One of the largest event’s to shake the fintech world over the past few years was the collapse of the German fintech, Wirecard. Earlier this year, Netflix released a documentary titled Skandal! Bringing Down Wirecard, which follows the fintech’s infamous and controversial downfall. The documentary is based on the book by Dan McCrum, a Financial Times journalist who was critical in releasing evidence of Wirecard’s fraudulent activities.
The inherent betrayal that many felt in the unravelling of Wirecard, lies in the huge credibility that was attached to the company for almost two decades and the sheer magnitude of fraud that was uncovered. The international success of the company led to the deception of numerous consumers, partners, and employees.
The documentary did an excellent job of building up tension and uncovering a wealth of shocking facets to the story. Alternating between McCrum, shortsellers, investors, an ex-Wirecard employee, and Financial Times executives, it spotlights a variety of
voices to give a well-rounded perspective of the company’s wrongdoings.
The film follows McCrum in his discovery of the scandal, tracing his steps deeper and deeper as he weaves his way towards the core of corruption in the multi-million Euro global company, starting from intriguing tips from shortsellers all the way to the
evidence that led to the
arrest of Wirecard CEO Markus Braun, marking Wirecard’s grand demise.
The scandal can be described in a great deal of words, but the most accurate one would be: bizarre.
Some such outlandish moments played out during the documentary include:
- The revelation that Wirecard’s fraud traces back to a quaint British town in the countryside of Durham,
and a dog-grooming house in the Philippines;
- A man caught spying on the Financial Times offices across the Thames to track employees movements and reporting; and
- The moment an ex-Wirecard employee recalls that the company would refer to their involvement in distributing pornography as “emotional content.”
Braun is conveyed as a technical, intelligent figurehead, seemingly imitating Steve Jobs in his all-black outfits and no-nonsense character. He denies all accusations of misconduct throughout the scandal, and maintains his innocence once arrested. Chief operating officer,
Jan Marsalek, is portrayed as a sliver-tongued, and quick-witted leading man who represented the opposite of Braun’s matter-of-fact persona.
The documentary unveils the foundations of the scandal, drawing the story to the most fascinating and mysterious character at the core of the scheme: Marsalek. Though CEO Braun’s face is the one plastered on newspapers, the documentary reveals the convoluted
scheme to depict the shadowy Marsalek, with his secret office, intimate parties, and surreptitious contacts, as a key part (if not the architect) of the entire operation.
The company was accused of money laundering on multiple fronts, having first processed payments from gambling and websites that contained aforementioned “emotional content.” When Wirecard expanded to Asia, it’s use of third-party partners was in fact a front
for a money laundering scheme made up of falsified documents and non-existent projects which in reality was just a house of cards.
The most surprising revelation was the sheer faith the fintech had been able to engender not only within financial services and investment circles, but by German regulators and government officials. While McCrum was digging into Wirecard and weaving through
the labyrinthine narrative of the Wirecard executive board, he was consistently set back by German financial regulator BaFin. Going so far as accusing McCrum and the Financial Times of insider trading and manipulation, BaFin was strenuous in its defence of
the fintech.
Even former German chancellor Angela Merkel provided blind support to the company, having lobbied for Wirecard during a diplomatic visit to China in 2019. Seen as a source of national pride and achievement, Wirecard was defended with no questions asked,
and thus Braun and Marsalek were able to operate and deceive customers for far too long.
Marsalek’s connections with the Russian government and Austrian secret service agencies that were funding a militia in Libya also presented a shocking twist. The documentary reveals that he was in talks with a humanitarian organisation and pledged €200,000
towards what they thought would be aiding refugees in Libya. However, it was later discovered that he was funding a border-guard force and receiving support from within the Austrian government to do so.
Marsalek was acting as an intermediary for Russians and right-wing Austrian parties, creating anxieties over the refugee debate to sway the Austrian elections and setting up for Russian interests, and encouraging said parties to capitalise on migration issues
for the benefit of their campaigns.
This revealed that Wirecard was not only lying about company acquisitions, a
missing €1.9 billion, and illegal profits from gambling, but ventured further into political corruption and interference in foreign affairs.
While the weight of Wirecard’s deception lies on Braun, who is facing up to 15 years in prison, the documentary insinuates that Marsalek is the true mastermind of the scandal. Braun has expressed more than once that he was a victim in these proceedings,
naively complicit in Marsalek’s schemes. Marsalek remains the most interesting character in the film, and the object of McCrum’s personal interest.
“If Marsalek ever turns up, I’d love to talk to him,” muses McCrum towards the end of the documentary. “I’ve spent years trying to get inside his head.”
Marselek’s suspicious activity and immediate disappearance following the break of Wirecard’s downfall leaves many unknowns around the true purpose of the deception. Was he greedy for money? Were his political interests the reason behind the fraud and embezzlement?
Is Braun truly a victim? (The latter seems doubtful).
The documentary leaves us with these questions unanswered, as
Marsalek remains at large and has been
placed on Interpol’s most wanted list. Just this week, it was reported that the charge sheet against former Wirecard boss Marcus Braun and two other executives runs 474 pages long, and will take five hours to read out in the Munich court where the proceedings will take place. The case is expected to last for a more than a year.
The collapse of Wirecard has borne a massive impact on the financial services industry, in doubting peoples’ ability to trust regulators to monitor and manage emerging financial providers. After
the failings of German regulators, other regulators must
learn from the mistakes made during the Wirecard scandal.
If the biggest German fintech was built on dirty money and entrenched in criminal activity, then to prevent another similar occurrence, all financial providers need to be subject to thorough compliance, screening, and AML practices and regulators must take
steps to ensure fraud prevention for users and companies.
*Image source: Reuters