Things didn't smell right at Wirecard - then a whistleblower was stonewalled

Singapore

IT DIDN'T take long for him to think something was amiss at what was then one of the fastest growing payments companies at the time.

For one thing, the credentials of a key executive behind the Wirecard Asia-Pacific operations, "didn't add up".

And just three weeks after joining Wirecard's Singapore office, Pav Gill, the former senior legal counsel at the fallen fintech's Asia-Pacific headquarters, realised that several attempts by his colleagues to raise certain red flags were often blocked by more powerful figures in the company.

Prospective whistleblowers were sometimes paid off, deemed troublemakers, or were simply silenced for fear of losing their jobs, according to Mr Gill, better known as a former employee who exposed Wirecard's massive fraud to The Financial Times (FT).

The German payments firm that had repeatedly shaken off allegations of accounting fraud collapsed into insolvency in June last year, after revealing that some 1.9 billion euros (S$3.09 billion) were missing from its accounts. Authorities in several jurisdictions, including Singapore's Commercial Affairs Department, have launched criminal probes into the company.

These follow after a series of investigative reports by FT, who gave credit this month to Mr Gill for exposing the company executives' misdeeds from the inside.

Speaking to The Business Times (BT) from Bangkok, where he is now based, the 38-year-old Singaporean, who joined Wirecard's Singapore office in September 2017, said his suspicions were first raised when the credentials of Edo Kurniawan did not match the job that he was tasked to do.

Mr Kurniawan, who was then running Wirecard Asia-Pacific's accounting and finance operations, had only served a couple of years each at venture capital firms Rocket Internet and Ardent Capital as a regional finance manager, according to his now-defunct LinkedIn profile.

"And then all of a sudden, you have him, who was in his early 30s, being hired by Wirecard as practically their No 3 finance person," Mr Gill said.

In a documentary on the scandal produced by UK-based Sky Studios, Mr Gill suggested that Mr Kurniawan often alluded to having to "clean up" things at the company, including "paying off" two staff working in the Philippines office who were accusing the firm of fraud.

There were multiple red flags.

One was when company filings that Mr Gill had on file showed that Wirecard's entities in Asia-Pacific were making losses. Yet, the region's earnings would often still match that in Europe whenever financial results were reported. From his experience, it was a clear sign that the numbers were cooked, Mr Gill told BT.

The company also had a practice of seeking out third-party companies, that were either shell companies or small, obscure businesses, to enter into software transfer agreements with thousands of euros, he said.

"What was also very interesting is the Singapore third-party companies all had the same registered address in Peninsula Plaza, leading to the same guy, who is now being investigated," he said.

Mr Gill refers here to Singaporean R Shanmugaratnam, who faces a series of charges for misrepresenting his company's balances in accounts. Shanmugaratnam is the director of Citadelle Corporate Services, which has reportedly handled money for Wirecard in a trustee capacity.

By Mr Gill's account, when he reported these discrepancies to his superiors in Munich, they had let him initiate an internal review with an independent law firm. He eventually picked Rajah & Tann, but senior executives tried to shut down the investigation in its final stages, he said.

It was later reported by FT that Germany's market watchdog, the Federal Financial Supervisory Authority, or BaFin, had been warned about deceptive practices at Wirecard - a listed firm - for over a decade. But it repeatedly declined to investigate the allegations, FT reported. It instead accused the complainants of colluding to manipulate the market.

Wirecard remains listed, but has been stripped of its status as a benchmark stock in Germany.

Mr Gill realised that the company was possibly backed by deep connections. Wirecard's ex-chief operating officer Jan Marsalek is suspected to have links with intelligence agencies in Austria, Russia, and Libya as well, he added. The links were reported by FT.

Marsalek fled in June, shortly after he was suspended by the company's management. He is now a fugitive wanted by the German police.

Internal whistleblowing policies fall flat when the powers-that-be in these institutions themselves are complicit in the wrongdoing, said Mr Gill, who resigned in September 2018.

"Often, if it's a scam or a fraud of a significant magnitude, that means that those at the highest levels tend to be involved. And so even if you were to follow whistleblowing processes in the company, they would ultimately lead to the people who have some sort of knowledge about it... (For complainants,) that can be a very scary situation to be in."

He thinks that regulations in many countries do not afford whistleblowers sufficient protection. Establishing independent whistleblowing bodies could be helpful, he noted.

Specifically, such protection is especially important for Singapore because the Republic is positioning itself as a financial hub, Mr Gill noted.

"Often, people just want to go to somebody that can look at what they have or talk to them about their suspicions and give them guidance, because you want to know whether you're overthinking stuff or is there really something there?

"You want to be in a situation where you're not judged. You don't want to fear that you will lose your job and you want an independent, neutral person advising you on what you should do and what needs to be done," he added.

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