In the scandal surrounding the bankrupt payment service provider Wirecard, a new trail leads to Russia. For a long time there have been reports of good contacts in the empire of Vladimir Putin and his secret services about the fleeting company director Jan Marsalek; some also suspect that he lives there today. Internal documents that are available to “Stern” and Personal-Financial.com now contain new information.
According to a connection analysis by the auditors of the company EY (Ernst & Young) in 2017, the Wirecard bank is said to have granted a loan of EUR 6 million for a company that was a “politically exposed person” ) from Russia. This company is also involved in a joint project with a subsidiary of the state corporation Rostec; this conglomerate of companies is primarily active in the arms industry and has been subject to US sanctions since the occupation of Crimea. In the correspondence on the loan, the name of a businessman active in Asia, who is considered to be a confidante of Jan Marsalek, is also mentioned.
The connection analysis is cited by the auditor oversight body APAS in a criminal complaint against auditors from EY. This 28-page letter dated September 28, 2020 is available to “Stern” and Personal-Financial.com. The Munich I Public Prosecutor’s Office confirmed on Friday that it had started investigations against those employees who had checked Wirecard’s annual financial statements for EY between 2016 and 2018 and confirmed them to be proper. “We have now thoroughly examined the APAS ‘s multi-page criminal complaint,” said a spokeswoman for the public prosecutor’s office to “Stern” and Personal-Financial.com: “As she identifies specific suspects and criminal provisions, we have, as the file order stipulates, an investigation against those named registered, ”she added.
The APAS, which is part of the business area of Federal Minister of Economics Peter Altmaier (CDU), had made massive accusations against the auditors in the letter. According to the APAS, there have been abnormalities in all three years that have not been fully investigated. The Wirecard tip has repeatedly rejected allegations and declared in-depth examinations unnecessary. From the point of view of APAS, it is about “facts” that “justify the suspicion that members of the profession have committed criminal offenses in connection with the exercise of the profession”.
EY has repeatedly and vehemently denied suspicions of criminal offenses. So far, the company is “not aware of any indications of criminal behavior by EY auditors at Wirecard,” emphasizes EY. Compared to the APAS one had already given a detailed answer to the allegations. The auditing company also hopes that the Federal Court of Justice will soon decide to what extent its employees must be exempted from their duty of confidentiality in order to make statements before the Wirecard investigation committee of the Bundestag. The court is due to rule on fines imposed by the committee on EY examiners who initially refused to testify when they were questioned at the end of November.
EY threatened to end the business relationship
It’s about a lot of money and also about possible claims for damages against EY. After all, investors had relied on the well-known auditing firm to nod their budgets. The state supervisors at the Bafin also gladly relied on the work of the private auditors.
Now it has been shown that with all the positive attestations, a lot of them were just a facade. As early as March 2017, according to an APAS letter to the public prosecutor, EY even threatened to end its business relationship with Wirecard. On March 29, 2017, the two auditors Andreas Dahmen and Martin Loetscher complained in a letter to Wirecard boss Markus Braun, Marsalek and the then CFO Burkhard Ley about the lack of cooperation on the part of the Executive Board in clarifying allegations. Points have not yet been “clarified” and forensic examinations have not been made. The two auditors therefore threatened to refuse their unqualified certificate for 2016. And they announced that “on the basis of your reaction to this letter we will reconsider whether and how we can organize further cooperation”.
They had previously complained that “on the basis of the information available”, the “sales booked in 2015 and 2016 were not currently adequately proven in terms of amount, facts and time”.
It is questionable whether the Wirecard management board has met the requirements. EY then issued an unqualified audit certificate. Likewise with the audit for the year 2016. Likewise with the audit for the year 2016. At that time it was about the so-called Zatarra report from two London stock traders. Here, EY “did not perform any audit procedures” in order to “conclusively assess” the allegations with “absolute certainty”, according to a working paper.
Company boss Braun, who still denies all allegations to this day, publicly declared in March 2016 that they had “investigated all allegations”. Not a single one of them is true. However, according to the APAS report, CFO Ley is said to have admitted to EY that the Zatarra affair was “not in the deepest holes”. In the official audit report, however, EY summed up that it was “convinced” that the allegations were “followed up and assessed” by Wirecard.
Even then, there were also massive allegations regarding Wirecard’s India business. For example, a lead auditor of an EY partner in India reported that a company boss of a Wirecard subsidiary had reported to him that when a group of companies was acquired in India, “members of the senior management of Wirecard AG in Germany” would have benefited from the involvement of an intermediate company. The auditor in India also reported on allegations of bogus sales, an attempt to bribe him – and that representatives of Wirecard’s “senior management” benefit from the deal.
The investigations into the events in India dragged on under the name “Project Ring” over several years – also because the auditors apparently waited in vain for feedback from the top management. In April 2018 Marsalek, who was responsible for the project on the board side, finally drew a line, as evidenced by an email dated April 3, 2018. In which he judged “the allegations as baseless”. One will therefore “not carry out any further investigations”. Marsalek also had a few friendly words for the EY auditors: “We thank you for your transparent and highly professional analysis and reporting at all times.”
The APAS says today that in view of the “will not to clarify” at Wirecard, EY “gave the wrong impression” that the allegations were finally investigated. When she gave testimony in the investigative committee in mid-November, the former Wirecard supervisory board member Tina Kleingarn confirmed that EY had only issued the attestation for the 2016 annual financial statements at the last minute. One reason for this was that, in April 2017, the board of directors was for a long time owed documents and evidence that the auditors had requested. The focus was on the results of the “Project Ring”, but also missing information on third-party business in Asia.
Zatarra author: “Receipts for $ 15”
The allegations against EY are now also sensitive for Deutsche Bank, because one of the two auditors – Loetscher – is now the head of accounting for her. Separately, the bank recently hired EY as its new auditor. A spokesman for the bank referred to “the presumption of innocence”. One appreciates “the cooperation with the colleague and we have full confidence in his competence and ability to fulfill his task”. Of course, one should carefully observe the situation – this also applies to “all further developments” regarding EY.
The authors of the Zatarra report from the spring of 2016, however, feel confirmed. “We were amazed that EY believed the management of Wirecard,” said Fraser Perring, one of the two authors of the report, when asked by Stern and Personal-Financial.com . “The EY auditors could easily have proven false information from Wirecard if they had looked at the annual financial statements of group subsidiaries and the orders from management staff in Asia. The necessary extracts from official registers cost us $ 15 at the time, ”said Perring. Accordingly, an important Wirecard sales manager in Asia was a convicted heroin dealer. The then CFO of Wirecard Asia Pacific had previously been involved in oil smuggling in the Philippines.
Perring also made serious allegations against the German authorities. “Nobody checked our findings on fraud at Wirecard at the time,” he said. “All authorities involved have failed, including the Bafin, the Ministry of Finance and the APAS.” Therefore, it could be considered a “bad joke” that the APAS had now reported EY to the public prosecutor. In fact, all German authorities would have preferred to pursue the group’s critics for years rather than investigate the allegations against Wirecard itself. “If the authorities had checked official documents, they would quickly have come across evidence of widespread misrepresentation by the company.”
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