You know, there's this phrase in finance that
always just it always cracks me up. Accounting
irregularities. Sounds so polite, doesn't it?
Sort of harmless. Like maybe someone forgot to
carry the one or they lost a receipt for a client
lunch. It's the ultimate euphemism. It is. It's
like calling a Category 5 hurricane a breezy
afternoon because usually, I mean, let's be honest,
when we hear accounting irregularities in the
news, it's not a simple math error. It's a smoke
signal. A huge smoke signal. Yeah. For something
much, much darker. Exactly. And today we are
doing a deep dive into what might be the mother.
Of all irregularities. We're talking about a
situation where the irregularity wasn't a missing
receipt, but a missing 1 .9 billion euros. Billion.
With a B. It's a number that's hard to even comprehend.
I know. Try to picture it. Well, just to visualize
that for a second, if you stacked 1 .9 billion
euros in, say, 100 euro notes, you're looking
at a stack that would literally reach into the
stratosphere. That's insane. It is a colossal,
colossal amount of money. And for a very long
time. The entire world, the entire financial
market thought that money was sitting safely
in a couple of bank accounts in the Philippines.
Right. Bolstering the balance sheet of Wirecard,
which was at the time the absolute pride of the
German tech sector, a titan. But then in June
of 2020, we all learned that the money wasn't
just missing. It likely never existed in the
first place. It's the story of Wirecard. And
frankly, even now, even though it's been nearly
six years since the collapse, it still feels
like a fever dream. It really does. I mean, if
you pitch this as a movie script, you've got
hackers for hire, fugitive executives who are
suspected of being Russian spies, regulators
hunting journalists instead of criminals, Hollywood
would probably reject it. They'd say it's too
unbelievable. Exactly. Tone it down a bit. It
really is the German Enron, but... Honestly,
with way more spycraft. It's wild. And the reason
we are revisiting this whole saga today here
in February 2026 is that we finally have a new
and very concrete chapter of closure. That's
right. We've had speculation for years, but just
last month in January, the courts in Singapore
handed down some really significant sentences
that I think. They close the loop on the actual
mechanics of the fraud. They absolutely do. For
the longest time, the big question was always
how. Right. How do you fake 1 .9 billion euros?
You can't just write a number on a napkin and
show it to an auditor. Right. You need a system.
You need infrastructure. And the sentencing of
these two individuals are Sean McGrath and James
Henry O'Sullivan in Singapore gives us the judicial
stamp. It confirms exactly how that machinery
of deception worked. We're definitely going to
get into those sentences later because they are.
so key to unlocking this whole mystery. But to
really understand how we got to a courtroom in
Singapore in 2026, we have to go back. Way back.
Way, way back. And I was digging into the origins
of Wirecard this week. And I have to say, for
a company that ended up replacing, you know,
Commerzbank and the DAX index, their beginnings
were, well, let's call them colorful. Colorful
is being very, very generous. Seedy might be
the more accurate term. OK, fair enough. So let's
rewind. The year is 1999. We're in Aschheim,
which is a quiet suburb near Munich. Wirecard
is founded. And usually when we think of fintech
startups, you know, we think of sleek apps, people
in coffee shops, solving problems for millennials.
But Wirecord's initial client base wasn't exactly
selling artisan coffee. Not at all. They were
processing payments for pornography and online
gambling websites. Right. And we really need
to pause here for a second because this isn't
just some like salacious detail to get people
interested. It is actually the cornerstone of
their entire business philosophy. OK, explain
that, because in what, 1999, 2000, processing
credit card payments for a porn site? wasn't
something a respectable bank wanted to get anywhere
near. Exactly. In the banking world, this is
what's classified as high risk. And it's high
risk for a few reasons. First, you got the obvious
reputational risk. You know, Deutsche Bank doesn't
want hotbabes .com showing up on their official
client list. Of course not. But maybe even more
importantly, the financial risk is all about
chargebacks. Chargebacks. So that's when a customer,
you know, calls their credit card company and
says, hey, I didn't make this charge. Correct.
And in the world of online porn and gambling,
that happens constantly, all the time. People
gamble, they lose money, they regret it, and
then they claim their card was stolen. Or they
subscribe to a site, get caught by their spouse,
and then claim fraud to cover their tracks. It's
a messy, high churn, complicated business. So
because the big respectable banks wouldn't touch
it with a 10 -foot pole. Wirecard just stepped
right in. And I'm guessing they weren't doing
it out of the kindness of their hearts. Oh, absolutely
not. They did it because they could charge exorbitant
fees. If you are the lender of last resort or
the processor of last resort, you can dictate
the terms. Wirecard was making margins that standard
payment processors could only dream of. But I
think more importantly than the money, it taught
the company a very, very dangerous lesson. And
what was that lesson? The lesson was you can
get really rich by operating in the shadows.
You can build a massive business by processing
payments that other people won't. And crucially,
by not asking too many questions about where
the money is coming from or where it's going.
So it baked this kind of opacity right into their
corporate DNA from day one. It did. It's almost
like they started out as a black ops payment
processor. So when they eventually try to pivot
to more legitimate. businesses you know airlines
and retail they just kept that same don't look
too closely at the books mentality precisely
they normalized secrecy in a normal healthy company
complexity is a bug it's something you try to
eliminate yeah you want things to be simple in
wire card complexity was a feature it was how
they hid everything it was how they hid the bodies
so to speak So, OK, they're chugging along with
the gambling and porn money. But then the dotcom
bubble bursts in the early 2000s. Right. And
Wirecard nearly goes under. I mean, they were
right on the brink of bankruptcy in 2002. And
this is where the central antagonist of our story
makes his grand entrance. Marcus Braun. Enter
Marcus Braun. He's this Austrian consultant and
his background is actually from KPMG. Oh, interesting.
He comes in, he injects capital, saves the company
from total insolvency and takes over as the CEO.
He's the one who really consolidated the business
model. He had this grand vision of Wirecard as
a technology powerhouse, not just a back office
payment plumber. But he also had a very, very
aggressive approach to growth. And this leads
us to 2005. Wirecard wants to go public. Now,
I've been around markets long enough to know
that an IPO, an initial public offering. is a
huge deal. It's like a, well, it's a financial
colonoscopy. That's a great way to put it. You've
got bankers, lawyers, auditors, regulators, just
everyone tearing through your documents for months
on end. It is an absolutely grueling process.
You have to publish a prospectus that details
every single risk, every debt, every lawsuit.
You have to go on a roadshow and convince these
really skeptical investors that your business
is real. It's the gatekeeper of the public markets.
But Wirecard looked at that gate and said, nah,
we'll just hop the fence. They did. They did
what's called a reverse IPO. And I really want
to unpack this because the mechanism they used
is just, it's both hilarious and terrifying at
the same time. They bought a company called InfoGenie
AG. InfoGenie, you really, you just can't make
this stuff up. So for our listeners who might
not know. What on earth was InfoGenie? So InfoGenie
was a penny stock. It was listed in Berlin, and
they had absolutely nothing to do with payments
or fintech. Their business was operating telephone
advice hotlines. You mean like 1 -900 numbers?
Exactly. We're talking tech support, horoscopes,
relationship advice, and probably some of the
more adult conversations that we were alluding
to earlier. I see. By 2004, Info Genie was basically
a zombie company. The stock exchange actually
wanted to delist them because their share price
was effectively zero. So Wirecard, instead of
doing its own proper, heavily scrutinized IPO,
decides to just buy this dying hotline company.
Correct. In December of 2004, the shareholders
of Info Genie agreed to a capital increase in
exchange for acquiring Wirecard. So mechanically,
InfoGenie bought Wirecard. But in reality, Wirecard
took over InfoGenie. And then what? They changed
the name from InfoGenie to Wirecard and voila.
On January 1st, 2005, Wirecard was a publicly
traded corporation. That is just wild. They literally
wore the skin of a dead company to sneak onto
the stock exchange. That is a very vivid and
I think a very accurate way to put it. And here's
why that matters so much. By doing a reverse
IPO, they skipped all the scrutiny. No roadshow.
No roadshow. No deep audit by skeptical investment
banks. No detailed prospectus for investors to
pick apart. They just sort of appeared on the
market. I mean, that feels like such a massive
red flag. If a company is actively avoiding scrutiny
on day one, shouldn't investors be incredibly
wary? They should be. Of course they should.
And to be fair, some were. But you have to remember
the context of the time. This was 2005. The tech
market was recovering from the dot -com bust.
People were hungry, especially in Germany, for
a German tech success story. very, very good
at selling the vision. He talked about the cashless
society, the digitization of money. He sounded
like a true visionary. And the growth chart seemed
to back him up. I mean, they rocketed into the
tech tax in 2006. They were growing faster than
anyone else. They were. And then the real crowning
achievement came in September of 2018. Wirecard.
joins the DAX 30. This was a massive cultural
moment in Germany. The DAX 30 is the elite club.
It's the German equivalent of the Dow Jones Industrial
Average. You're talking BMW, Siemens, Adidas,
Volkswagen. The absolute titans of German industry.
And Wirecard joined the club. And you have to
look at who they replaced. They kicked out Commerzbank.
The symbolism there was intoxicating. It was
just perfect for their narrative. Cumbers Bank
was founded in 1870. It was the establishment.
It was old money, traditional banking. Right.
And here comes Wirecard, founded in a Munich
suburb in 1999, kicking the old guard out the
door. It looked like the future defeating the
past. It's the perfect story. Old banking is
dead. FinTech is king. And I mean, investors
just ate it up. At its peak, Wirecard was valued
at over 24 billion euros. It was worth more than
Deutsche Bank at one point. That's staggering.
Just let that sink in for a minute. A payment
processor that started out with porn and gambling
sites was worth more than the biggest, most systemically
important bank in Germany. So let's talk about
what they claimed they were actually doing to
justify that 24 billion euro valuation. Because
you can't just say we process payments and be
worth that much. You need to have a special sauce,
some kind of magic. Right, they claim to have
a financial ecosystem. Their business, on paper,
had three main pillars. First, the bread and
butter. payment processing, and risk management.
Okay. This is just acting as the middleman between
a merchant, like an airline or a shop, and the
credit card network, like Visa or MasterCard.
They take a tiny little cut of every single transaction.
Okay, that's standard stuff. I mean, PayPal does
that, ADN does that, nothing special there. Second
pillar was card issuing. So they would issue
physical or virtual debit cards for other companies.
So if a new startup wanted to launch a cool new
banking app, Wirecard would provide the actual
card infrastructure in the background. Right.
I remember they worked with companies like Revolut
in the early days and a bunch of other smaller
fintech apps. They did. And they had big names
in their client list. I remember seeing their
client deck, Allands, KLM, Qatar Airways, Transport
for London. I mean, if you saw that list, you'd
think, OK, this is a legitimate blue chip operation.
And they did have real clients. That's what makes
the fraud so tricky. The business wasn't completely
fake. The European part of the business was real.
It was actually losing money for the most part.
But it was real. They were processing real payments
for real companies like Aldi and Lidl. But the
real growth story, the thing that was driving
the stock price, wasn't Aldi or Lidl. It was
all the innovation stuff. I remember the Boone
app. Boone, yes. It was their mobile payment
app that gave... you a virtual MasterCard on
your phone. It was Apple Pay and Google Pay compatible.
And it was a decent product, wasn't it? It was
actually a pretty good product, but it wasn't
making them billions of euros in profit. Not
even close. And then there was the China connection.
I feel like this was the narrative that really,
really drove the stock price into the stratosphere.
The Alipay narrative. This was pure genius from
a storytelling perspective. Wirecard claimed
to be the indispensable bridge between China
and Europe. They partnered with Alipay and WeChat
Pay, which are, you know, the completely dominant
payment apps in China. And the pitch was simple.
When millions of Chinese tourists come to Paris
or Munich to buy luxury handbags and watches
they want to pay with their phones. Wirecard
is the company that makes that happen. It sounded
like a license to print money. You have millions
of wealthy tourists billions in potential transactions.
It was an incredibly compelling story. They announced
these huge partnerships with Printem the big
department store in Paris the body shop Munich
Airport. It positioned Wirecard as the only player
who could unlock this massive, massive revenue
stream. So on the surface, you've got real clients,
you've got cool apps, this massive Chinese expansion,
and the financials looked absolutely incredible.
A hockey stick graph. Totally. In 2013, their
revenue was, what, 482 million euros? By 2018,
it was over 2 billion. Assets just quadrupled
in that same period. And then in 2019, they got
what seemed like the ultimate validation. SoftBank,
you know, Masayoshi -san's massive Japanese investment
fund invested. And that's a huge stamp of approval.
It's the biggest. When SoftBank puts money in,
the market takes that as a sign that you have
officially made it to the global big leagues.
And there is always a but in these deep dives.
While the stock price was climbing and while
the German public was celebrating their new tech
champion, there were people. people, smart people
scratching their heads. There were. Because the
math just wasn't adding up. No, it wasn't. And
this is where we need to introduce a concept
that is absolutely critical to understanding
the entire fraud. We have to talk about third
party acquirers or TPAs. OK, let's slow down
and really explain this, because I'll be honest,
when I first started reading about the scandal
years ago, this was the part that confused me
the most. What is a third party acquirer? So
imagine Wirecard wants to do business in a country
where it doesn't have a financial license. Let's
say the Philippines or Malaysia or Dubai. OK.
They can't legally process the credit card swipe
themselves because they aren't a licensed bank
or financial institution in that jurisdiction.
So they're blocked. They can't operate there.
Theoretically, yes. But instead of giving up.
or going through the long process of getting
a license, they just hire a local partner. This
local partner is the third -party acquirer. And
that partner has the license. Exactly. The TPA
has the license. So the TPA processes the transaction
for the merchant in that country. They take the
customer's money, they hold it, and then in theory,
they pass it on to Wirecard, minus a commission.
So it's basically like outsourcing the actual
work. It's exactly like outsourcing. It's like
being an Uber driver, but you don't have a car
or a driver's license. So you hire a guy who
does have a car to drive people around. And then
you tell everyone that you're the one running
the successful taxi business. And Wirecard claimed
that this TPA business was huge. This is the
absolute key to the entire fraud. Wirecard claimed
that roughly half of their entire transaction
volume and the vast, vast majority of their operating
profit came from these obscure TPA partners in
Asia and the Middle East. Wait, wait. Half their
business was coming from these outsourced partners
that no one had ever heard of? Yes. And because
it was outsourced, Wirecard didn't have any of
the associated costs. They didn't have to pay
for servers or staff or office space in those
countries. They just booked the revenue. So that's
why their profit margins look so much better
than... their competitors. Exactly. They claim
to be making these massive profits with basically
zero cost. I mean, that sounds way too good to
be true. We have billions in revenue, but it's
all happening over there in that other company's
books. Don't worry about it. And that is exactly
what the skeptics started to notice. As far back
as 2008 and certainly by 2015, people were looking
at this TPA structure and saying, this doesn't
make any sense. This smells wrong. And this brings
us to the heroes of this story. Yeah. The people
who didn't buy the hype. We have to talk about
the Financial Times and the short sellers. The
FT, and specifically a journalist there named
Dan McCrum, they deserve a Pulitzer and a half
for what they did. Absolutely. In 2015, the FT's
blog, it's called FT Alphaville, started a series
called The House of Wirecard. And they just started
methodically picking apart the accounting. They
were asking the simple questions. Like what?
Like, where are these assets really? Why is a
company that claims to be making so much profit
constantly asking for more cash from investors?
That's a classic tell, isn't it? If you're so
profitable, why do you always need to borrow
more money? Exactly. Cash flow should be strong.
And then in 2016, things got really, really spicy.
We got the Zatara report. Zatara. It honestly
sounds like a villain in a James Bond movie.
It does, doesn't it? It was actually a pseudonym
used by Fraser Puring of Viceroy Research and
Matthew Earl of Shadowfall. Now, these guys are
short sellers. So investors who are betting that
a stock price will go down. Correct. And they
released this bombshell 101 page report accusing
Wirecard of, well, everything. Fraud and money
laundering. I read parts of the Zatara report
recently. It wasn't subtle at all. They basically
just said this is a crime scene. They did. They
alleged that the TPA business in Asia was. largely,
if not entirely, fake. They claimed Wirecard
was laundering money for illegal offshore gambling
rings. It was a dossier of just nuclear accusations.
Now, in a normal functioning market, if someone
drops a 100 -page report alleging massive fraud
and money laundering, the regulator, in this
case Bafin, the German regulator, would kick
down the doors of the company and start seizing
hard drives. You would think. You would absolutely
think. But this is where the story becomes a
true tragedy of German institutional pride. Bafin
didn't investigate Wirecard. Unbelievable. They
investigated the short sellers. That is just
mind -blowing to me even now. The guys pointing
out the fire get arrested for arson. Effectively,
yes. Bafin and the prosecutors in Bavaria bought
into Wirecard's narrative completely. And Wirecard's
narrative was that these Anglo -Saxon speculators
were trying to manipulate the market to destroy
a great German champion. So it became a nationalist
issue. It became a nationalist issue. They are
attacking our success story. This is an attack
on Germany. So the Bavarian prosecutors actually
opened criminal investigations against Fraser
Paring and the others. They did. They threatened
them with jail time. Yeah. And it created this
circle the wagons mentality in the German establishment.
If you criticized Wirecard. You weren't just
a skeptic. You were attacking Germany itself.
But the Financial Times didn't stop. In January
2019, Dan McCrum published what really should
have been the kill shot. January 30th, 2019,
the FT reports that a senior executive in Wirecard's
Asia -Pacific operations, a guy by the name of
Ido Kurniawan, was suspected internally of falsification
of accounts and round -tripping. Okay, round
-tripping. We need to define this because this
is the core of how they kept the balloon inflated
for so long. So imagine I have a company. I want
to look successful. I want to show growing revenue.
I take, say, 100 euros out of my company's left
pocket. I transfer it to a sub... subsidiary
I control in Hong Kong. That subsidiary then
transfers it to a so -called partner company
in India. That partner then pays me back the
hundred euros for some fake software services.
The money just comes right back into your right
pocket. Exactly. And I record that hundred euros
coming in as revenue. My stock price goes up
because look at all this amazing revenue growth.
But I haven't actually made a single dime. I've
just moved my own money in a circle. It's financial
illusionism. You're just creating the appearance
of activity where there is none. And the FT had
the documents. They had internal spreadsheets.
They had emails. They had proof that this was
happening in the Singapore office. And what did
Wirecard do? Did they finally apologize? Did
they launch a real internal investigation? No.
They went nuclear. They sued the Financial Times
for unethical reporting. They claimed the documents
were fake, part of the conspiracy. And Baffin.
Baffin did something absolutely unprecedented.
This is the part of the story that still shocks
me the most. In February of 2019, Bayfin, the
German financial regulator, banned the short
selling of Wirecard shares. They made it illegal
to bet against the company. They made it illegal.
It was a massive intervention in the free market
to protect a single company. And to top it all
off, they filed a criminal complaint against
Dan McCrum and his colleague for market manipulation.
I just I try to imagine being Dan McCrum in that
moment. You have the truth. You have the evidence
in your hands. And the government of Germany
is actively trying to put you in jail while the
actual fraudsters are ringing the opening bell
at the stock exchange. It's terrifying. It's
the stuff of nightmares for a journalist. But
it wasn't just legal threats. And this is where
the deep dive gets really dark. We have to talk
about Dark Basin. This sounds like something
out of a science fiction movie, but it's completely
real. It is very real. In June of 2020, just
as everything was collapsing, a group called
Citizen Lab at the University of Toronto released
a stunning report. They had uncovered a sophisticated
hackers for hire group operating out of India.
A company called Beltrats Infotech. Link to that
company, yes. And the group was codenamed Dark
Basin. And who is hiring these hackers? Well,
the client list is officially confidential, but
the targets of the hacking campaigns tell the
story. The people being relentlessly targeted
were hedge funds, short sellers, investigators,
and journalists. All of whom were critical of
Wirecard. Every single one. So if you were asking
tough questions about Wirecard's balance sheet,
suddenly your email inbox is getting bombarded
day after day. With what? Sophisticated phishing
attacks, attempts to steal your passwords, attempts
to gain access to your private communications,
your sources. Dan McCrum was targeted. Fraser
Paring was targeted. It was a coordinated campaign
of digital espionage designed to silence the
critics. It just shows the lengths they were
willing to go to. This wasn't just, you know,
cooking the books. This was an active intelligence
operation to suppress the truth. It was warfare.
But here's the thing about accounting fraud,
and it's always true. You can fake revenue. You
can fake profit, but you cannot fake cash forever.
Eventually, you have to pay the bills. You have
to pay back the loans. Gravity always wins. Gravity
always wins. By late 2019, the pressure was mounting.
The FT reports were damaging the stock price
no matter how much they denied them. Investors
were getting nervous. So Wirecard made a very
desperate move. What did they do? They hired
KPMG, one of the big four global auditors, to
conduct a special independent audit. Okay, so
the idea was KPMG will come in, check everything,
they'll give us a clean bill of health, a gold
star, and then all these critics will have to
shut up forever. That was the plan. But it was
a massive, massive gamble. Because unlike EY,
Ernst & Young, who had been auditing Wirecard
for years and had apparently been sleeping at
the wheel, KPMG came in fresh with a skeptical
eye. And they started asking for the documents.
Specifically, they asked for the documents related
to those third -party acquirers in Asia, the
source of all the profit. Exactly. Show us the
bank statements. Show us the original transaction
logs from your partners. And Wirecard couldn't
produce them. They couldn't. They kept delaying.
They made excuse after excuse. Oh, the server
is down today. Oh, you know, privacy laws in
Singapore prevent us from sharing that information
directly. The classic dog ate my homework defense.
Basically, in March of 2020, Wirecard tried to
bluff their way through it. They put out a press
release claiming that KPMG had found no discrepancies.
But that wasn't true. It was a lie. The truth
came out on April 28, 2020. KPMG officially released
their report and was absolutely devastating.
Now, they didn't explicitly say it's a fraud,
but they said something that for an auditor is
almost worse. They said. We cannot verify that
this money exists. Which in the world of auditing,
that's the polite way of screaming fire at the
top of your lungs. It is. The stock tanked 26
% that day. The hedge fund TCI filed new criminal
complaints. The facade was just cracking wide
open. And then we get to June 2020. The final
spectacular explosion. It all came down to the
2019 annual report. It was supposed to be released
on June 18th. If they didn't release it, their
loans, billions in loans, would be called in
by the banks. And they needed their longtime
auditor, EY, to sign off on it. But EY, finally
feeling the intense heat from the KPMG report
and the media, decided to actually for the first
time properly check the bank accounts in the
Philippines where this money was supposed to
be. Better late than never, I guess. I suppose.
So Wirecard had claimed for years that 1 .9 billion
euros, which was effectively all of their profit
from the last decade, was sitting in escrow accounts
at two banks in the Philippines, BDO Unibank
and the Bank of the Philippine Islands. And what
happened when EY finally called them? The bank
said, we have no idea who you are. These account
numbers you're giving us don't exist. These documents
you have, these confirmation letters, they are
forgeries. Boom. The Central Bank of the Philippines
then jumped in and made an official statement
saying, quote, the money never entered the Philippine
financial system. So on June 18th, 2020, instead
of announcing a huge profit, Wirecard had to
issue a statement saying that 1 .9 billion euros
was missing. Marcus Braun resigned the very next
day, June 19th. And here's a fantastic piece
of corporate trivia. They appointed an interim
CEO, an American guy named James Fries. He had
joined the company, get this, the evening before.
Now, can you imagine? It's your first day on
the job. You get hired as the new compliance
guy. You walk in on a Thursday and on Friday,
the CEO quits and the company announces it's
missing two billion euros. Here are the keys
to the castle. Good luck. Unbelievable. He apparently
looked at the books over the weekend, realized
it wasn't just a liquidity issue, but a total
catastrophic fraud. And he was the one who ultimately
had to file for insolvency. His tenure as CEO
lasted just 85 days. So Marcus Braun was arrested
on June 22nd. While he was being processed and
sitting in a Munich jail cell, the other key
figure in this whole drama decided to execute
his own exit strategy. Jan Marsalek. Jan Marsalek.
The chief operating officer, the man who's in
charge of all the Asia operations, the man who
managed the TPA relationships. The man who is
currently one of Europe's most wanted fugitives.
He just vanished. He vanished. He told his colleagues
he was flying to the Philippines to personally
find the missing money. He even had immigration
records faked to show that he had entered the
Philippines, but he didn't go to Manila. So where
did he go? According to incredible investigations
by Bellingcat and the German newspaper Der Spiegel,
he took a private jet to Belarus, and from there
he was spirited away to Russia. And the strong
suspicion is that he's living in Moscow now.
Yes. Possibly under the protection of the Russian
intelligence services, the FSB. Which brings
us right back to the spy thriller aspect of this
whole thing. It turns out Marsalek might have
been feeding information to various intelligence
agencies for years. He was living a double life.
It adds a whole other layer of shadow and intrigue.
I mean, was Wirecard just a massive accounting
fraud or was it also a money laundering operation
for intelligence services and their various activities?
We may never know the full extent of it. So the
company completely collapses. Insolvency is filed
on June 25th, 2020. The stock, which had been
in the DAX 30, goes to pennies. Thousands of
people lose their jobs. It was a total bloodbath.
The insolvency administrator came in and immediately
cut 730 staff. The company was just chopped up
and sold for parts. Right. Santander bought the
core European tech for a measly 100 million euros.
100 million. For a company that was valued at
24 billion just two years earlier, Rails Bank
bought the UK arm. The empire that Marcus Braun
had built was just sold for scrap metal. So that
was the crash. An absolute spectacular implosion.
But legal justice, as we know, moves a lot slower
than the stock market. Much slower. And that
brings us to the core reason we are doing this
deep drive today. We need to talk about what
happened just last month, in January of 2026,
in a courtroom in Singapore. This is the closure
we've been waiting for, for years. We knew the
money was missing. We knew the documents were
forged. But we needed the courts to officially
establish exactly who did it and how they did
it. We saw some of the initial convictions back
in 2023. James Ward -Hanna and Chai Ai Lim, they
got relatively short sentences for their roles.
But the big fish in the Singapore operation were
sentenced just a few weeks ago. Aat Shanmugaratnam
and James Henry O'Sullivan. Let's start with
Shanmugaratnam. He ran a small trustee company
called Citadel Corporate Services. He was sentenced
to 10 years in prison. What was his role in all
this? He was the guy with the stamp. It's as
simple as that. He was a trustee. His job on
paper was to hold money in escrow accounts for
third parties. Okay. Wirecard needed to prove
to their auditors, to EY, that the money from
the TPA business actually existed. So they would
ask Sean McGrathnam to issue an official confirmation
letter. A letter that would say something like,
yes, I can confirm my company Citadel is holding
500 million euros in an escrow account on behalf
of Wirecard. Exactly that. And he wrote those
letters. Year after year. He signed documents
claiming Citadel held huge sums of money. At
one point, up to 1 .1 billion euros. But the
accounts were empty. The accounts were empty.
Or they contained a tiny fraction of what was
claimed. He was simply lying on official letterhead
to fool the auditors. And for that service, I'm
assuming he was paid handsomely. He wasn't doing
for free, no. But compared to the billions that
were at stake, the bribes were probably relatively
small. He got 10 years for falsification of accounts.
That is a very heavy sentence in Singapore. And
then there's the other guy, James Henry O'Sullivan.
He got six and a half years. O'Sullivan was the
coordinator. He was the link man. He was the
bridge between Wirecard's top management, like
Jan Marsalek, and the local guys on the ground,
like Sean McGrathnam. He facilitated the arrangements.
The court found that he was instrumental in setting
up and maintaining this entire structure of lies.
I mean, this is the smoking gun, isn't it? This
is the final nail in the coffin. It absolutely
is. It's judicial confirmation. It proves beyond
any doubt that the missing 1 .9 billion euros
wasn't stolen by some rogue hacker. It wasn't
lost in a bad investment. It was a complete fabrication
from the start. It was a fabrication. These men
went to prison for long sentences because they
signed pieces of paper saying money existed when
they knew for a fact that it didn't. It effectively
closes the loop on the entire mechanism. Wirecard
used the TPA structure to create fake revenue
out of thin air. They used trustees like Shem
Mugaratnam to create fake verification for that
fake revenue. And they used the complexity of
international banking with all its different
jurisdictions to hide it all from the auditors
sitting back in Germany. And it worked. For over
a decade, it worked. That is the really scary
part. If the Financial Times hadn't been so dogged,
so persistent, or if the pandemic hadn't caused
market jitters that ultimately led to that special
KPMG audit. They might still be doing it today.
It's a chilling thought, isn't it? It really
is. It makes you realize just how much of our
global financial system runs on, well, on blind
trust. It's the trust economy. We trust the bank
statement is real. We trust the auditor stamp
means something. We trust that a company in the
DAX 30 must be legitimate because, well, it's
in the DAX. Right. Wirecard weaponized that trust.
They knew that people wanted to believe in them.
Germany wanted a tech champion to rival the giants
in Silicon Valley. Investors wanted those incredible
returns. Exactly. Confirmation bias is a hell
of a drug. When you looked at Wirecard, if you
wanted to see a spectacular success, you saw
a spectacular success. If you looked closely,
you saw a crime scene. But most people, including
the regulator, didn't want to look closely. And
the regulators, Bafin, they were the worst offenders
of all. They were so protective of the home team
that they completely forgot their job was to
be the impartial referee. It is the Enron of
Germany, but you're right, in some ways it's
worse. Because with Enron, the regulators and
the authorities eventually caught on and prosecuted
them. With Wirecard, the regulators were actively
fighting against the people who were trying to
expose the fraud. It's a stain on Germany's financial
reputation that I think will take a generation
to wash out. I agree. So, sitting here now...
In early 2026, looking at the 10 -year sentence
for Shannon Bogaratnam, looking at the ruins
of what was once a 24 billion euro giant. What
is the big takeaway from all this? For me, it
comes down to one word. Complexity. Whenever
a company tells you, oh, our business model is
too complicated for you to understand, or we
make money in these very complex ways in faraway
places, run. Complexity is camouflage. Always.
Wirecard used a web of subsidiaries, TPAs, trustees
in Singapore, and endless excuses about privacy
laws to hide a very, very simple truth. They
weren't actually making any money. Right. Genuine,
healthy businesses can usually explain how they
make money in two sentences. We sell phones.
We fly planes. We sell coffee. When the answer
becomes a flowchart involving three continents
and an obscure trustee in Singapore, you should
be very, very worried. And I keep thinking about
the whistleblowers. Pei Viel, the senior legal
counsel in Singapore who leaks those initial
documents to the FT. He risked his entire career,
his personal safety. He's a hero, a genuine hero
in a world of dark base and hackers and state
level intimidation and legal threats to stand
up and say this is a lie is an act of incredible
bravery. It really is. So we have form of closure.
The fraudsters are either in jail or they're
in Russia. The company is gone. But it still
leaves you with this really nagging question.
And what's that? If a DAX 30 company, a national
champion audited by a big four firm like EY.
regulated by Bafin, could successfully fake 1
.9 billion euros in cash for a decade? Where
else is this happening right now? That is the
question that should keep all of us up at night.
There is almost certainly another wire card out
there. Maybe it's not as big. Maybe it's not
German. But somewhere right now, there is a company
posting record profits based on a spreadsheet
that is nothing but pure fiction. And on that
absolutely terrifying note, I think we're going
to wrap it up. Sleep tight, everyone. Check your
sources. Be skeptical of those hockey stick growth
charts. And maybe, just maybe. Double check if
your favorite fintech darling used to run a telephone
psychic hotline. Thanks for listening to The
Deep Dive. Stay curious. We'll see you next time.