Financial fraud quadruples Enron’s sudden death of German electronic payment giant

Subtitle: August 21 from the German blue chip index (daX After the removal of the “fairy tale”, the myth of wirecard, which is regarded as the future star of German financial technology industry, will come to an end, and even become an indelible stain on German financial regulation. < / P > < p > the situation of the German electronic payment giant wirecard this year may provide a perfect interpretation of the “fairy tale disillusionment”, and the death of its executives makes people feel as if the plot of the novel has come into reality. The scandal involves a large number of well-known investment banks, funds and even German politics. < / P > < p > in June this year, the audited wirecard was found to have a cash balance of 1.9 billion euro (about 15.7 billion yuan), and the company finally admitted that the 1.9 billion euro did not exist at all. < / P > < p > subsequently, some of the company’s top executives quickly fled and disappeared, and some former executives died quietly. How is the huge financial “black hole” whitewashed? The investigation of the truth can take months. < / P > < p > the German Stock Exchange said it planned to remove wirecard, a payment company caught in a financial fraud scandal, from the German blue chip index (DAX 30) later this month. It is reported that the new component stocks of DAX index will be announced at 20:00 GMT on August 19, and will take effect after the German stock market closes on August 21, which will also be the last day wirecard stays in the DAX index. < p > < p > so far, the myth of wirecard, which once rose like a fairy tale and is regarded as the future star of German financial technology industry, will come to an end, and even become an indelible stain on German financial regulation. As the scandal continues to ferment, the current German finance minister Scholtz, who announced not long ago to participate in next year’s prime minister election, has also cast a shadow on his election path. < p > < p > wirecard was established in 1999 and launched Internet payment service at the end of 2006, which allows users to open an account by registering their wirecard account online. < / P > < p > after the rise of e-payment in Asia, Markus Braun, the CEO of wirecard, found business opportunities and made a big push into Asia, setting up subsidiaries in Dubai, Singapore and the Philippines. < / P > < p > in 2018, wirecard replaced Commerzbank and joined the DAX 30 index. Since then, the company’s market value at its peak reached 24 billion euros (about 1977 billion yuan). In April last year, wirecard also received $1 billion (about 6.9 billion yuan) from sun Zhengyi’s Japanese Softbank group to help it enter the Korean and Japanese markets. German Chancellor Angela Merkel also recommended this payment company to the industry when she visited China in September last year. At that time, under the prospect of a new round of opening up of China’s financial industry, wirecard was considered to be the most likely German company to enter China’s payment and settlement industry. Then, in October last year, wirecard announced that it would buy up to 80.7 million U.S. dollars (about 558 million yuan) to acquire all the shares of Shang Yin Xin Payment Service Co., Ltd. (hereinafter referred to as “shangyinxin”). After the transaction, it held 80% of the shares of ICBC, and two years later, it purchased the remaining 20% with options. However, on April 30 this year, ICBC received a huge fine from the people’s Bank of China. For 16 illegal acts such as misappropriating reserves and suspending payment business without authorization, the central bank confiscated 116 million yuan, which is the highest amount of penalty received by China’s payment industry so far. < p > < p > according to Tianyan, wirecard still owns 9.36% of the equity in ICBC. On June 2, shangyinxin company was announced as a dishonest company by the Supreme People’s court for violating the property reporting system. The company and its founder Lin Yao were restricted by the court for high consumption. < p > < p > in June this year, a financial scandal broke out in wirecard. Ernst & Young said that it was unable to verify the company’s 1.9 billion euro cash deposited in Philippine banks. Two Philippine banks subsequently declared that the company was not on its customer list, and the relevant documents and certificates provided by wirecard were forged. < p > < p > just a week later, on June 25, wirecard filed for bankruptcy with the court, and it was exposed that it owed nearly $4 billion in debt. The company’s stock price fell 97% a week, and the company’s executives, including CEO and coo, left. A spokesman for the Munich state prosecutor’s office said that former senior executives of wirecard were suspected of conspiring with others to exaggerate the company’s income by falsifying business, creating the illusion that the company has considerable financial strength, and successfully raised 3.2 billion euros (about 26.4 billion yuan), which is a “commercial Gang fraud”. < p > < p > in the capital market, the “Enron incident” in the United States has already become a famous case of accounting fraud. This year, Ruixing coffee’s 2.2 billion yuan false transaction also shocked the outside world. Wirecard’s 1.9 billion euro counterfeiting scale, equivalent to 4 times Enron and 7 times lucky, has become a major financial scandal in Germany, causing people to question the German Federal Financial Supervision Agency (Bafin) under the supervision of current German finance minister Scholz. < / P > < p > in fact, as early as January last year, it was reported that the German federal financial supervision agency had received reports from anonymous informants about the company’s irregularities and financial problems, and launched an investigation. However, the German financial regulatory authority subsequently took rare measures to prohibit short selling of wirecard shares in order to reduce the damage caused by these accusations. This is the first time in German history that it is officially forbidden to short a single stock, and it is rare in the world. The director of the regulatory authority has apologized. At the time, he said, the agency had to do so because it found signs of possible market manipulation, including insider trading. In addition, many other well-known international investment banks and funds have also been involved. According to wirecard, BlackRock group, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, Societe Generale of France and others are the main institutional investors of wirecard. The day before the scandal, Bank of America also increased its stake in wirecard by 0.28%. Because of the huge losses caused by wirecard, German commercial banks gave up the annual profit target. < p > < p > in the wake of the scandal, wirecard founder and President Markus Braun resigned and surrendered, was arrested twice and is currently under judicial investigation. Other detained company executives include Stephan von erffa, the recently suspended accountant, and Oliver bellenhaus, who runs the Middle East credit card system in Dubai, who was arrested after returning from Dubai earlier this month. Prosecutors suspect that these executives are conspiring to defraud, misrepresent and manipulate the market. < / P > < p > but the most legendary is Jan marsalek, former chief operating officer and Asia business head of wirecard, whose whereabouts have been a mystery since the end of June and triggered an international search. < / P > < p > it is reported that masalek was extremely vigilant and had fled before the German detention order was approved. At that time, it was reported that masalek fled to Manila, Philippines on June 23, and then disappeared the next day after transferring to China. But since then, Philippine authorities have said immigration officials have forged information about the entry and exit of masalek, who does not appear to be in the Philippines at present. In mid July, there were also media reports that he might go to Belarus or Russia to hide after entering the Philippines, but the police still have no clear clue. Last week, the death of a key financial fraud figure who had a close relationship with masalek was declared dead by the Department of justice of the Philippines, adding to the mystery of masalek’s story. < / P > < p > the deceased, Christopher Bauer, 44, was involved in the establishment of wirecard’s first branch in the Philippines in 2007, and then left, but had close business contacts with wirecard through two partner companies. In early March, together with masalek, he received KPMG’s special auditor and Ernst & Young auditor in Manila. According to the two executives at the time, Bauer’s business involves “high-risk customers” in online gambling and pornography. Philippine authorities say an investigation into the wirecard scandal will take months. As many as 50 individuals or institutions are being investigated by the authorities’ anti money laundering agency. < / P > < p > at present, Interpol has raised the wanted level of masalek to the highest level of red. The German federal criminal police also officially published posters and photos on its website, television and social media, calling on the public to continue to help track masalek’s whereabouts. A vigorous international search is continuing.