Wirecard fugitive Jan Marsalek is alleged to have violated internal governance rules and banking laws in an incident that was flagged to Germany’s financial watchdog Bafin in 2019.
The incident, described in an EY audit report and other documents seen by the Financial Times, shows how Mr Marsalek, a 40-year-old Austrian who is believed to have fled Germany as Wirecard collapsed in June, was prepared to step outside the boundaries of his role as chief operating officer at the payments group.
The documents show that in mid-2018 Mr Marsalek granted a deferral for an €11.25m loan given by Wirecard Bank to a borrower who was in arrears with interest and repayments.
Mr Marsalek, who is now on Interpol’s most wanted list, had no formal role at Wirecard Bank, which was a Bafin-regulated subsidiary of Wirecard. The lender had its own separate executive and supervisory boards which were supposed to act independently and were not allowed to take orders from the parent company.
The bank’s audit report, which flagged other problematic lending and other shortcomings by Wirecard Bank, was filed to Bafin in 2019. It is unclear if Bafin, which that same year banned short selling in Wirecard shares and filed a criminal complaint against Financial Times journalists investigating the company, took any action.
Wirecard, a once high-flying payments group, collapsed into insolvency this summer after €1.9bn of corporate funds were exposed as a sham in one of Europe’s biggest postwar accounting frauds. The bank is to be wound down.
Munich prosecutors are taking a particular interest in loans given to business partners. The total volume of these loans to partners in Asia stood at around €870m in March 2020.
Among the loans was a €11.3m credit by Wirecard Bank in 2016 to Singapore-based company Bijlipay, a Wirecard business partner that offers mobile payments services to merchants in India.
Wirecard’s supervisory board member Tina Kleingarn told German MPs in a parliamentary hearing last month that the Bijlipay loan was one of several examples where Wirecard’s internal risk assessment and the justification of the business case was substandard.
She said that she warned Wirecard chief executive Markus Braun about the weak credit decisions and at the end of 2017 left the supervisory board over concerns about Wirecard’s poor corporate governance.
Wirecard Bank’s loan to Bijlipay became non-performing after less than two years as the company stopped servicing it in mid-2018, documents seen by the FT show. At that point, Mr Marsalek intervened and, in a phone call with Bijlipay, granted a deferral.
According to EY’s audit report on Wirecard Bank, Bijlipay at that point was lossmaking and sitting on an unsustainable level of debt. It was also one of the companies mentioned by a Singapore-based whistleblower in early 2018 who raised allegations of balance sheet manipulation at Wirecard.
The auditor noted that a credit decision was taken “not in line with the internal authority of the bank”.
Danyal Bayaz, an MP for the Greens, said: “Mr Marsalek seems to have treated Wirecard Bank as a self-service store, grossly violating banking regulation rules.”
Florian Toncar, an MP with the liberal Free Democrats, said: “It is becoming ever more clear that the bank [ . . . ] was a part of Wirecard’s system of opaque money flows which was used to organise the fraud.”
Wirecard’s supervisory board was informed about Mr Marsalek’s interference in Wirecard Bank decisions by EY in March 2019. The auditor expressed “concerns regarding the independence of the board of Wirecard Bank AG” as Mr Marsalek acted “as a de facto risk taker” for the bank while not being “integrated into bank’s processes and internal control systems”, documents seen by the FT show.
In a terse subsequent letter to Mr Marsalek and other executive board members, the supervisory board pointed out that the “law requires that the management of Wirecard Bank AG is within the sole responsibility of the management board of Wirecard Bank AG”.
Apart from the letter, however, Mr Marsalek’s behaviour did not have any consequences. The COO was only fired in June 2020 days after it became clear that the outsourced business in Asia which was overseen by Mr Marsalek had been misrepresented to investors for years.
Mr Marsalek’s lawyer and Bafin declined to comment. Bijlipay did not respond to a FT request for comment.