Its meteoric rise led Wirecard, a financial services provider for online payment transactions, to go public in 2005. It was not until 15 years later that the Wirecard system was exposed. In spring 2019, the Financial Times had reported for the first time about inconsistencies with Wirecard’s subsidiaries in Asia and about bogus trades with companies that no longer existed. Because of the fictitious profits, Wirecard had easily obtained loans. When it became obvious that balance sheets and financial documents had been falsified by Wirecard, the stock plummeted. The German BaFin, whose job it would have been to monitor, had not only failed to notice the scandal, it sent McCrum a notice of suspected share manipulation in 2019. But McCrum did not let up until the whole Wirecard abyss was exposed. Dan McCrum testified in the Bundestag’s investigative committee and received journalism awards for his reporting. The economic damage caused by Wirecard is estimated at 30 billion euros. Diplomatisches Magazin spoke with Dan McCrum about his research into the Wirecard case.
DM: Mr McCrum, how did you get the idea that something was wrong with wirecard?
Dan McCrum: I was talking to an Australian hedge fund manager and he said to me, Dan, would you be interested in some German gangsters. And then another so-called short seller approached me called Leo Perry, and we went for coffee in London, and he laid out this whole theory that Wirecard was faking its profits.
DM: And how did he know that?
Dan McCrum: So Wirecard had purchased a whole series of little companies in Asia from places like Singapore, Lao, Indonesia. And what he did is he compared what Wirecard said with what he could find about these companies in public filings and information online. And the two didn’t match. So, and short sellers have this phrase: There’s never only one cockroach in the kitchen. If Wirecard was lying about these things, then it was probably lying about a lot else.
DM: And then you started your research?
Dan McCrum: So I started my research. And it took six months to be able to get a story into print. Does a business have to be this complicated? And I think that was on purpose. I think they made everything about their business as complicated as possible so nobody really could understand it.
DM: You have been threatened?
Dan McCrum: There was this whole crazy series of escalations. It became this cat and mouse battle between me and the Financial Times and Wirecard. It started with legal letters, then hackers, then private detectives following people around. There was the offer, maybe of a bribe, $10 million? I mean, who can’t you buy for $10 million? (laughs)
DM: And did you, for one moment, consider to accept these 10 million? (laughs)
Dan McCrum: There were a lot of jokes like that. I remember we reported it up and the news editor walked over and he was like: “I want some. Where’s my shit?” It’s hard to describe how utterly unheard of something like that is. I mean, it seemed like something from a spy novel. And so we approached it, assuming it was a trap to show that we were corrupt.
DM: And the Wirecard management, they instructed these people to frighten you?
Dan McCrum: Some bits of that we can prove. And, yes, it was very intimidating. Wirecard, you know, started to use a lot of private detectives. The main guy was this charismatic Austrian whiz kid. I sort of want to be spy. And one of his friends was the former head of Libyan intelligence. So he had that guy running some of his spy operations. But, you know, we started to pick up hints that Jan (Jan Marsalek, ex-Wirecard sales director, key figure in the scandal, is on the international wanted list, Editor’s Note) also had some Russian friends. And he was waving around these top secret documents with the recipe for the nerve toxin Novichok. So we started to realise the kind of dangerous people that we were dealing with and that was very intimidating.
DM: How was it possible that the control authorities and the press did not notice anything for so long?
Dan McCrum: People see what they want to see, especially when money is at stake. So part of it was greed. Part of it was the assumption that someone else had looked into it. It's this kind of game where everyone says, well, the auditors must have done their job. And the bankers and the investors. And, you know, we see it's a kind of a timeless story. People have been taken in by fraudsters over and over again. And if you're not expecting it, you know, you go to the Wirecard office in Munich and see thousands of people appearing to do proper jobs. Markus Braun has joined the ranks of the big name technology company CEOs. He’s a billionaire. You know that people have expectations about what those sort of people are like. And it's kind of beyond belief, isn’t it? How could they get to that position if it was all a fraud.
DM: Your newspaper, the Financial Times, was reluctant to publicise the case. Why?
Dan McCrum: I wouldn’t say the Financial Times was reluctant. A lot of it we could not put into print because we couldn't prove it was Wirecard behind the dirty tricks. It was just until we had solid evidence, we didn't have anything to write. And then what surprised us all was how large parts of Germany didn't appear to regard what we had.
DM: Markus Braun, the former CEO of Wirecard, and two other ex-managers were arrested. The charges: fraud, falsification of the balance sheet, market manipulation, breach of trust. The trial will continue in autumn. Will you be following it?
Dan McCrum: Yes, with great interest. And it’s going to be interesting to see what the consequences are in Germany.
Interview Marie Wildermann