Inside the Exposure of Wirecard’s Fraud ⇥ newyorker.com

Ben Taub, the New Yorker:

It was against this backdrop [of the “golden age of fraud”] that German institutions supported Wirecard. The country’s traditional industry is in cars and energy systems — BMW, Volkswagen, Daimler, Siemens. Wirecard represented the nation’s challenge to Silicon Valley, its leap into financial technology and the digital era. “German politicians were proud to be able to say, Hey, we have a fintech company!” Florian Toncar, a German parliamentarian, observed. Wirecard’s rising stock price was regarded as a sign that the business was dependable, that its critics were clueless or corrupt. The German business newspaper Handelsblatt called Wirecard’s C.E.O. a “mastermind” who had “come across the German financial scene like the Holy Spirit.” But it was not regulators or auditors who ultimately took the company down; it was a reporter and his editors, in London.

[…]

“You cannot understand Wirecard if you understand Wirecard only as fraud,” Felix Holtermann, a financial reporter at Handelsblatt, told me. “It’s not a Potemkin village, it’s not a Bernie Madoff case.” According to Holtermann, who has also written a book about the company, Marsalek routinely “used his power to override Wirecard’s very, very small compliance department” to issue bank accounts, credit cards, and debit cards to Russian oligarchs who were on European financial blacklists. “Germany was, and still is, the money-laundering saloon of Europe,” he said. “Only the biggest washing machine broke.”

The story of Wirecard is outside my usual reading catalogue; I do not spend a lot of time on the Financial Times’ Alphaville pages. So it is unsurprising that I missed the initial cracks of this story as they were reported in 2015. In a way, I am glad I only experienced this for the first time through Taub’s article. It is staggering.