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Wirecard Round-Tripping Scam with Singapore & Luxembourg Companies

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Carlos Haeuser, was not only a long-standing executive of Wirecard, but his wife, Brigitte Axtner Haeuser is Head of Digital Sales for Wirecard and a named director of WDAH in Singapore in the 2018 annual report.

As we’ve been searching for where Wirecard’s MCA business is (and the bulk of it looks not to be in Brazil, Turkey or Europe), we’ve come across a number of details that have made us take a second look at certain aspects of the business. There are some very odd coincidences and complicated relationships between Wirecard, its current and former executives, and third-party companies, many of which are suspicious in themselves, and, when taken together, raise yet more questions.

A company in Singapore, oCap Management, formerly called Senjo Trading, whose MD, Carlos Haeuser worked for 13 years at Wirecard as a senior executive, started claiming to offer merchant cash advance in Singapore in November 2018 at around the same time it received €115M ($131M) of funding from an unknown third party. (Coincidentally, this is also the time when Wirecard started talking about MCA). By the end of December 2018, €113M of these funds had been lent out by oCap, without any sales people and without any advertising spend, and with distribution expenses of just $38K.

Carlos Haeuser, was not only a long-standing executive of Wirecard, but his wife, Brigitte Axtner Haeuser is Head of Digital Sales for Wirecard and a named director of WDAH in Singapore in the 2018 annual report.

Carlos Haeuser, was not only a long-standing executive of Wirecard, but his wife, Brigitte Axtner Haeuser is Head of Digital Sales for Wirecard and a named director of WDAH in Singapore in the 2018 annual report.

Until 2017, oCap was involved in trade financing and ship management, but also referenced etrade finance and blockchain technology on their website. However with Carlos’ arrival, and promotion to MD on the 9th of November 2018, the business shifted track to offer MCA. Their level of success in just one month seems remarkable considering that, despite claiming to have facilitated $100M of loans in 2017 they had zero revenues in 2017 from interest income. Rather, in 2017 all revenues – on the basis of their audited accounts – were derived from ship management fees.

Following the €115M loan in late 2018, and in just 6 weeks, oCap somehow lent all that of money onwards in EUR, USD and GBP denominated loans from Singapore.

Furthermore in 1Q19, when Wirecard’s MCA program grew further to €400M, oCap formed a Luxembourg subsidiary that is described as “acquiring or assuming the risks associated with loans receivable”.

Why do we think this is interesting?

oCap has multiple close ties to Wirecard, making the timing of their MCA business launch interesting:

  • oCap was formerly known as Senjo Trading. Wirecard lent €25M to Senjo Group, a related business, in May 2017. Senjo was also widely reported as being a material driver of Wirecard revenues, EBITDA and receivables.
  • oCap’s CEO and MD, Carlos Haeuser had been a long-serving Wirecard executive, joining the firm in 2005 and promoted to EVP in 2010. He left the business in March 2018 to join oCap, although paperwork suggests there was some overlap between his time at Wirecard and oCap with his new appointment as director of oCap taking place on 5th March while he only officially left his previous roles as CEO of Wirecard Turkey and CEO of Wirecard Technologies on 15 March 2018 and 22 March 2018 respectively (Source ACRA).

Carlos Haeuser is the CEO of oCap, and was appointed a director on the 5th of March 2018.

On the 15th of March 2018 Carlos resigned as the Chairman of the board and MD of Wirecard Turkey (replaced as Chairman by Wirecard COO Jan Marsalek) (Source).

On the 22nd of March 2018, Carlos was removed as CEO of Wirecard Technolgoies Gmbh (Source).

  • Of course, it’s also interesting that Turkey is where Wirecard has previously claimed to be doing significant volumes of MCA despite their audited financials showing nothing of the sort and worth remembering that MCA is illegal in Turkey.
  • oCap has also had two auditor resignations so far in 2019. T Ravi, their auditor of 2016 and 2017 resigned in early February 2019 to be replaced by BDO, who resigned in July 2019 without signing the 2018 financials. They were replaced by the less well known OA Assurance who eventually signed the annual report in August 2019. Related party disclosures changed between the 2017 and 2018 accounts – perhaps this is why BDO did not sign the accounts?

While this could all be a coincidence, it is worth examining closely in light of the criminal “round-tripping” investigation that Wirecard is facing in Singapore, where the CAD is investigating Wirecard for allegedly moving money from its balance sheet to undisclosed related parties and then back as revenue, earlier in 2018 than the events described above. We think the CAD in Singapore should be aware of the suspicious timing and similarities of these events.

The FT has previously reported that Senjo (now oCap) had significant unpaid receivables at Wirecard and that a substantial portion of their revenues and EBITDA come from Senjo. It seems reasonable to conclude that Wirecard was the 3rd party that lent the €115M to Senjo. If any of this money has made it back to Wirecard to pay-off the receivables that are owed by Senjo/oCap – that would be round-tripping.

Wirecard claims that it is lending €370M via MCA. This number has fallen, since the previously stated €400M. They’ve also changed their statements regarding where this money is being lent, telling investors at the H1 results call that it’s now less than 1/3 in Brazil and Turkey. According to their CPO, it’s not in Europe. There aren’t a lot of places left it could be, and Wirecard refuses to disclose to investors where it is (contrary to Markus Braun’s statements re transparency).

Wirecard management told analysts and investors that they had no relationship with Ocap and that there had been no relationship with Carlos Haeuser since January 2018.

The accounts show a different story.

In November 2018, Ocap received an unsecured, euro-denominated €115.6M loan from an undisclosed party, which they managed to lend out entirely by year-end. Wirecard’s 2018 annual report states, when referring to merchant cash advance, “a volume of €115.6M was already earmarked for this purpose by powerful financing partners”. The newly filed WDAH reports show that Wirecard Asia borrowed from Wirecard Group in order to make an onward loan of €115.6M. A euro-denominated loan made in Singapore of the exact same amount as that received by a company with strong ties to Wirecard strongly suggests this is a loan to Ocap, contrary to management’s claims.

This report indicates that Wirecard has been untruthful in their communication with investors about a material transaction of >€100M.

Wirecard has misled investors about who this money was lent to, and they failed to disclose the fact that the loan appears to be a related-party transaction:

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The Ocap CEO, Carlos Haeuser, was not only a long-standing executive of Wirecard, but his wife, Brigitte Axtner Haeuser is Head of Digital Sales for Wirecard and a named director of WDAH in Singapore in the 2018 annual report. In addition, Ocap/Senjo is an important client for Wirecard: in the Wirecard internal documents released by the FT, it is shown as the second largest customer of CardSystems Middle East (CME), Wirecard’s most profitable subsidiary.

It is also concerning that, within six weeks of making the loan, Wirecard made a €5M allowance for a potential loss. This stands out as an unusual allocation, particularly bearing in mind the relationship between Ocap and Wirecard directors. If Brigitte saw Ocap as such a credit risk, should WDAH have sanctioned lending the €115M to Ocap?

The loan was extended following the balance sheet date, with partial repayment of the loan extended until 2020. This would suggest the business is not doing as well as hoped. Were these late 4Q transactions an avenue to circulate money to CME and pay down the aged Senjo receivables referred to by the FT?

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Holvi Mastercard temporarily suspended due to Wirecard insolvency

Wolfgang Holzem

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Holvi Mastercard has been temporarily suspended due to recent events in connection with the insolvency of Wirecard AG

How did this happen?

The UK Financial Conduct Authority (FCA) has suspended service for Wirecard Card Solutions Ltd (WDCS) earlier today. WDCS is a subsidiary of Wirecard AG and issues the Holvi Business Mastercard. This decision was taken by the FCA without any prior notice.

What does this mean for you?

All other functions of your Holvi account are still fully available. You can still invoice, receive and transfer funds. Please be assured that all Holvi customer accounts and funds remain safe, secure and accessible at all times – no Holvi accounts have been impacted by this event. This is because all Holvi customer funds are segregated and held in separate accounts in European banks in Finland, Sweden, Denmark, the UK and France.

No customer funds are held by Wirecard AG. Your money and Holvi account are safe.

Your trust is our top priority. We’re actively working on a solution and will continue to update as soon as possible.

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Wirecard Board wants to continue Business in the UK and discussion are ongoing with the FCA

Wolfgang Holzem

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The payment processor struggling to survive a balance sheet scandal Wirecard, continues to do business despite the application for bankruptcy. “The board is of the opinion that a continuation is in the best interest of the creditors,” said the Dax group on Saturday in Aschheim near Munich.

The management board made an application for the opening of insolvency proceedings for Wirecard AG last Thursday.

According to the company, the examination of whether insolvency proceedings will be opened continues.

The business operations of the group companies including the licensed units are currently being continued, it said. It is constantly checked whether bankruptcy applications for subsidiaries of the Wirecard Group must also be made. Group companies, with the exception of a small development branch, have currently not filed for bankruptcy.

The Wirecard Bank is currently not part of the bankruptcy proceedings, the payment transactions of the Wirecard Bank are not affected, the company emphasized. Payments to Wirecard Bank merchants would continue to be carried out without restrictions. They are also “in constant communication with the credit card organizations”.

Wirecard Card Solutions has interrupted business

Wirecard Card Solutions Limited, based in Newcastle, “has interrupted its business due to an order from the responsible Financial Conduct Authority,” it said. However, Wirecard hopes to be able to continue operations in the UK with its current global B2B clients.

Current B2B clients include Payoneer, Hovi, Curve.

Measures for this are discussed currently with both the UK and German authorities.

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Deutsche Bank is considering taking over Wirecard Bank

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At the beginning of the week it still looked as if Wirecard’s Bank would also go into bankruptcy because too much customer money had meanwhile flowed out – now it is becoming clear that Deutsche Bank could take over in whole or in part. The Bank is examining possible financial aid in coordination with BaFin, the insolvency administrator of Wirecard AG and the management board of Wirecard Bank, a spokesman said.

According to German media reports, at least one financial investor has also expressed an interest in Wirecard Bank.

The financial supervisory authority Bafin had appointed the Bundesbank as a special representative at Wirecard Bank, who should ensure that no funds flow to Wirecard AG and that business continues.

Wirecard Bank has a full banking license and can offer all financial services. Since the beginning of the year, it has been promoting 0.75 percent interest on checking deposits on the “Boon Planet” banking app, while other institutes hardly pay any interest or even charge fees for fixed deposits.

If the bank had gone bankrupt, the deposit guarantee fund of the private banks would have compensated customers who did not withdraw their money on time.

On the balance sheet, Wirecard Bank is not a heavyweight. According to internal sources, at the end of March it had total assets of 1.6 billion euros, which roughly corresponds to a medium-sized savings bank. The equity at the end of the quarter was 205 million euros and he bottom line was a surplus of 4.7 million euros at the end of the quarter, after 40.8 million in the same quarter of the previous year.

What motives drive Deutsche Bank is still unclear. “We are one of the largest banks in the payment traffic worldwide and that is one of our strengths, a real core business area,” Deutsche Bank board member Fabrizio Campelli told Handelsblatt in an interview published on Friday and “if there are opportunities to strengthen ourselves, we will look at them.”

Deutsche Bank may be targeting Wirecard Bank’s corporate customers in payment transactions, although the first have already turned away. Since the beginning of July, for example, the discounter Aldi Süd has no longer processed credit card payments through the insolvent payment service provider, but through the provider Payone, as the company explained on Thursday. 

The cooperation with Wirecard Bank has since been limited to business with the Aldi gift card. But this has no consequences for customers.

The connections between Wirecard and Deutsche Bank are complex anyway. Last year, on the initiative of the Wirecard Group, there were even informal merger talks with Deutsche Bank, which, however, broke off quickly as Bloomberg news agency reported first. In addition, the bank temporarily granted company founder Markus Braun a private loan of EUR 150 million secured with Wirecard shares.

In addition, one of the auditors, who was responsible for checking the Wirecard balance sheet at EY in 2017, switched to Deutsche Bank in 2018 as chief accountant.

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