The former chief executive
of Wirecard, Marcus Braun, has been arrested. Auditors revealed that nearly $2 billion has gone missing. This has been a wild ride for Wirecard. You only need to look at the share price over the past five days. Wirecard is a payment processing company. At their height they were
worth 22 billion euros. Wirecard was supposed
to be Germany's ticket into the high-tech world. They were supposed to be
the pride of German fintech. Wirecard spectacularly imploded. Its stock went to penny stock
level and now it's worthless. That is quite remarkable. Never before has a company on
Germany's DAX just gone bust. Is there a corporate fraud going on here or is it something more mundane? The business model was fraudulent right from the beginning. It was bank robbery and
investors and creditors they're seeking more than 12
billion euros in repayments. The two key players are two Austrians. The chief executive, Markus Braun and his deputy, Jan Marsalek. Right now, Marcus Braun is in jail and he's facing charges. It's far more difficult to know
anything about Jan Marsalek because he's missing. There is reason to believe
that he had close ties to secret services around the world, so he had the means
and obviously the money to just vanish without a trace. Might he be in Russia?
Might he be in Asia? Might he be on some deserted
island? Nobody really knows. He's on the most wanted list of Interpol, but so far, nobody's been
able to track him down. The German economy mostly
builds on car-makers and engineering companies,
which is sort of the past. Wirecard was that bright
new future-oriented company and Wirecard promised
that they would deliver electronic payments and in the future they would become a super big company. They started as a startup, essentially, around 2000 and grew up around
the, you know, what some people might find, slightly
unappetizing businesses of pornographic content and gambling and then turned themselves
into a main player in the global payment
facilitation business. Markus, when you look at Wirecard's share price, it's eye-watering. The incredible acceleration in the valuation of your business. I think we are showing enormous growth, I have no fear at all
in terms of evaluation. Starting in 2010, Wirecard's
profits began to explode and show a very, very solid and almost too good to believe growth. Wirecard at some point replaced
Germany's second largest lender, Commerzbank, and its
market value of over 22 billion was more than Deutsche
Bank, the biggest lender, and Commerzbank combined.
Which showed the significance and how things have changed
in the German economy. There's a chap called Jan Marsalek, who was the chief operating officer. There is another guy called
Markus Braun, the CEO. And while we know some elements of what led to the fall of this company, there were some elements
that we didn't know about. I met Jan Marsalek just
for a background chat, and he was quite frank about his youth, that he was mostly interested
in IT and programming. I can only assume he was a classical nerd when he was younger. When he rose through
the ranks at Wirecard, he developed a taste for the extravagant. He lived the life of a high roller, looking back he spent more money than what he was earning
as a Wirecard executive. Jan Marsalek was close to a commander of a Russian mercenary army
who took him to the Syrian city of Palmyra right after
that Russian mercenary army expelled ISIL from the city. He flew in there, he went to the beach and fired around Kalashnikovs I was told. He even took a small piece of
an ornament back to Germany. I saw it, I held it in my own hands. Part of the Wirecard
story that we've uncovered is a little bit sort of
boys' fantasies - you know men in expensive suits and fancy
watches, champagne parties. Investors are impressed,
Markus, by the growth. If you look of the last 15
years your up 40,000 percent. Interestingly, the collapse of Wirecard starts around the time where
Wirecard is at its peak. And that is when they
joined the DAX Index. And that's really a huge achievement to be among the 30 biggest
companies of Germany. At their height, its
market value was at 20, 22 and a half billion euros. The illegitimate part of
Wirecard was, in large parts, a business that happened
far away from headquarters. So these were businesses that were in Asia or in the Middle East, businesses largely where Wirecard had no
sort of operating license of its own and, therefore,
relied on partners to work with them. Unknown to the public and wider audience, Wirecard faked profits and transactions. How did they do this? They had a business that was called third party providing business. They did business with outside partners that processed transactions in countries where they had no license. And these businesses provided Wirecard with fake profit statements and fake balance sheet statements. Wirecard in reality
didn't turn out a profit. If you stripped the profits
from the fake business which provided fake revenue
and profit statements, it was unprofitable at least since 2016. Basically the entire
company was a smoke screen. The trouble of the way Wirecard was set up was that nobody, or very few people, had a global overview of the company. A lot of people knew a little sliver. The auditors, Ernst & Young, for years, signed off on their accounts. And so there doesn't seem to
be anything untoward there. There didn't seem to be
anything illegitimate, but the questions kept coming, particularly from the Financial Times that started publishing
reports around 2018 saying that there were problems
with accounting in Asia. And every turn Wirecard said, "No, this is not true,
this is legitimate." They often would raise their forecasts as to appeal investors and they managed to wiggle
out of this, time and again. Let me ask about the scandals that we've seen in the stock market. I do not, too much,
look into controversies. In the Philippines, they had
an account with two banks on which about $2 billion were sitting. It got from the bank fake
balance sheet confirmations, and this is how the entire
smoke screen worked. There did, however, come a point around the time of 2019, 2020, where they enlisted the
help of a second auditor, and that was KPMG. And KPMG was asked for a
special audit of the books. They flew down to Manila and initially nobody
doubted the money was there. They just wanted to see, can
this be tapped at any time, is this free liquidity? What we now know is that a
lot of this was fictitious, that some documents were outright forged, that some employees at these banks were not who they said they would be. Knowing now that this money never existed, that obviously posed a huge
problem for Jan Marsalek, who was faced with a
daunting task of coming up with several hundred millions of euros that he could transfer
from Asia to Europe. As we know, that never happened. And that was sort of the
beginning of the end of Wirecard, as we know it. The scandal that has been brewing over the last week is
now definitely deepening. The initial employees said no money, none of Wirecard's missing 2.1 billion ever entered into the Philippines. The company has temporarily suspended its outgoing COO, Jan Marsalek, but it seems there will
be further questions for the business to answer. Jan Marsalek was suspended on June 18. Marsalek went into Braun's
office for one last time and someone who happened
to stumble into the room said there were intense discussions. Braun kept talking at Marsalek, and soon thereafter Marsalek went missing. We're looking at a space of a week, from Marsalek existing Wirecard HQ to Wirecard going up in smoke. More details on this to come, but again, a clearly unusual scandal. In some ways, Jan Marsalek is sort of a mirror image of Wirecard. There is the visible, the legal part, if you want, of Jan Marsalek, which is he's the chief operating officer of a large German company, and then there is the murkier,
opaque part of Jan Marsalek, which is dealing with
mercenaries, traveling to Syria. There is one place where
it's easy to get a sense of who Wirecard and Marsalek was, and that is this opulent villa that sits in the middle of Munich. This is a place where Jan
Marsalek had his residence. He didn't formally live there, but he had all the fripperies
that you might want. I was granted access to the building by someone who was authorized and I developed my own little
obsession of finding out what was going on. There's a room with some artwork, but it also has that kind of
appearance now of being a place that was hastily and quickly abandoned. Most of the furniture was
removed from the place but there was still two
intensive care bed units. In the basement, there was a huge locker with drugs inside uppers,
downers, stimulants. Its quite extraordinary to have 2 billion lost and not know where it is. I was told that Marsalek and his gang funneled out 1.5 billion of the company. We know he milked the company dry by transferring a lot of loans
that the company provided to entities that he then
secretly controlled abroad. Investors and creditors, they're seeking more than 12
billion euros in repayments. How can a error, a mistake, a scandal of that size,
happen in a DAX corporation. We have many questions that
we want to ask the government in the following weeks. These guys, these companies
have auditors, right? Is it time to audit the auditors? The decline of Wirecard is
obviously a huge embarrassment for a lot of constituencies out there. There are the auditors, who signed off on these accounts for years. And the question that's out there and that remains unanswered is, why did they not detect what was going on? I mean, Ernst & Young is
one of the big auditors. They should know what's
going on at these companies. This company had all kinds
of signs, reported by media going back a year or two now and yet people still gave
the company the benefit of the doubt, over and
over and over again. How did Wirecard get so
much political support? The prosecutors have for a long time turned a blind eye on Wirecard, and for the entire institution
apparatus of Germany, it is very embarrassing. Investors, first and
foremost, have lost out here. And among the investors, spare
a thought for Marcus Brown, who was the biggest
investor in the company and he went from billionaire
to now sitting in jail. So quite a downfall for him. Most people might not
have too much sympathy, but if we speak of losers,
he's certainly among them. Wirecard was fraud probably
right from the beginning. It's the biggest financial
scandal in Germany. And the amount of money that was lost, it was probably the biggest bank robbery that happened in this country.
