Wirecard falsified customer details to secure €900m investment from SoftBank
Wirecard falsified customer data and lied about internal records to secure a €900 million investment from SoftBank that was seen as a vote of confidence in the German payments group after the Financial Times began raising concerns. questions about its activities in 2019.
Details of the deception, which are at the heart of Munich prosecutors’ criminal case against former chief executive Markus Braun, show Wirecard’s efforts to secure investment from the Japanese investment conglomerate.
SoftBank’s backing also helped Braun raise €500 million in additional debt the year before Wirecard collapsed in June 2020, when he admitted half of his revenue and €1.9 billion corporate cash did not exist.
SoftBank’s investment in Wirecard convertible bonds was announced in April 2019 and was followed by the sale of a €500 million bond to other investors. The funds helped keep Wirecard’s cash-intensive operations afloat.
During due diligence on the deal, SoftBank was rocked by Financial Times reports in April and May 2019 that flagged Wirecard’s reliance on obscure trading partners in Asia.
Citing a Wirecard spreadsheet, the FT said three outsourcing partners in Manila, Singapore and Dubai accounted for half of its revenue and nearly all of its operating profit.
At the time, chief executive Braun dismissed the FT report as ‘simply untrue’.
SoftBank has always insisted on seeing a list of Wirecard’s most important customers who have been handled by these outsourcing partners, according to people familiar with the details.
Braun initially denied that request, arguing it was confidential business data, the people said. As a compromise, Braun and Akshay Naheta, then a senior executive at the tech investor, agreed that SoftBank representatives could view customer data on a computer at Wirecard’s Munich headquarters.
Because the three outsourcing partners had no real customers, Wirecard second-in-command Jan Marsalek and a colleague compiled a list using real customer data from Wirecard’s operations in Europe, according to people familiar with. folder.
SoftBank representatives saw the fake client list on a computer screen in Munich in late July 2019, the sources added.
The previously unreported deception preceded a much larger effort to falsify transaction data by Marsalek and others during a special KPMG audit in the final months before Wirecard’s collapse.
Braun and two other former executives of the company are set to stand trial later this year for fraud, breach of trust and market manipulation.
Braun denies any wrongdoing and claims he was also a victim of the fraud.
Wirecard chief accounting officer Stephan von Erffa, who has been charged with fraud and denies any wrongdoing, admitted falsifying documents in an isolated event during the KPMG audit.
Munich prosecutors have established that Wirecard knowingly gave SoftBank inaccurate information, according to people familiar with the matter. During due diligence, the Japanese investor also insisted and received a written guarantee from Wirecard that the spreadsheets on outsourced operations cited by the FT did not exist.
Several employees later testified that the spreadsheets were real and had been updated by Wirecard’s accounting team for over three years.
Von Erffa told Munich prosecutors that Braun knew the spreadsheets were genuine, according to people familiar with the matter.
Braun’s spokesperson said in a statement that the FT’s description of the events was “false” and “rejected by [Braun’s] defence” and that they reflected an “inaccurate understanding” of the fraud, as the contractor partners were real and the funds were misappropriated without Braun’s knowledge.
Softbank declined to comment.