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Fraser Perring: Chronicles of Deceit, Part I

A high-profile research analyst who identifies and bets on troubled companies has acquired an unusual and perhaps unwarranted amount of influence in the brief period of time he’s been in this line of work.

Forty-six-year-old Fraser Perring, a resident of Lincoln, England, founded and runs Viceroy Research with two other analysts. Their investigations of what they claim are misleading corporate disclosures or flawed business models have regularly sent the stock prices of their targets spiraling downward.

Perring is a short seller who appears to relish the attention that comes from being publicly bearish on companies in a marketplace that seems largely designed to push stock prices higher. And with no client funds to manage (Perring trades only for his own account) and thus few regulatory disclosures to make, he is free to discuss his globe-trotting lifestyle with a reporter or use his Twitter account to launch broadsides against anything that irks him. His Viceroy Research Twitter account has more than 17,100 followers and his personal account has 4,471.

His brash, unapologetic approach to the traditionally closemouthed, insular business of short selling drew significant attention, with Perring snagging an endorsement from the well-known former fund manager Marc Cohodes in a 2018 Bloomberg News profile and striking up dialogues with influential hedge fund managers like Bronte Capital’s John Hempton and Valiant Capital’s Eduardo Marques.

Short sellers rarely pass up an opportunity to critique an executive’s duplicity or accuse brokerage analysts and auditors of compromising their ethics for money. Of course, short sellers need not be saints, but someone who makes his money pointing out the market’s con artists shouldn’t be one himself.

But as revealed by a seven-month investigation by the Southern Investigative Reporting Foundation, Perring is a charlatan of the first order, with a brazen multiyear record of personal and professional deceit. It makes one wonder, If Perring is fudging the truth to reporters about houses and cars, what else is he not on the level about? A lot, it turns out.

Take Perring’s globe-trotting lifestyle. In January, Mail on Sunday reported that he owned houses in London, New York City and Oregon, liked to race supercars and has a Mercedes-AMG valued at 200,000 pounds. It’s certainly a remarkable picture of what Perring had achieved since mid-2012 on Wall Street. But property records and asset searches for both the houses and the car came up empty. Jamie Nimmo, the Mail on Sunday reporter who wrote the article, told the Southern Investigative Reporting Foundation that Perring had been the source of those details.

The first part of this investigation lays out Perring’s erratic and troubling conduct, including some dubious methods to generate interest for his research on stock message boards and his impersonating a well-known hedge fund manager. Part two will examine the real forces backing and benefiting the business model of Perring and many other activist short sellers.


Born August 5, 1973, in Canterbury, England, Fraser John Perring spent his early years on his parents’ pig farm in Cornwall before heading off to boarding school. He has told people that he attended Nottingham Trent University and studied a prelaw curriculum; the university declined to confirm this, citing privacy concerns.

What Perring did from age 21 to 38 is not particularly well-known, although it included stints as a pub worker and a chef. When asked to provide a copy of his résumé covering this period, Perring refused. And in an October interview with the Southern Investigative Reporting Foundation, his wife Jeannette also declined to discuss his background “out of respect.” She and Perring, who have been separated for years, are “going through the process” of obtaining a divorce, she said.

His parsimony with dispensing the truth can be traced to the summer of 2012 when Perring turned his day-trading hobby into a career.

See more detail in “A Short Foray Into Social Service” on how Perring’s conduct as a social worker gives a hint about his later Wall Street behavior.

Perring focused his efforts on deep-dive research and trading of the many problem-ridden companies listed on the London Stock Exchange’s Alternative Investment Market, or AIM. Launched in 1995 as a way for embryonic companies to access public capital (reminiscent of Nasdaq in the 1980s), AIM by 2012 was less a showroom for promising startups than a lightly regulated twilight zone for penny stocks.

The exchange’s relaxed listing requirements have often attracted companies whose weaker asset bases and modest finances have prevented them from qualifying for more established exchanges. The managements of numerous AIM-listed companies have developed a reputation for being aggressively promotional as they strive to boost their stocks’ share prices. This has frequently presented attractive opportunities for short sellers to await the expected decline in stock prices after companies fail to live up to their promises.

That Perring (or any short seller) would be attracted to AIM-listed stocks is perhaps not surprising. But the way he went about things was.

Ian Hollins, childhood friend

In 2008 Perring created an account with ADVFN, a London-based message board that is popular with day traders. Starting in 2010 he began to frequently post there using the name FJP73 and gradually built up a following through posts that were alternately informal and deeply researched. Then Perring’s posts started to receive comments from someone with the handle Ian Hollins — supposedly his childhood friend and a trader.

Ian Hollins’ posts initially promoted Perring’s ADVFN posts. Sometimes Hollins’ support was subtle and at other points it was downright sappy, like when a Hollins post said about Perring, “I am surprised you waste your valuable time coming on this thread.”

Eventually the posts of Hollins (described in his own comments as a London trader of 18 years who moved to Jakarta, Indonesia, for tax reasons) began to disclose how a good friend (presumably Perring) had provided him valuable advice to “de-risk”  investments.

In April 2013 Perring launched a no-frills stock commentary website Erratic Market Coverage, with Hollins listed as a contributor. While Perring wrote nearly every post, one of the few posts attributed to Hollins touted Perring’s work: Hollins’ April 17, 2013, post referred to Perring’s valuations of gold mining stocks as “excellent” and called him “a far better trader than I.”

(Perring has since reassessed his own trading skills: In the January Bloomberg News profile cited above, he claimed he was not a very good trader. Perring also stated as much in several 2017 and 2018 conversations with the Southern Investigative Reporting Foundation, noting that his poor trading skills led him to work harder as an analyst.)

In June 2015 Perring archived documents on the open publishing platform Scribd that were related to litigation between Churchill Mining PLC and Indonesia (a favorite message board topic for Perring) as well as 23 pages of Hollins’ message board posts on the subject.

A casual ADVFN visitor might not have heavily scrutinized Hollins’ posts but they had an odd timing to them. Hollins’ first posts appeared in August 2010, with only a dozen more added from January 2011 to June 19, 2012. And comments from the FJP73 moniker (of Perring) stopped on Dec. 19, 2010, until 2013. It certainly looks like the hands behind the FJP73 and Ian Hollins accounts were busy doing something else for almost 19 months. Indeed, Perring was busy working as a social worker from Jan. 1, 2011, to June 27, 2012.

But why would the Hollins personage — someone supposedly rich enough to be in tax exile — spend countless hours writing and responding to message board posts about the fate of penny stocks and the machinations of nearly bankrupt companies?

At first Hollins’ message board posts provided support to Perring (by citing virtually identical investments and research views, all while using a writing style like his). But as Perring’s research career began to gain steam and members of his professional circle went from just day traders to including professional money managers on both sides of the Atlantic, Ian Hollins’ presence also changed. This Hollins persona began to surface as a frequent reference point in Perring’s real-life conversations with his colleagues and investors interested in his research.

In this way Ian Hollins’ public profile grew into one of a brilliant commodities trader who had followed the investment counsel of his close friend Fraser Perring and thus reaped a fortune in London only to now live regally in Indonesia. The implication was clear enough: Unlike Perring, mere ordinary day traders lacked a tight working relationship with an ultrarich friend like Hollins.

This past summer London-based hedge fund manager Matthew Earl shared with the Southern Investigative Reporting Foundation how Perring had described a lucrative deal that Hollins had supposedly struck with an Asian mining company — to pay him a 100 million-pound royalty each year. (In interviews, eight investment bankers who specialize in advising energy and natural resources companies said they had not heard of such a transaction, and several of them expressed skepticism that an established mining company would forge this type of a deal.)

“Fraser told me [that Hollins] was a superrich former RBS commodities trader,” Earl said during a London interview in July.

“Hollins was a sort of omnipresent background figure [in Perring’s relationship with me] and Fraser was always discussing how Ian might put some of his own money to work with us,” Earl added.

Fahmi Quadir, a New York–based short seller who had at one point dated Perring, said in an August interview that Perring repeatedly mentioned Hollins and even said he would make an investment in her then-nascent fund Safkhet Capital. Both Quadir and Earl told the Southern Investigative Reporting Foundation that no investment from Hollins ever materialized. (Point of disclosure: In December 2016 Quadir donated $2,000 to the Southern Investigative Reporting Foundation; in August this donation was returned.)

Quadir found that Perring’s persistence in mentioning Ian Hollins started to veer into the absurd. She described in detail to the Southern Investigative Reporting Foundation the following London episode: Perring suggested that she stay in his apartment on a London trip to meet with Eli Gabso, the manager of Sage Global Capital, and Perring.

But after arriving in London, Quadir discovered “Fraser’s apartment” was simply an Airbnb rental that Perring had arranged for her. “Someone’s name was on the mail on the counter and they had their clothes in a closet,” Quadir recalled.

In the morning Perring asked Quadir to tell Gabso that she was staying in Hollins’ place. Quadir said nothing in reply, but resolved that if she was asked, she would tell Gabso the truth. Perring then told her that Gabso was suspicious about whether Hollins existed. (And Perring insisted that he did not want Gabso to know the number of Perring’s properties.)

“It was obvious Fraser didn’t own it; he didn’t know his way around that neighborhood,” Quadir later recalled. “And he couldn’t even help me with the [apartment’s] Wi-Fi or heating. When Eli [Gabso] asked me where I was staying, before I could say anything, Fraser said, ‘at Ian’s place.’”

After searching British property records, the Southern Investigative Reporting Foundation could not find any indication that Perring owned a property in London. In April Perring sold his house in Lincoln, England, for 187,500 pounds and moved to another residence in the same community.

Sage’s Gabso told the Southern Investigative Reporting Foundation in October that Perring had often mentioned Ian Hollins when discussing investments. When Gabso tried to investigate Hollins’ background but found nothing, Gabso asked Perring to provide proof that Hollins was real, only to have Perring change the subject, Gabso recalled.

In response to pointed questions from the Southern Investigative Reporting about Ian Hollins in late September, Perring said that name is an alias he invented to refer to a real friend. Quadir says Perring told her in January 2019 that Hollins died from complications from an enlarged heart. Yet, the Southern Investigative Reporting Foundation found no mention on the internet of an English commodities investor in his mid-40s who passed away that month.

Indeed, Hollins’ posts were what’s popularly called “sock puppeting,” whereby someone posts comments from a fake persona on an internet forum to boost his (or her) own views.

Perring also invoked Hollins in a January 2019 encrypted Signal message conversation with Safkhet’s Quadir. In the exchange, reviewed by the Southern Investigative Reporting Foundation, Perring told Quadir that analyst Kuldip Ambastha of Los Angeles-based wealth adviser Aspiriant LLC, with almost $11.7 billion under management, had recently emailed him asking for his assessment of her money management skills. The message read as follows: “We have looked from afar for a few months but rate your opinion on the basis you have turned us down many times and suspect Fahmi will or charge us a lot. We would be happy with the latter.”

Perring told Quadir that Ambastha had known Hollins well and Aspiriant had made “14x” off Hollins. But the Ambastha email had so many flaws that it’s difficult to imagine that Ambastha, with a decade of experience in the investment management field, could have written it.

Aspiriant, an advisory firm for high-net-worth clients, charges set fees for its services, so it’s unclear what sort of compensation scheme Perring was referring to. And why would Aspiriant, a prospective limited partner in Quadir’s fund, say the fund’s fee structure did not matter? Plus, the claim that Perring had turned down numerous investments from Aspiriant seems highly improbable. If Aspirant (or any financial adviser) allocated client capital to a small research firm with no money management capabilities, this would be a large legal and regulatory risk. And Ambastha’s discussing Aspiriant’s desire to invest in Safkhet in January would be odd since he had left Aspiriant 10 months earlier.

In a September email exchange with the Southern Investigative Reporting Foundation, Ambastha alleged that Perring had fabricated the email query from him about Quadir; he said he and Aspiriant had never sought to invest with Perring or Safkhet.

Ambastha said he had emailed Perring a brief complimentary note in January wishing him good luck after he read his Bloomberg News profile. He said he had once casually corresponded with Quadir two years earlier after he saw her mentioned in a February 2017 Bloomberg News article about short seller Marc Cohodes. (Point of disclosure: In 2017 Marc Cohodes contributed $344,593.20 to the Southern Investigative Reporting Foundation.)

Quadir confirmed that she had received from Ambastha only a February 2017 email. And Ambastha provided to the Southern Investigative Reporting Foundation copies of the actual emails he sent to Perring and Quadir.

Replying to a question about Ambastha’s alleged email to him, Perring wrote in September, “I am unsure of the Aspiriant’s reference but have been contacted by them in the past via [my company Viceroy’s] general email address.”

Misleading a business contact about the amount of property one owns would be childish; deceiving a friend about prospective sources of capital for her newly launched business is a uniquely cruel sort of lie. Both actions speak volumes about a person’s private life. But after Perring became involved with money managers, lying became central to how he operated professionally.

A strained research partnership

In the fall of 2015 Perring secured a big break: Through a mutual acquaintance, he managed to arrange a phone call with Matthew Earl, whose reputation had been made five years earlier as a brokerage analyst who recommended selling the shares of outsourcing providers Connaught PLC and Xchanging.

The purpose of Perring’s call to Earl was to explore a mutual interest in Wirecard AG, a German payments company. Perring had told the mutual acquaintance he felt Wirecard’s shares were sharply overvalued and Earl had just released a report on the company on his fund’s blog, Lordship Trading, and had already shorted its shares. (The Southern Investigative Reporting Foundation reported in 2018 and 2019 on Wirecard’s dubious Asian transactions but without tapping Earl as a source.)

See why the Southern Investigative Reporting Foundation wrote about Perring in “Editor’s Note on Fraser Perring.

Perring’s first call to Earl, which ran roughly 90 minutes, convinced Earl that Perring did not know much at all about Wirecard, Earl recalled. Perring told Earl he was a private investor with a history of shorting the stocks of troubled companies with large market capitalizations.

Despite Earl’s reservations about Perring’s claims of having an esteemed track record, Earl agreed to keep discussing Wirecard with Perring and compare notes with him on an ongoing basis. (Earl recalled that Perring told him that he had been one of the earliest short sellers of Valeant Pharmaceuticals International stock and had been in touch with the Southern Investigative Reporting Foundation during its reporting on the company. The Southern Investigative Reporting Foundation did not, however, use Perring as a source for its reporting on Valeant.)

An odd dynamic emerged as the two conducted research on Wirecard, Earl said in a September interview: When Earl and Perring talked on the phone, “Fraser was often lost and didn’t understand the [financial concepts] behind what I’d uncovered.” But on their Skype chats, Perring would submit very original and polished research, Earl said. In excitement, Earl would then call Perring to expand on what he’d just posted, only to hear him once again struggle to discuss it.

“What was happening was that Fraser found someone similar to me and [he] would just copy and paste their research into Skype,” Earl said. Apparently, Perring had found an analyst willing to provide him copies of his research notes. About two months after Earl and Perring began their collaboration, Earl confronted him about the strange dynamic. Perring admitted that he had a source providing him research work, Earl recalled. Earl said he eventually made contact with this person but declined to name the individual.

Despite their unequal participation in the research process, Earl structured a 50-50 partnership with Perring in an outfit they called Zatarra Research & Investigations; Earl said in a September interview he had reasoned that Perring was reasonably adept on the internet sleuthing front since he was repeatedly surfacing key documents. Zatarra’s business model involved shorting the shares of companies identified by Earl and Perring as troubled and then publicly releasing their findings. Additionally, the two partners figured that as Zatarra’s track record grew, hedge funds might pay a handsome price for its research services. (Earl said that the name Zatarra came from a moniker bestowed on the protagonist Edmond Dantès in the 2002 movie version of Alexandre Dumas’ “The Count of Monte Christo.”)

When asked about Zatarra’s distribution of labor, Perring in an email reply described Earl’s effort as centered on writing, whereas his activity focused on research. This point, when later shared with Earl, made him laugh. “Fraser did some document retrieval and the Zatarra website; that’s it. Everything else was me,” Earl said.

On Feb. 24, 2016, Zatarra released the first of five reports on Wirecard and attracted positive notice from the likes of the Financial Times and Bronte Capital, hedge fund manager John Hempton’s popular finance blog.

Hedge fund managers were soon reaching out to Zatarra to learn more about its work. One fund manager who reached out in late February 2016 was John Fichthorn, the general partner of Dialectic Capital; his New York-based hedge fund then had about $500 million in assets under management and Fichthorn had shorted Wirecard’s shares several months earlier. In a September interview with the Southern Investigative Reporting Foundation, Fichthorn said he had thought it would be productive for him to connect with someone from another fund to discuss the challenge of researching a very complex company. (Point of disclosure: In February 2014, Fichthorn’s Commeo Fidenter Foundation gave $4,950 to the Southern Investigative Reporting Foundation.)

Fichthorn said that his fund Dialectic had only one contact with Zatarra: a meeting with Perring and a member of Quintel Financial Intelligence, an outside forensic research firm hired by Fichthorn in 2015 to dig up and analyze Wirecard’s European and Asian filings.

Yousef Al-Majali, the co-founder of Quintel (now called Oculus Financial Intelligence), recalled meeting with Perring. In an October interview with the Southern Investigative Reporting Foundation, Al-Majali said he provided Perring the research commissioned by Dialectic but was not very impressed with the depth of Zatarra’s work. “I can tell you that based on what I got from the one meeting, [Quintel’s research] was way ahead of them on documenting what [Wirecard] had done,” Al-Majali said.

And according to Fichthorn, the one meeting with Quintel’s Al-Majali was the extent of Dialectic’s dealings with Zatarra. “We never compared notes with [Zatarra]; that’s for sure,” Fichthorn said. In a September interview, Fichthorn expressed astonishment about Perring’s “strange fantasy” that his one meeting with a Quintel representative amounted to a business relationship with Fichthorn.

Channeling a mysterious Ryan Vaughan

Perring, however, represented matters very differently to Earl, according to Earl’s recollection. In June 2016 Perring told Earl what he thought was very good news: John Fichthorn was willing to pay Zatarra 100,000 pounds annually for its research work. To discuss the deal, Perring proposed a three-way Skype messaging chat between Perring, Earl and Fichthorn. Earl agreed and when the time came, Earl logged on — only to find Perring and a “Ryan Vaughan” waiting for him.

In an October interview, Earl recalled phoning Perring to ask who Ryan Vaughan was, and Perring said it was John Fichthorn. Perring, Earl said, told him how the allegedly secrecy-obsessed Fichthorn would regularly use pseudonyms to conceal his identity when discussing investments with people outside his fund.

Earl also recalled that when he and Perring chatted by Skype or sent email, they often referred to other people by their initials for security purposes. Thus to Earl, Perring’s reply of “J” on the Skype chat meant John Fichthorn, Earl remembered.

Perring and Earl had several perfunctory Skype chats with this “Ryan Vaughan” before “I put down my foot,” Earl recalled. At this point, Earl demanded a phone call with Fichthorn.

And the resulting call was surreal, Earl recalled. “It was a horrid connection and lasted maybe a minute,” Earl said. “The speaker had a sort of John Wayne accent. To me, it was obviously Fraser [Perring] pretending to be American. When I tried to ask a question about what was going on, [the call got] cut off.”

After the call, Earl said, he calmly explained to Perring that Zatarra would have nothing more to do with Fichthorn or the Vaughan character without a call to discuss the parameters of their research relationship — and a contract.

Perring, in an email response to the Southern Investigative Reporting Foundation, denied that this whole set of Vaughan exchanges had occurred but recalled that Earl had accused him of posing as Vaughan. And Perring said he and Earl regularly used pseudonyms when conducting meetings about Wirecard, especially when journalists were involved; he did not respond to a follow-up question about who he thought Ryan Vaughan might have been. (For his part, Earl said the only time he did not reveal his identity during this period was during a Der Spiegel interview, in accordance with agreed-upon conditions.)

In August 2016 Earl became angry after receiving a Skype text message from “Ryan Vaughan,” seeking to discuss Wirecard, Earl recalled. Earl refused to engage with this Skype account unless its identity was revealed. Then “Fraser [Perring] called me and told me that Ian Hollins had made the introduction to Ryan Vaughan, who had explained [to him] it was really John Fichthorn,” Earl said.

“What? That’s hilarious,” said Fichthorn, when the Southern Investigative Reporting Foundation shared Earl’s details of the episode. “It’s insane bullshit, but it’s really very funny.” Fichthorn denied that he had ever used pseudonyms in his business dealings and said Zatarra had never had a consulting relationship with Fichthorn’s Dialectic.

In late August 2016 the “Ryan Vaughan” drama intensified, Earl recalled in an interview last week. Perring claimed to Earl that John Fichthorn had given him permission to use a Twitter account @FollowValue1 that supposedly belonged to Fichthorn to send tweets critical of Wirecard. (Twitter later suspended this account for violations of the company’s terms of service.)

In a series of Aug. 26, 2016, Skype messages with Perring, Earl confronted Perring about tweets that this account had sent the previous evening, disclosing the contents of an upcoming Zatarra research note.

“I really don’t believe any of this,” Earl wrote to Perring. “There’s no way [John Fichthorn is] going to give you his Twitter and if so why would you tweet about contents of [a] forthcoming note?”

By way of explanation, Perring said he had gone to a pub, “got tipsy” and sent “some stupid tweets.”

“Wow,” wrote Fichthorn when reached for comment. “That’s fucking excellent.” Fichthorn unequivocally stated no one, including Perring, had ever had access to his personal Twitter account and that @FollowValue1 was not Fichthorn’s account.

For Earl, the August call and Skype messages became the final straw in a series of what he called “inexplicable events” that led him to end his Zatarra partnership with Perring.

But before that, Earl endured what he referred to as “the Vodafone incident,” when Perring, upon returning in July 2016 from a family holiday on the Turkish coast, related a fantastic tale.

An unusual business proposition

That July Perring recounted to Earl that he had just had a chance encounter at his hotel’s bar with Vodafone’s head of mergers and acquisitions, who made over drinks what Perring described as an astonishing — and unsolicited — proposition: Perring alleged that for a 15,000-pound payment, this British telecom executive would leak to Zatarra details of upcoming acquisitions.

Moreover, according to Perring, this executive claimed to have worked out a foolproof way to arrange for the illegal payment for material nonpublic information: First, Perring would sell his older car to this executive for about 3,000 pounds. After a brief period, Zatarra could buy it back from him for 15,000 pounds. Then the executive would provide Zatarra the relevant information. And Perring would theoretically handle all the details of this operation.

Earl’s response to Perring when he learned of the offer? “No, absolutely not,” Earl recalled. Earl said he told Perring that throughout his career he had been fully compliant with Financial Conduct Authority rules, and insider trading was clearly forbidden.

“Even if I wanted to [engage in insider trading], I don’t know that I’ve heard a more cock-and-bull story in my life,” recalled Earl, who added that he still wondered what had prompted Perring to think he might believe his tale.

Perring, when asked about Earl’s recollection, said, “I don’t comment on anecdotes.”

A Vodafone spokesperson did not respond to an email request for comment. (The Southern Investigative Reporting Foundation found no evidence that a Vodaphone executive engaged in this conduct.)

By August 2016 Earl had quite enough of Perring; Earl had already been planning to open what is now his current business, ShadowFall Capital & Research, without Perring. All that remained was for the two men to settle up accounts: Their agreement called for them to produce their trading records and share 50 percent of the proceeds (less expenses) with each other.

But in October 2016 Perring told Earl that he owed Perring 100,000 pounds for what he termed research expenses. In reply, Earl said the only expenses Perring could have incurred were for the design and launch of Zatarra’s website, and Earl asked for related receipts. Perring said he didn’t have any since he had paid for everything in cash. Earl countered that Zatarra’s website designer might have been paid in cash but Amazon Web Services, Zatarra’s hosting provider, couldn’t have been, and the total expenses should not have amounted to 100,000 pounds.

Perring acknowledged to the Southern Investigative Reporting Foundation that he believed Earl owed him a payment for “research services,” but Perring said he did not remember the specific amount.

After the eruption of the expense reimbursement argument (that the two never resolved), Earl thought he had heard the last of Perring.

One day by the school

Just six weeks later, however, Earl received an alarming phone call from Perring, as he later recounted to the Southern Investigative Reporting Foundation. On Dec. 6, 2016, about an hour after Earl had posted a critical analysis of Wirecard on his blog, Perring phoned, saying he had been held against his will right after dropping off his daughter at school, Earl later alleged. Two large men with Eastern European accents had forced their way into Perring’s car that morning and demanded he tell them everything he knew about Earl and Zatarra’s short selling of Wirecard stock. They also, Perring said, wielded pictures they had recently taken of Perring’s family and threatened that they would return in two days: If he did not cooperate then by telling them everything he knew about Earl, Zatarra and the Wirecard shorting, they would hurt him. If he fully cooperated, however, they would pay him 100,000 pounds.

As Earl later recalled, he was virtually speechless: “I was stunned, and all I could do was think to ask him about the police and what were they doing to protect him and his family.”

Yet the more he thought about it, Earl found the tale profoundly strange — that thugs would threaten Perring to obtain information about a man with a fairly high profile, about whom much information was publicly available. Nor did it escape Earl’s notice that the sum of money allegedly offered Perring was was identical to the amount Earl had refused to pay him.

Later that day, Earl called the Lincolnshire Police Department and spoke to the detective chief inspector who had fielded Perring’s complaint about the purported abduction. That call was brief and dull, with the inspector making it clear to Earl that the matter was not a priority for him and he lacked information because there really wasn’t much information to give out.

Whatever misgivings Earl had about Perring’s account, this was not the police response he expected to a claim that thugs had detained and threatened harm to someone in broad daylight right outside a school zone.

Further attempts to gain more information from the inspector ended the same way — with comments like “there isn’t much to say because not much happened.” And other public safety units contacted by Earl did not have any additional information.

While nothing came of the alleged threats to Perring, Earl said at least one aspect about the whole incident rang true to him: At the time, Wirecard was indeed deploying private investigators to surveil both Perring and Earl, according to Earl. “It wasn’t particularly pleasant — cars parked outside of your house at all hours, photographs being taken, friends asking you why someone was ringing them up about you,” Earl recalled. He added that two men from Kroll had delivered to his home a threatening letter from Wirecard’s lawyers.

Several other hedge fund managers who had shorted Wirecard’s stock in the summer of 2016 told the Southern Investigative Reporting Foundation that they observed similar surveillance operations against them and had received legal threats from Wirecard. They shared documents and provided recollections of this activity to the Southern Investigative Reporting Foundation but asked to not be named.

A Wirecard spokesman, FTI Consulting’s Charles Palmer, wrote in response to Earl’s allegations, “Wirecard strongly denies Mr. Earl’s claims. Wirecard, has not, at any point, instructed any third-party to surveil him.”

In a response to a question from the Southern Investigative Reporting Foundation, Perring maintained that the confrontation had transpired exactly as he had initially described it to Earl: “Your question belittles the very serious nature of the crimes that took place against me and my daughter,” he said. “There were several witnesses who came forward following my abduction and an arrest was made. Equipment was seized from the arrested individual.” Perring continued, “Likewise independent witnesses reported the occupants of the car’s suspicious activity. There are other events I cannot currently disclose.”

The Southern Investigative Reporting Foundation inquired with Lincolnshire Police’s media services office about the alleged assault. Lincoln Police Officer Lisa Porter, in an emailed response, wrote that following Perring’s complaint, police had arrested a man on Dec. 6, 2016, but he had been released without any further action taken and the case was now closed.

In a follow-up email, Officer Porter clarified that “without any further action” meant that no charges were filed against the arrested man. She added that documents about the incident were not publicly available and declined to answer numerous questions about the identity of the arrested man.


Last summer Perring shared a rather unusual WhatsApp message with Fahmi Quadir. In it, he had a note directing his London-based lawyer Dina Shiloh to issue a press release on July 29 that would declare Perring is giving up his public profile because his “pseudo faux public existence” involved misleading those whom he “cares most about” and he does not wish them to be “criticised or trolled for supporting him.”

In September Quadir told the Southern Investigative Reporting Foundation she had remained close friends with Perring despite their having ended their romantic relationship several months earlier. Quadir said she suspected what had prompted Perring to send the message was her recent confrontations with him in May and June about alleged lies he had told her.

Shiloh never put out the press release and it’s unclear if Perring even sent the note to her. In an email reply, Shiloh said all questions should be addressed to Perring.

When asked to comment on the context of his message to Quadir, Perring wrote that he believed the Southern Investigative Reporting Foundation was acting with “malicious intent” in “disclosing [his] personal messages.”

Perring also said he had never shared any messages “that would have damaged [Quadir’s] business or personal image.”


The reporting in this article, accomplished with a trip to England, was drawn from interviews with 15 portfolio managers and research analysts who have dealt with Perring over the past four years. Many of those interviewed provided corroborating documentation, including emails, notes, and screen captures of texts and comments on encrypted messaging services.

Given the sensitive nature of Fahmi Quadir’s relationship with Perring, this article selected only the information that was backed up by documents. In Earl’s case, this article used only his statements that were supported by documents and corroborated by another person.

Perring’s responses included a series of ad hominem attacks that were completely outside of the scope of this article, and because of this his full set of responses were not included. He chose to not reply to five final questions, terming this investigation “a charade.”

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Editor’s Note About Fraser Perring

It is unusual for an investigative reporter to reveal his sources, but to set the record straight I am acknowledging that Fraser Perring was a source in some of my previous Wirecard AG reporting. Earlier this year, Perring provided me with a set of documents I used in an article and he connected me to several other individuals that aided additional Wirecard reporting. Perring was not a key source whose information my reporting hinged on. By the time I was introduced to him in late 2017, I had been investigating Wirecard for months and I did not use any of the information he sought to provide in my first article on the company in January 2018. But he did talk with me frequently and did introduce me to someone whose research proved quite valuable.

As a reporter who over the years has drawn abundant legal threats and who in 2018 came within 24 hours of having to stand in contempt of a U.S. attorney’s subpoena (for refusing to provide testimony and notes for a trial), I am all too familiar with having to protect the origins of information I have obtained.

To be clear, I never told Perring the Southern Investigative Reporting Foundation would protect his identity, and he never asked for this.

For a reporter, ordinarily if a source becomes suspect, simply ignoring this source is the wisest course. When I began to suspect that I was regularly being given incomplete or misleading information, then I felt my options had dwindled.

(Indeed in 2013 I wrote about someone who, earlier in my career, had served as a source for me: Bryan Caisse, a mortgage-backed-securities portfolio manager. I wrote about him after I learned he had been running a Ponzi scheme and, to do so, was using my 2008 article about him.)

Moreover, a journalism nonprofit designed to bring a measure of illumination to the capital markets should not ignore stories that make short sellers and other financial skeptics feel uncomfortable even though they form a significant part of its readership and donor base.

In other words, accountability journalism has true meaning only to the extent that everyone is kept accountable.

Clarification: The first paragraph of this disclosure was updated on Nov. 15 to better describe when Perring provided Roddy Boyd information that was used in his Wirecard AG reporting. 

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The Pity of Wirecard, Part II: Bezzle Never Sleeps

Illustration: Edel Rodriguez
Illustration: Edel Rodriguez
Illustration: Edel Rodriguez

If questions about the integrity of Wirecard AG’s accounting in its crucial Asian operations are ever to be resolved, Singapore regulators will need to step back and take a long, hard look at James Henry O’Sullivan’s relationship to the Aschheim, Germany–based company. Prosecutors at Singapore’s Consumer Affairs Department have been investigating Wirecard’s fast-growing Asian division, claiming in a March 8 filing that employees in its Singapore office orchestrated a complex, multiyear scheme to inflate the company’s revenue.

Specifically, the regulators would want to examine O’Sullivan’s complicated role in Wirecard’s suspect October 2015 purchase of Great India Retail’s online payment businesses, which the Southern Investigative Reporting Foundation reported on in January 2018.

Forty-six-year-old O’Sullivan, a native of England but said to be currently living in Singapore, seems to keep a low profile; his name rarely shows up in legal documents or on the internet, except in filings for a series of Isle of Man–based shell companies and a Luxembourg holding company, Caireen SARL.

But sift through enough of this paperwork and a very distinctive picture of O’Sullivan emerges — that of a digital payments industry veteran with a cleverly hidden hand in nearly everything Wirecard does in Asia. And O’Sullivan is the likely owner of International Techno Solutions, one of 11transactional parties” that Singaporean prosecutors have alleged engaged in “arrestable offenses,” such as round-trip accounting and money laundering, to boost Wirecard’s revenue.

Flying under the radar may soon be a thing of the past for O’Sullivan if two Chennai, India–based brothers have anything to say about it.

Ramu and Palaniyapan Ramasamy, the founders of Hermes Tickets and Great India Technology, in March sued O’Sullivan, as well as Wirecard and its chief operating officer, Jan Marsalek, claiming they had masterminded a scheme to persuade the brothers to sell their companies under false pretenses and thus exposed them to reputational and economic harm.

(Hermes Tickets and Great India Technology are both subsidiaries of the Ramasamys’ larger company Great India Retail. And the Ramasamys used to be vocal Wirecard supporters: Ramu Ramasamy delivered the India strategy update at Wirecard’s 2016 Capital Markets Day presentation to analysts and investors.)

Anyone reading the Ramasamys’ complaint would have difficulty distinguishing between the interests of O’Sullivan and those of Wirecard since the suit has described both as pursuing an identical strategy and seeking the same assets. The Ramasamys have claimed in their suit that O’Sullivan (referred to as Defendant No. 4) approached them in early 2014 and made a bid for Hermes Tickets — through a Singapore-based company named Santego he seems to control. And though the Ramasamys declined O’Sullivan’s bid, he kept in contact with them and submitted another offer at the end of 2014, they said. The brothers turned down that one, too.

But O’Sullivan shifted gears in December 2014, according to the Ramasamys’ suit: He tried to arrange for Wirecard to invest in Great India Technology by introducing the brothers to Wirecard COO Marsalek, they said. The complaint has further alleged that O’Sullivan described Wirecard to Ramu Ramasamy as his “German partners” and told the brothers he was aware of Wirecard’s strategic deliberations as well as its management’s willingness to move rapidly to close a deal.

In October 2015 Wirecard invested 14 million euros in Great India Technology, amounting to 56 percent of its privately held shares. Separately, O’Sullivan paid 1 million euros to purchase his own 5 percent stake. Per the Ramasamy’s lawsuit, the entity that he used to purchase and hold his 5 percent investment in Great India Technology was Emerging Markets Investment Fund 1A, a Mauritius-based fund.

That same Emerging Markets Investment Fund 1A had in September 2015 paid the Ramasamys about 37 million euros to purchase Hermes Tickets. Yet six months later, the fund sold Hermes Tickets to Wirecard for 230 million euros up front, with 110 million euros in performance bonuses delivered over three years; the total price amounted to 340 million euros. In a press release and its corporate filings, Wirecard discussed its Hermes Tickets purchase at length — but without mentioning the seller, Emerging Markets Investment Fund 1A.

Wirecard has denied the Ramasamys’ allegations that it misled the brothers or collaborated with O’Sullivan. Angela Liu, an attorney at London law firm Herbert Smith Freehills who represents Wirecard, said via email, “Wirecard wholly rejects the allegations made against it by [Great India Retail.] Wirecard considers that the lawsuit has no merit and will be defending it in full.”

Liu added, “Wirecard is not aware of any role of Mr. James Henry O’Sullivan in Wirecard’s acquisition of Hermes; he did not receive any compensation from Wirecard.”

But a detail that just surfaced as result of the lawsuit’s filing might prove very damaging to Wirecard: Page 24 of Ramu Ramasamy’s affidavit submitted to the court on April 1 clearly suggested that O’Sullivan (Defendant No. 4) was either the owner or agent of Emerging Markets Investment Fund 1A (Defendant No. 3). Moreover, Ramasamy’s affidavit described O’Sullivan as having played an active role in negotiating the fund’s Hermes Tickets purchase and its two-month-later resale to Wirecard. (The fund is also a defendant in the Ramasamys’ lawsuit.)

Indeed the Ramasamys’ lawsuit has claimed that O’Sullivan used Emerging Markets Investment Fund 1A to purchase Hermes Tickets as well the 5 percent stake in Great India Technology — and to subsequently resell them to Wirecard for a substantial multiple of their original prices.

So what’s the risk to Wirecard from its Hermes Tickets deal being examined in court? Should the Ramasamys prove that O’Sullivan is an owner of Emerging Market Investment Fund 1A, a host of questions would be raised about possible improper sales practices by Wirecard. And where did that handsome sum of 340 million euros paid by Wirecard go?

While O’Sullivan might not be the sole owner of Emerging Markets Investment Fund 1A’s shares, he could not use it to buy and sell assets unless he was either a sizable stakeholder or had been given power of attorney by someone who is.

Singaporean prosecutors have stated they are investigating Hermes Tickets and Great India Technology for their possible role in Wirecard’s alleged accounting scheme. And while the prosecutors’ March 8 filing did not mention Emerging Markets Investment Fund 1A, they did name one of the fund’s key investments, Orbit Corporate & Leisure Travels, as an additional so-called transactional party potentially involved with dubious sales. (To date, the fund has invested in four companies: Great India Technology,  Hermes Tickets, Orbit Corporate & Leisure Travels, and Goomo, a consumer-focused company with a travel-booking platform that was spun off in March 2017 from Orbit.)

Though the Ramasamy brothers are seeking about 51 million euros in damages from Wirecard and the other defendants, they also greatly want information. Ramu Ramasamy’s affidavit asked the judge to compel Wirecard to disclose the particulars of its relationship with Emerging Markets Investment Fund 1A and for the fund to identify all of its equity ownership.

When queried if Wirecard knew of O’Sullivan’s efforts to buy Hermes Tickets and about his alleged stake in Emerging Markets Investment Fund 1A, Liu replied, “Wirecard was not aware of any attempt by Mr. O’Sullivan to buy Hermes in 2014 nor does Wirecard have any information that Mr. O’Sullivan is or was a shareholder of EMIF1A.” She said, “As evidenced by the share registry, Mr. O’Sullivan never was nor is the owner of 5% of the shares in GIT,” referring to Great India Technology.

Liu also acknowledged that O’Sullivan has had a longstanding relationship with Wirecard. “Mr. O’Sullivan has been in contact with a multitude of employees at Wirecard for many years; discussing a variety of subject matters, including joint customers and customer projects.”

The incredible disappearing act of O’Sullivan

O’Sullivan’s success as an operator in the digital payments sector can be attributed both to the web of connections he made in the early stages of his career as well as his aforementioned practice of keeping a low profile.

Nonetheless, O’Sullivan’s name crops up in some sparse British regulatory filings for a series of now-shuttered companies that used to be based in the tax and regulatory haven of the Isle of Man — all linked to David Vanrenen, a South Africa-born digital payment entrepreneur. One of the initial developers of what became known as the digital wallet, Vanrenen (like O’Sullivan until recently) lives in Monaco; Vanrenen’s son Daniel may have introduced O’Sullivan to him. (Visa just purchased Earthport, a cross-border payment services company that Vanrenen co-founded in the late 1990s, for $320 million.)

Starting in 2002 O’Sullivan served as chief executive of one of Vanrenen’s companies, Waltech Limited, and as a director of four of its subsidiaries. And Vanrenen’s Walpay became a leading payment processor for high-risk operators in the often shadowy but legal industries that Wirecard has long served ― ones offering pornography, internet gambling, currency exchange and binary options.

According to Bloomberg, O’Sullivan was the chief technology officer of another Isle of Man–domiciled company, Pay 2 Limited; this prepaid card issuer claimed prior to its 2009 dissolution that it processed 50 million pounds a month in transactions. One of O’Sullivan’s colleagues at Pay 2 Limited, its former financial controller Peter Stenslunde, is now executive director of Wirecard South Africa.

More recently, however, O’Sullivan has adopted a new modus operandi: He seems to have stepped away from daily corporate management duties for the most part. And in what appears to be an attempt to remove all public traces of his business ties, O’Sullivan began (especially after October 2015) using representatives to stand in for him on some corporate boards or as a company’s registered owner (so that their names not his appear in public filings).

Vanishing from Bijlipay Asia

A good example of O’Sullivan’s muted business presence can be observed with Bijlipay Asia Ltd., a holding company that began its life as a Vanrenen-controlled entity called Waltech Asia Pte. Ltd. but changed its name in 2009 after its registration in Singapore. From Jan. 12, 2009, until Oct. 28, 2015 — the day after the Great India Technology deal became final — O’Sullivan served as a director of the company. (Roy Harding, a longtime colleague of O’Sullivan from his days at Waltech Limited, departed from Bijlipay Asia’s board at the same time. Also a director of O’Sullivan’s holding company Caireen SARL, Harding resigned from its board on March 31, 2017.)

Although O’Sullivan is no longer on Bijlipay Asia’s board, his proxy is almost certainly 53-year-old Ricky Raymund Misson, who resides in Singapore. Referring to himself as audiovisual consultant and a former staff sergeant with the Singapore Armed Forces’ special operations group, Misson has an unusual résumé for someone now running several enterprises involved with multinational digital payment services.

Misson’s name appears in the database of Singapore’s Accounting and Corporate Regulatory Authority as the principal owner of four companies: Bijlipay Asia, Misson Pte. Ltd., Africa Card Services Pte. Ltd. and Santego Capital Pte. Ltd.

Bijlipay and Africa Card Services are engaged in aspects of digital payment services. Records indicate Misson Pte. Ltd. is the entity Misson relies on to manage his audiovisual consulting business. And Santego Capital is probably the holding company that the Ramasamys have alleged O’Sullivan used in early 2014 (as mentioned above) for his first Hermes Tickets bid. (The Ramasamys’ lawsuit referred to “Santego Business Corporation,” but no company with that name is listed in Singapore’s corporate registry. An individual involved in the litigation told the Southern Investigative Reporting Foundation that Ramu Ramasamy substituted “business” for “capital” when filing his affidavit.)

Misson’s Bijlipay is Wirecard’s oldest publicly disclosed customer in the Asia-Pacific region. (Its holding company Bijlipay Asia owns 95 percent of Skilworth Technologies Private Limited, a Chennai-based payments company that possesses the trademark for the Bijlipay mobile point-of-sale machine marketed in India. Another former colleague of O’Sullivan, Timothy William Johnstone, sits on Skilworth’s board.)

The Southern Investigative Reporting Foundation obtained dozens of Wirecard emails and documents referring to Bijlipay, but none mentioned Misson.

Yet, internal Wirecard documents and emails indicate that O’Sullivan is well-known to key executives in Wirecard’s Singapore office and that they clearly understand he controls Bijlipay.

For example, a Nov. 15, 2017, email thread between Wirecard Asia’s executive director, Fook Sun Ng, and Wirecard Asia financial staff (including finance director Edo Kurniawan) discussed Bijlipay’s 3.71 million euro debt to Wirecard so that Ng could then discuss the matter that evening with O’Sullivan.

A May 2018 report by law firm Rajah & Tann put Bijlipay at the center of a fraudulent accounting scheme and claimed that three years’ worth of sales and purchase agreements between Bijlipay and Wirecard’s Indonesian office were fake. (Wirecard hired Rajah & Tann in April 2018 to examine the claims of a Singapore-based whistleblower alleging that the company’s executives had committed widespread accounting fraud.)

In their March court filing, the Singaporean prosecutors named Ng, Kurniawan and four other Wirecard Asia employees as suspects in a series of potentially “arrestable offenses” in the Wirecard accounting case.

Misson did not reply to several emails from the Southern Investigative Reporting Foundation seeking comment.

Bijlipay’s CEO, Pradeep Oommen, did not respond to an email with several questions from the Southern Investigative Reporting Foundation.

And when asked about Bijlipay’s importance to Wirecard, attorney Liu said Bijilpay had contributed less than 1 million euros to Wirecard’s revenue in 2018.

Wirecard, according to its internal documents, might not realize lot of revenue from Bijlipay but it has instead contributed plenty of headaches. For example, in May 2017 Wirecard’s supervisory board wanted to see the “business case” (a standard internal assessment of probable profit and loss made by a bank before closing a commercial loan), for the $10 million loan Wirecard had granted Bijlipay in 2014. When it dawned on a group of finance executives that they had not created one, merger and acquisition manager Lars Rastede remarked in astonishment via email, “Did nobody perform a cost/income calculation before jumping into the Bijli project financed by $10 million?”

Reworking the helm at Internal Techno Solutions

Another company that succeeded (at least formally) in jettisoning the O’Sullivan name from its management and ownership structure is International Techno Solutions Pte. Ltd. Originally launched in 2003 as Walpay Asia Ltd. and based on the Isle of Man, the company in 2008 adopted the name International Techno Solutions Pte. Ltd. after registering in Singapore. O’Sullivan served on International Techno Solutions’ board from October 2008 to October 2010 and as its owner until May 2014.

This spring Singaporean prosecutors included the company as one of the cited transactional parties in their ongoing investigation of Wirecard’s accounting and sales practices.

A year before prosecutors became concerned about International Techno Solutions, Rajah & Tann had flagged as problematic a series of transactions between the company and Wirecard’s Indonesia office.

In May Singapore authorities revoked International Techno Solution’s registration in a move known as “striking off.”

The many faces of Senjo

One of the few entities O’Sullivan can still be directly connected to is Caireen SARL, a Luxembourg holding company that, in turn, owns Senjo Payments Europe SA. The latter company’s name, however, bears a remarkable similarity to that of Senjo Group Private Ltd., a Singapore-based payments company and financial technology investor described by the Financial Times in April as one of Wirecard’s three biggest customers.

Although Wirecard called this estimate inaccurate — and in May sued the paper in a German court for “making use of and misrepresenting business secrets,” according to Reuters — internal company emails from 2016 and 2017 supported the Financial Times’ reporting.

And the Ramasamys’ complaint listed O’Sullivan’s address as in “care of Senjo” at #56, One Raffles Place, the former address of Senjo Group’s Singapore headquarters.

Abigail Peters, an outside public relations adviser for Senjo Group, denied that O’Sullivan’s Senjo Payments Europe is connected to her client. In an email, Peters wrote, “No entity called ‘Senjo Europe’ or ‘Senjo Payments Europe’ has ever been part of Senjo Group.”

Peters did not directly address a question about whether O’Sullivan is a Senjo Group owner, but stated, “James Henry O’Sullivan has provided Senjo Group with consultancy services on market and investment opportunities. In that regard we have mutual confidentiality obligations with Mr. O’Sullivan. We are aware that Senjo’s relationship with Mr. O’Sullivan is not exclusive.”

But Senjo Group is closely linked to two key entities cited in either the Rajah & Tann or the Singaporean prosecutors’ reports: In a November 2017 press release, Senjo Group described as its “assets” (or investments) both Bijlipay and Mindlogicx, a Bangalore, India–based payments company.

During a January 2018 CNBC Asia interview when COO Gavin Lock was asked for details about Senjo Group, he said his company was “founded in 2016” by a “group of successful e-payment and corporate finance executives.” That skimpy overview of the organization’s labyrinthine history omitted, however, the critical role Wirecard played in funding and managing it.

What is now called Senjo Group opened its doors in March 2006 as E-Credit Plus Pte. Ltd. in Singapore. By September 2007 Wirecard executives (including COO Marsalek) were among the listed officers of E-Credit Plus’ British subsidiary E-Credence UK Limited. On Dec. 28, 2009, Wirecard purchased E-Credit Plus for 12.8 million euros, a rather steep price for a company with just 380,000 euros in revenue that year. The company was eventually renamed Wirecard Asia Pte. Ltd. and remained based in Singapore; it formed the basis for Wirecard’s rapid expansion in the Asia-Pacific region.

Discussing a move that that brings to mind the round-trip accounting charge being investigated by the Singaporean prosecutors, Wirecard disclosed in its 2014 annual report that it had “deconsolidated” Wirecard Asia Pte. Ltd. (of Singapore) so as “to optimize its organizational structure.” In other words, five years after Wirecard had initially purchased this division from E-Credit Plus, Wirecard sold it to Senjo Group’s first two listed officers: Senjo Group’s current general manager, Christopher Eddie, and its head of commerce, Yoshio Tomiie. Wirecard received a net payment of 100,000 euros for the company. (Wirecard today does maintain a division called Wirecard Asia.)

In February 2017 Tomiie sold the holding company that held his Senjo Group stake (called YO54 Holdings Pte. Ltd.) to Surajpal Singh, a real estate investor from Singapore, and Richard Willett, a 79-year-old horse breeder and wealthy retired Canadian entrepreneur who now lives on a ranch in Montana.

The Willett family’s interest in Senjo Group is managed by Willett’s son Oliver, who directs investments for Les Gantiers Limited, the Willett family’s office. Based in Monaco, Oliver Willett enjoys a close professional relationship with O’Sullivan. The two collaborated in 2014 and 2015 when O’Sullivan negotiated the Hermes Tickets and Great India Technology transactions.

Senjo Group gave the barest of replies to questions from the Southern Investigative Reporting Foundation and did not reply to a follow-up email seeking clarification on O’Sullivan’s ownership ties.

Richard and Oliver Willett did not reply to emails and phone calls seeking comment for this article.

Multiple phone calls to a contact number for James Henry O’Sullivan did not result in a response.

Ramu Ramasamy also did not reply to requests for comment.

Wirecard’s full set of responses still leaves O’Sullivan’s role a great mystery.

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The Pity of Wirecard, Part I: Oliver’s Army

SINGAPORE — Few companies can explain their meteoric growth as alluringly as Wirecard AG.

According to one of its preferred narratives, Wirecard presents itself as Europe’s leading financial technology innovator, a globe-spanning developer of white label code and applications that companies can use to help build their own online payment systems.

In Wirecard’s telling, its software removes the friction from electronic payments for both merchants and consumers. And in another narrative, it is a nimble bank, steadily generating low-risk revenue through the sale of integrated banking and credit-card processing services to businesses, and prepaid credit cards to consumers.

To date, investors have found the prospect of owning shares in a company that is simultaneously driving a technological shift in consumer behavior while growing profits irresistible. Last September, Wirecard entered the German corporate establishment when it displaced Commerzbank for inclusion alongside the likes of BMW and Bayer on the blue-chip DAX index, a closely followed roster of 30 of Germany’s biggest companies.

By late January, Wirecard’s market capitalization was almost 24.6 billion euros.

And on Jan. 30 that all changed, perhaps forever.

That’s the day the Financial Times published an exposé detailing a Singaporean law firm’s investigation of a host of alleged accounting irregularities in Wirecard’s Asian operations, and its stock price was pummeled. A German regulatory intervention that banned short selling of Wirecard’s shares through April 18 (a clear indication that the company’s tale of a short seller conspiracy had found some official support) did stabilize the stock price, but not before 10.6 billion euros of market capitalization were erased.

A close read of the May 2018 preliminary findings of the Singaporean law firm, named Rajah & Tann, suggests that a significant percentage of Wirecard’s success in the Asia-Pacific region — the most striking component of its growth story for the past three years — may be attributable to dubious transactions that inflated both the balance sheet and income statement. (On April 18, Wirecard, through London law firm Herbert Smith Freehills LP demanded that the Southern Investigative Reporting Foundation remove from this article a link to a document with the Singaporean law firm’s findings, arguing it does not represent a formally concluded investigation and that its publication represents a breach of the expectation of attorney-client privilege.)

On March 26, Wirecard released a statement on the Rajah & Tann report that concluded the suspect transactions would not have a material financial effect on the company’s 2018 results. It did acknowledge that “a few local employees” in Singapore might have unspecified “criminal liability” under that country’s law but no specifics were provided.

Documents obtained by the Southern Investigative Reporting Foundation show that Wirecard’s Asian success story is just that — a tale or myth fed to investors designed to propel the share price ever higher. The only thing that was keeping Wirecard’s regional operations from being exposed as a financial black hole was a single unit that Wirecard desperately wanted to keep concealed.


Meet CardSystems Middle East FZ LLC, a tiny, Dubai-based entity with a long name on Wirecard’s ever-expanding organizational chart. Don’t waste time looking for information on CardSystems in Wirecard filings. Apart from a few very brief mentions in annual reports, there’s no other reference by Wirecard.

CardSystems built a complex ecosystem of payment processors and banks that economically girds a series of gambling, adult entertainment and dating or companionship websites whose content is problematic enough that Wirecard decided it can’t have its name associated with them (even though it has a well-established track record of working with such content).

Moral and reputational concerns aside, any business that can succeed only when its core operation is hidden behind a daisy chain of lightly regulated banks and shell companies is probably going to cause investors a migraine one day.

Wirecard’s management has not been forthright about where its rapid earnings growth has come from. As recently as March 29 the company was telling investors that porn and gambling represented about 10 percent of its total transactions.

If Wirecard were to drop this line of business, then more than one-third of its operating profit would go out the door. This is a fact that Wirecard CEO Markus Braun does not touch upon when he makes speeches about the importance of optimism to Europe’s digital business community.

CardSystems essentially functions as a veiled middleman, linking various pornographic and gambling content providers to a network of payment processors and so called acquiring banks. Many of the payment processors operate behind a series of fake websites of the sort described in a June 2017 Reuters investigation.

(A brief aside: Deutsche Payment, one such payment processor that used a network of fake websites to mask illegal offshore gambling transactions, appears to have been controlled by Wirecard, which owned its trademark. According to the Internet Archive, for many years the Deutsche Payment website redirected visitors to Wirecard Austria’s site. Wirecard did not disclose the corporate connection but removed the Deutsche Payment link from its website shortly after the Reuters article was published.)

In return for this matchmaking, CardSystems receives an agreed-upon cut of the payment processing fee.

With this network in place, Wirecard can maintain a legal and reputational distance from what executives in its Alscheim, Germany, headquarters call “emotional content,” apparently referring to the gambling and porn operations.

(Although many institutional investors won’t relish being even indirectly exposed to porn and gambling, processing payments for this type of subject matter is perfectly legal in many countries.)

CardSystems’ internal financial projections for 2018, obtained by the Southern Investigative Reporting Foundation, reveal it was expected to generate sales of 450 million to 500 million euros, and earnings before interest, taxes, depreciation and amortization (or EBITDA) were slated to be an eye-popping 200 million euros. (EBITDA is a frequently cited and controversial yardstick for profitability that leaves out capital expansion and financing costs.)

Based on Wirecard’s 2018 preliminary results, CardSystems may have contributed about 22 percent of the company’s revenue and almost 35 percent of EBITDA. (Wirecard executives familiar with the unit’s performance of last year said they believed that it met or slightly exceeded these targets.)

Still, that’s tiddlywinks compared with what CardSystems meant to Wirecard in 2017,  since, according to the Federal Gazette publication of Germany’s Ministry of Justice and Consumer Protection, CardSystems accounted for 126.7 million euros or slightly less than 50 percent of Wirecard’s net income.

For all its impressive sales and profits, CardSystems is practically a one-person operation. It’s the brainchild of longtime Wirecard veteran Oliver Bellenhaus, who runs it out of his home office in what is currently the world’s tallest building, the 200-story Burj Khalifa in Dubai.

Nailing down a specific number of CardSystem employees proved difficult for the Southern Investigative Reporting Foundation. Probably fewer than a dozen employees are dedicated to the unit’s business, according to current and former Wirecard officials who spoke on the condition of anonymity out of fear of litigation.

CardSystems is a gold mine for Wirecard but its structure should check almost every box on a list of things guaranteed to raise an auditor’s hackles. The first issue is the size of its revenue relative to the small size of its workforce, a disparity especially pronounced given the sheer size of CardSystem’s business. In order to have its accounts pass muster with auditors, Wirecard officials classified about 60 Dubai-based company employees as assigned to CardSystems, but in reality they were on the company’s books at a different subsidiary.

Bellenhaus has complete operational control over CardSystems and has managed to keep a few banks, primarily ones located in Eastern Europe, engaged in his referral network. This is no mean feat since most established acquiring banks have stopped processing payments connected to porn websites, given the industry’s high charge-back rates. Apart from a stray press release issued in 2010, just about the only place the 45-year-old Bellenhaus is publicly quoted or referenced is on the websites of a Latvian bank and a Vilnius law firm.

(Charge-backs differ from traditional refund claims in that they involve a consumer’s essentially going over a merchant’s head and asking his or her bank to forcibly remove funds from a business’s bank account. When they are processed often enough, the time and expense involved rapidly begin to wipe out profitability for the acquiring bank.)

Bellenhaus did not reply to an email seeking comment. And in response to a question about CardSystems’ staffing levels, Wirecard spokeswoman Iris Stoeckl disputed that the unit’s head count is small, stating that 200 sales and tech staffers work at its Middle East and North Africa hub. She did not directly address a question about CardSystems’ virtual absence from company filings other than to note, “[Wirecard] cannot disclose any additional figures beside the figures disclosed in our annual audited report.”

There’s little evidence that Wirecard’s profile in the internet’s darker corners is diminishing. Consider the recent YouTube video on which Alexis D. Vyne, a transgender adult entertainer and film actor, shows how the company processes payments for, a Canadian website popular with individuals seeking escorts and sexual services. (Over the past several months, ads placed on LeoList were linked to four human trafficking arrests in the Greater Toronto area.)

Bringing CardSystems into the daylight ought to prompt some pointed questions from investors, and one of the first orders of business should be establishing how much business is really being done by that company for Wirecard.

Some basic extrapolation suggests that without the profits from CardSystems, Wirecard’s regional income statement would be awash in red ink.

In 2017 Wirecard’s annual report stated Asia-Pacific sales and EBITDA were, respectively, 619.2 million euros and 153.4 million euros. Recall that CardSystems’ results are included within Asia-Pacific results, however. Thus, when CardSystems’ sales of 450 million euros and EBITDA of 175 million euros are deducted, Wirecard’s Asia-Pacific sales clearly lost money in 2017.

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Wirecard AG: Something Is Terribly Wrong Here

After the Financial Times published a pair of whistleblower-driven exposés that suggested some of Wirecard’s parabolic growth in the Asia-Pacific region resulted from a purported multiyear revenue inflation scheme, anyone wanting to understand the kettle the German payments company finds itself boiling in would do well to adopt the timeless journalistic maxim “follow the money.”

But where to start?

India would be a good initial place.

According to a March 11 court filing by Singaporean prosecutors, three “transactional parties” involved in questionable deals (including two Wirecard subsidiaries) are located in India. (Singapore is both the headquarters for Wirecard’s Asia-Pacific region and where the FT reported the alleged scheme had been launched.)

The prosecutors’ filing is a response to Wirecard’s motion in the high court that sought to limit the scope of the Singapore police’s commercial affairs department investigation and secure the return of computers and files taken in raids on Feb. 8, Feb. 20 and March 5. (The high court rejected Wirecard’s motion for “a lack of legal basis” but noted that the company may still appeal the decision, according to The Straits Times.)

The companies that Singaporean prosecutors are interested in — Hermes Tickets I, Great Indian Technology and Orbit Corporate & Leisure Travels — were first flagged as suspicious by the Southern Investigative Reporting Foundation’s investigation last year of Wirecard’s October 2015 purchase (for 230 million euros) of a hodgepodge of small, privately held payments and e-commerce companies called Great Indian Retail, based in India. Wirecard paid an additional 110 million euros in earnout payments through 2017.

Additional documents recently filed in India by Star Destination Management — the parent of Star Global Currency Exchange, a kiosk-based currency exchange company purchased by Wirecard — strongly suggest that the prosecutors need not go beyond India to establish that the Great Indian Retail deal stinks to high heaven.

Nothing about the deal is close to adding up.

Consider Star Destination Management’s 2016 annual report, which gives no indication that it sold its core revenue-generating asset in February 2016. Whatever else happened that year, kiosk ticket sales clearly were not too robust, and as of March 31, 2016, the company reported a loss of a little under 25,200 euros. Although Star Global Currency’s purchase price was not disclosed, the modest scale of its operations is seen in the Department of Industrial Policy and Promotion‘s foreign direct investment circular where Wirecard’s 1.45 million euro capital injection is disclosed.

Star Destination’s filings offer documentary proof that the Indian sellers of these companies have received only a fraction of the 340 million euros that Wirecard spent. In any quest to follow the money, it’s important to know where the money is not.

(Wirecard, through its outside spokesman Charles Palmer of FTI Consulting, said in an emailed comment that the company had no business relationship with Star Destination Management.)

Recall that using both corporate and governmental filings, the Southern Investigative Reporting Foundation’s reporting showed that what Wirecard purchased, Hermes Tickets I and the 60 percent stake in Great Indian Technology, cost a total of 52.36 million euros — 37.36 million and 15 million, respectively.

The gap between the 230 million euros Wirecard spent buying these companies and the 52.36 million that is observable in corporate or regulatory filings is a handsome 177.6 million euros — all before another 110 million euros was paid out to the sellers for meeting agreed-upon performance targets.

And to be sure, Wirecard’s disclosures of its cash outflows from investment activity — the section of the annual report listing what the company has paid to acquire companies or assets — in the years 2015 to 2017 indicate 340 million left its coffers.

So where did the 287.6 million euros go?

All signs point to Mauritius-based Emerging Markets Investment Fund 1A, an entity with no discernible beneficial owner that’s acted as an intermediary between the sellers of Star Global Currency and Great Indian Retail, and Wirecard. Its distinguishing characteristic is its ability to get Wirecard to buy assets for multiples of what it paid just weeks prior.

(Asked whether the prices it paid for these assets were in the best interests of shareholders, Wirecard replied via email, “The acquired asset’s valuation ultimately reflects the growth potential of the Indian payments industry and the company’s unique position in the Indian market.”)

What few details there are about Emerging Markets Investment Fund 1A’s existence serve to raise further questions.

For example, it shares the identical physical address of Emerging India Fund Management, a Trident Trust administered fund in Mauritius, a jurisdiction with minimal disclosure requirements. Additionally, an email address for Emerging Markets Investment Fund 1A found on Great Indian Technology’s private-placement document tracked back to Emerging India Fund Management. Numerous calls to Trident Trust were not returned.

Furthermore, a circular series of connections link Emerging India, Emerging Markets Investment Fund 1A and Wirecard.

(Asked about Wirecard’s relationship to Emerging Markets Investment Fund 1A, FTI’s Palmer said that the company has no “economic interest” in the fund and declined to comment additionally, given the rules limited partnerships impose on disclosure.)

Emerging India, according to press accounts, has invested $180 million in two private equity transactions: Orbit Corporate & Leisure Travels, an agency specializing in trade shows and professional conferences, and Goomo, a consumer-focused company with a travel-booking platform that emerged last March from Orbit.

Orbit’s March 31, 2016, shareholder list indicated that Emerging Markets Investment Fund 1A owned 93 percent of its shares. Goomo’s Nov. 11, 2016, Memorandum & Articles of Association listed the Emerging Markets Investment Fund 1A as its primary shareholder; a credit report for Goomo’s Singapore subsidiary recorded the fund as its owner.

One of Orbit’s two listed directors, Ramesh Balasundaram, founded and sold Star Global Currency to Wirecard. Additionally, Orbit’s shareholder list describes the company as “a joint venture with Star Group of Companies,” a reference to Star Global Currency and Star Destination. Just before Wirecard bought Hermes Tickets, according to the notes of a Sept. 12, 2015 shareholder meeting, the company was negotiating to sell its travel related business to Orbit. Just five days later however, Great Indian Retail’s owners began to sell shares of Hermes Tickets to Emerging Markets Investment Fund 1A.

A January 2018 lawsuit filed in England by Hermes Tickets’ minority shareholders claims that IIFL Wealth Management UK, a unit of Indian financial services conglomerate IIFL Holdings, advised Emerging Markets Investment Fund 1A in its purchase of their shares. The suit alleges that Amit Shah, a banker for IIFL Wealth Management UK, told the plaintiffs in a phone call that IIFL established Emerging Markets Investment Fund 1A and had raised money for it.

IIFL, for its part, argued in an April 2018 response that IIFL Wealth UK had nothing to do with the transaction and Shah’s only role was as “a go between who was a mutual acquaintance of both the claimants’ representatives and Emerging Markets Investment Fund 1A.” It said that Shah had no recollection of making statements about Emerging Markets Investment Fund 1A.

Amit Shah was unable to be reached for comment. According to a press release on Feb. 6, IIFL Wealth UK said that Shah had resigned for “personal reasons.”

(Wirecard is not named in this litigation.)

A recent claim filed in the Indian state of Tamil Nadu, apparently made on behalf of an unidentified Great India Retail minority investor, does name Wirecard and its chief operating officer Jan Marsalek, as well as the Emerging Markets Investment Fund 1A and  Goomo/Orbit as defendants. It appears to be one of several similar claims and while the document was not available online, the court’s web portal says that a hearing to discuss a settlement is already scheduled.

Notably, a “James Henry O’Sullivan, c/o Senjo Group” is also listed as a defendant.

O’Sullivan has several connections to Wirecard, including a stint as a director at WalPay UK Ltd., a payments company that at some point in 2012 appears to have moved to Singapore and become WalPay Asia Ltd., and is now known as International Techno Solutions PTE.

In the March 11 filing discussed above, Singaporean prosecutors named International Techno Solutions as one of the “transactional parties” doing business with Wirecard and a subject of their investigation.

Another link between James Henry O’Sullivan and Wirecard comes via Senjo Payments Europe, which he owns through Caireen SARL, a Luxembourg-based holding company. In June 2017, Wirecard’s Bank registered a lien in Singapore for the 25 million euro loan it made to Senjo Group, and that it used in financing its $30.3 million purchase of Kalixa Group, a rival payment processor.

See the full text of Wirecard’s answers to questions from the Southern Investigative Reporting Foundation.

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Wirecard AG: The Great Indian Shareholder Robbery

Wirecard AG is the luckiest company you have never heard of.

It has the good luck of a boxer who is a master of bobbing and weaving in the ring, making it difficult for an opponent to land a punch. Prizefights, though, typically go for all of 10 or 12 three-minute rounds. Yet for 10 years a combination of short sellers, journalists and forensic research consultancies (whose clients often include short sellers) have publicized a long list of concerns about Wirecard’s operations, to little avail.

Why so much drama?

For one, Wirecard has a business model that is pure catnip to critics of every stripe.

Having emerged from a reverse merger of a struggling dot-com era call-center operation, Wirecard shifted to payment processing. But it also owns a bank, has a low-tech prepaid payment card segment and still retains an even lower-tech call-center unit, all headquartered in a small suburb 10 miles from Munich.

Wirecard is a “rollup,” primarily built through the acquisition of smaller companies at a breakneck pace: Since late 2014 it has made 11 acquisitions. Critics argue that rollups use acquired revenue to mask broader troubles with organic growth.

Moreover, Wirecard’s approach to many of these purchases could be charitably called “highly unusual,” such when it has made large prepayments prior to announcing a deal. The Financial Times reported in April 2015 that Wirecard provided different levels of regulatory disclosure about transactions, according to the jurisdiction involved. As the FT noted, a corporate filing in Singapore (where a company purchased by Wirecard was based) revealed that its assumption of 12 million euros in liabilities was really an opaque loan it made to an unspecified recipient after the deal’s completion “for the acquisition of intangible assets from a third party.” (Wirecard CEO Markus Braun told the FT, “At such owner led companies . . . sometimes you have to buy out third party shareholders, or you have to take over assets of sister companies. This is then part of the purchase price.”)

And Wirecard’s management often discloses its financial results using custom, or “adjusted,” metrics rather than following applicable International Financial Reporting Standards. While this practice is completely legal, it can inflate the appearance of earnings and cash flow figures.

Despite all this, investors are still placing their faith — and money — behind Wirecard because of its prospects for reporting the kind of growth shown in its most recent  earnings report, for the quarter that ended Sept. 30.

The slope of the stock chart below would suggest that Wirecard’s critics are against the ropes and taking so many blows that the referee might need to step in.

Source: Nasdaq
Source: Nasdaq


But lucky doesn’t equal smart for Wirecard’s investors.

After a seven-month investigation, the Southern Investigative Reporting Foundation has obtained thousands of pages of documents that suggest a minimum of 175 million euros — and perhaps as much as 285 million euros — from Wirecard’s 340 million euro purchase of an India-based payment processor in October 2015 did not go to the seller.

Making matters odder still, Wirecard’s own filings show the money left its coffers.

So where did a large chunk of Wirecard’s capital go in one of its fastest growing markets?


In the fall of 2014 corporate finance officials from JM Financial Services, a prominent Mumbai-based investment bank, received a mandate to locate a buyer for Chennai, India-based Hermes I Tickets Private Ltd., a modestly sized e-commerce company that derived 63 percent of its business from selling travel tickets.

The Southern Investigative Reporting Foundation obtained a copy of the pitch book that bankers used to market Hermes Tickets to prospective buyers. For fiscal 2015, Hermes Tickets aimed to generate 22 million euros in sales and about 3.8 million euros in earnings before interest, taxes, depreciation and amortization, or EBITDA (a standard, though imperfect, gauge of a company’s potential profitability).

The asking price was 46.2 million euros, but no buyers emerged for Hermes Tickets that fall or through much of 2015.

On Oct. 27, 2015, a deal was announced and, well, patience paid off: Wirecard purchased Hermes Tickets when it bought the payment businesses of its parent, Great Indian Retail Group, and a 60 percent stake in another subsidiary, Great Indian Technology. The transaction’s price tag was 230 million euros in cash, plus 110 million euros in prospective earnout payments over three years.

If it seems baffling that Wirecard’s deal to pick up Great Indian Retail’s payment businesses ended up totaling 340 million euros when only 13 months earlier Hermes, its primary component, had been shopped around for 80 percent less, that’s because it is. While India is a rapidly expanding economy, Hermes Tickets might have appreciated in value somewhat — but not that much. (Wirecard, for its part, argued that Great Indian Retail’s payment assets grew substantially in value in that 13-month period because of Indian GDP growth and the rapid growth of the digital payment market.)

Even with Wirecard’s history of oddly structured acquisitions, the Great Indian Retail deal sticks out, the more so since a source with Indian venture capital experience looked at Hermes Tickets’ financials in 2014 and described its payments business as being “very small.” So the Southern Investigative Reporting Foundation started to look for documents that might explain just what Wirecard had bought, and more important, where the cash went (a task greatly aided by India’s paperwork-heavy regulatory system.)

While for an American, interpreting India’s reporting format, currency and phrases can be a challenge, the sale of Hermes Tickets in Great Indian Retail’s 2016 annual report is clearly described as the “proceeds from sale of investment in subsidiary” of 2,749,940,988 rupees, or 37,365,539 euros. This is broadly congruent with the September 2014 asking price.

India’s Department of Industrial Policy and Promotion requires a company that receives a direct investment from foreigners (or FDI) to disclose the names of those involved in the transaction as well as the value. As such, the FDI circular offers a way to confirm the sale of Hermes Tickets: From October 2015 to March 2016, a buyer paid about $39 million, roughly 35 million euros, for Hermes Tickets shares.

(Wirecard denied purchasing Hermes Tickets for 37.36 million euros and said that DIPP data only shows investments from foreign entities into India, and as such, does not reflect what it paid in Mauritius.)

Someone examining this transaction might suppose that since Hermes Tickets cost 37.36 million euros, the balance of 192.64 million euros went for the 60 percent stake in Great Indian Technology.

Unfortunately for Wirecard’s shareholders, determining what happened is not that easy.

Great Indian Technology’s primary asset appears to be its ownership of licenses to operate two prepaid payment cards, iCashCard and SmartShop. (Customers pay fees so they can deposit cash at Great Indian Retail-branded kiosks and then use the cards in debit transactions.)

According to the Sept. 25, 2015, notes of Great Indian Technology’s extraordinary general meeting, Wirecard spent a total of 15 million euros on the company — through a 1 million euro cash payment up front and a 14 million euro private placement. Great Indian Technology’s annual report indicates that the company was not very active or profitable; it generated a pretax profit of 21,952 euros for the fiscal year that ended March 31, 2015.

A close read of Wirecard’s discussion of its merger activity in the 2015 annual report reveals that in addition to Great Indian Retail’s payment businesses deal, the company had also acquired Star Global Currency Exchange Private Ltd., an operator of currency-exchange kiosks and shops. (The deal’s press release referred to “StarGlobal” as “a brand,” not a standalone company.)

It’s a curious transaction.

No linkages are apparent between Great Indian Retail and Star Global Currency in public documents. Star Global Currency’s founders, the Balasundaram brothers, do not appear to own shares of Great Indian Retail, and likewise, Great Indian Retail’s founders, the Ramasamy brothers, do not appear to hold stock in Star Global Currency. There are not any listings of related party transactions between the two companies, and Star Global Currency is not referenced in the Hermes Tickets pitch book. Star Global Currency’s website does not even mention Great Indian Retail’s money transfer and currency cards.

What is not in doubt is the math: If Wirecard spent 230 million euros up front, and the combined transaction price for Great Indian Technology (15 million euros) and Hermes Tickets (37.36 million euros) was 52.36 million euros, Star Global Currency should have been worth at least 177.6 million euros.

It was not, however.

Wirecard made a 1.3 million euro investment in Star Global Currency at an implied 2 million euro valuation, according to a March 2016 share transfer form and the FDI circular. Although it was more productive than Great Indian Technology, Star Global Currency booked a small loss on its roughly 32 million euros in gross revenue for the fiscal year that ended March 31, 2016, per its annual report. Nor was the company very big — with just 20 employees, 2.95 million euros in total assets and a book value of 1.71 million euros.

All told, the Southern Investigative Reporting Foundation was able to track 54.36 million euros of the 230 million euros that Wirecard spent on the purchase of Great Indian Retail’s payment businesses, leaving 175.64 million euros unaccounted for.

Stranger still, Wirecard’s cash outflows from investment activity, as disclosed in its filings, clearly indicate that the money for the acquisitions and the 110 million euro incentive payment left its coffers.

So where did the money go? And why isn’t Wirecard alarmed about the missing funds? The answers aren’t immediately apparent.

There is one company, however, that should bear some extra scrutiny: the Emerging Markets Investment Fund 1A, a Mauritius-based fund that has served as an intermediary between the buyers and sellers in all of Wirecard’s India-related transactions.

Star Global Currency’s share transfer filing shows Emerging Markets Investment Fund 1A acting as a conduit, transferring to Wirecard a block of 504,499 shares of Star Destination Management Co. Private Ltd. (Star Global Currency’s parent company). The fund held the shares for 27 days and sold them to Wirecard at cost.

The fund performed the same role — buying stock and then selling the shares to Wirecard shortly afterward — for Hermes Tickets (the FDI circular cites three separate transactions) and Great Indian Technology.

None of Wirecard’s filings discussed Emerging Markets Investment Fund 1A’s role in its India strategy.

Foreign direct investors in Indian companies have used Mauritius-domiciled holding companies to shield their profits from capital gains taxes, but that loophole was largely closed in 2016. Regardless, Emerging Market Investment Fund 1A’s ownership of Great Indian Retail’s subsidiaries’ shares was for a few months at most; to qualify for India’s lower tax rate on long-term capital investments, an investor has to own an asset for a minimum of 36 months.

An email address and a street location listed in the contact information for Emerging Market Investment Fund 1A in Great Indian Technology’s September 2015 private placement letter provide some clues: The email address is associated with another Mauritius-based entity, Emerging India Fund Management, as is the street address.

The website of Emerging India is splashy, and it claims to manage an impressive $1.5 billion through diverse investment strategies, but good luck figuring out who works for the fund or who owns it. The fund is based in Mauritius and uses the address of Trident Trust, an administrator for hundreds of funds that adopt its address for registration purposes. Repeated calls and email messages to Emerging India and Trident Trust were not returned.

Despite Emerging India Fund Management’s claim to have $1.5 billion in assets under management, the Southern Investigative Reporting Foundation could not find any managers of India-based institutional or endowment capital with knowledge of it. There are, however, two private equity transactions that the fund has made — for Orbit Corporate + Leisure Travels, an agency specializing in trade shows and professional conferences, and Goomo, a consumer-focused company with a travel-booking platform that emerged last March from Orbit. The fund, according to the Hindu Business Line report, has invested a total of $180 million in the two ventures.

Wirecard said that other than the Oct. 27, 2015, transaction, it has never had a connection to Emerging India Fund Management and that the fund did not act as a conduit for Great Indian Retail. The company did not address a question about the fund’s ownership.

Several connections exist between the two travel companies and Wirecard.

To start with, one of Orbit’s two listed directors, Ramesh Balasundaram, was Star Global Currency’s co-founder and co-owner. Additionally, the company is described on its shareholder list as “a joint venture with Star Group of Companies,” a reference to Star Global Currency and Star Destination.

Emerging Markets Investment Fund 1A has played a key role, in founding and controlling both Orbit and Goomo, according to Indian corporate filings.

Orbit’s March 31, 2016, shareholder list indicated that Emerging Markets Investment Fund 1A owned 93 percent of its shares. Goomo’s Nov. 11, 2016, Memorandum & Articles of Association listed the Emerging Markets Investment Fund 1A as its primary shareholder and Trident Trust’s Mauritius address as its headquarters; a credit report for Goomo’s Singapore subsidiary recorded the fund as its owner.

A connection between Wirecard and Orbit was spelled out in the Sept. 12, 2015, notes of the extraordinary general meeting for Hermes Tickets’ shareholders, concerning negotiations with Orbit to sell Hermes Tickets’ travel-ticketing business. (Travel ticketing represented 63 percent of the Hermes Tickets’ sales, according to its pitch book.) No further details about that potential sale seem to have cropped up in filings.

Notably, those negotiations occurred at the same time (Sept. 17, 2015) that Great Indian Retail’s owners began to sell shares of Hermes Tickets to Emerging Markets Investment Fund 1A. Just eight days after that, on Sept. 25, Great Indian Technology’s shareholders held their own extraordinary general meeting, where the fund’s 1 million euro share purchase and Wirecard’s 14 million euro private placement were announced.

And there’s an unusual footnote to Wirecard’s purchases of Great Indian Retail’s businesses: Their auditors resign, often.

Hermes Tickets, for example, lost two auditing firms in the space of one week in August 2015, just two months prior to its sale to Wirecard: On Aug. 24 the Kuriachan & Nova firm cited its “preoccupation with other assignments,” and on Aug. 31 the V. Krishnan & Co. firm claimed it was “not being in a position to continue” as the company’s auditor.

At some undisclosed point in the ensuing months V. Krishnan & Co. was rehired, only to resign on June 15, 2016, due to a “preoccupation with other assignments.” All told, three different accounting firms resigned from Hermes between Aug. 24, 2015, and Oct. 17, 2017; V. Krishnan & Co. and Kuriachan & Nova were appointed and resigned twice, a third firm, CNGSN & Associates LLP, was appointed and resigned three times. (Ernst & Young, Wirecard’s auditor, is now the company’s accountant.)

Great Indian Technologies and Star Global Currency also had auditors resign.

Why does this matter? Auditor resignations — especially of the unexpected variety — are closely scrutinized by investors, who often worry that a company’s accountants have discovered something problematic and are giving up the traditionally lucrative audit fees to shield themselves from litigation risk.

The accounting firms did not respond to emailed questions.


Wirecard’s public relations chief Jana Tilz did not respond to questions posed in a series of email message sent before this article’s initial publication.

But on Jan. 24 the company’s investor relations manager Iris Stoeckl and outside public relations adviser Elliot Sloane of FTI Consulting sent responses and Wirecard also made additional comments.

Update: This article has been updated throughout to include Wirecard’s replies to questions posed several weeks ago. The answers are hyperlinked as well at the bottom of the story.