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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.