From the President: Exposing Fraud at "Germany's Enron"
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FROM THE PRESIDENT AND CEO
Bruce Dorris, J.D., CFE, CPA
Wirecard was once a fast-rising European fintech company that grew primarily through acquisitions. Now it’s dubbed the “Enron of Germany.” Its attempts to cover up holes in its accounts resulted in a plummeting stock price and ultimately pushed the company into insolvency. The similarities to Enron are straightforward: gregarious corporate leaders, opaque financial statements and a dogged reporter.
But in Wirecard’s case, Dan McCrum — the investigative journalist who broke the story for the Financial Times and is this year’s winner of the 2021 ACFE Guardian Award — faced unprecedented obstacles and harassment. McCrum, who’s become the poster child for “vigilance in fraud reporting,” is especially deserving of an award that the ACFE bestows annually to a journalist who shows determination and perseverance in exposing specific acts of fraud and white-collar crime.
Like CFEs, McCrum has been dogged in his pursuit to find the truth and expose fraud despite the threats and obstacles in the way.
Though regulators and prosecutors didn’t charge Wirecard executives Markus Braun and Jan Marsalek until 2020, McCrum had been investigating the company since 2014.
As McCrum got closer to the truth about Wirecard’s fraudulent activity, the company fought back. Not only did it deny any wrongdoing, but it accused the FT of deliberately printing negative stories for financial gain by shorting Wirecard’s stock. According to McCrum, Marsalek even tried to bribe an equities specialist at the FT to kill the negative stories. But McCrum and the FT stood strong and continued to run the exposé.
All this may be common practice by fraudsters who often go after the people casting them in a negative light. But the story then took on a rare, and perhaps ironic, twist when BaFin, Germany’s financial regulator, also started to investigate the FT rather than the masterminds behind the fraud. The FT’s team was rightly concerned.
Indeed, the investigation became so tense that journalists and editors at the FT resorted to using a code word for Wirecard to keep at bay the private investigators who’d been hired to watch them. McCrum even joked around the office that Wirecard’s name had become synonymous with Lord Voldemort, the villain from the Harry Potter series and whose name must not be spoken.
McCrum’s big break finally came in Singapore where the FT’s team met with whistleblowers who exposed potential manipulation of financial numbers. He’d soon discover that much of Wirecard’s revenue didn’t exist.
As the FT and McCrum published stories revealing fake accounts, the house of cards that Markus Braun had created started to fall. McCrum’s reporting shows that we won’t be bullied while we do our jobs to root out fraud in the workplace.
In the most recent cover story from Fraud Magazine, “Wirecard’s house tumbles,” Dan McCrum, an investigative reporter for the Financial Times, delves into how he spent six years questioning the finances of Wirecard, Germany’s moneymaking payments processor. But his efforts paid off. Read about his wild, weird investigation.
