The liquidators of the Irish arm of failed German electronic payments group Wirecard are focusing their investigation into an almost €400 million fraud on four key areas, its creditors have been told.
In a report issued last week to creditors of Wirecard UK and Ireland Ltd, the joint liquidators, Ken Fennell and James Anderson of accountancy firm Deloitte, said they have completed two interim reports for the Office of the Director of Corporate Enforcement (ODCE) on the Dublin-based company's collapse.
They were appointed to the Irish unit in October last year, four months after Munich-based Wirecard filed for insolvency, becoming Germany’s biggest postwar financial scandal, as it revealed a €1.9 billion of cash recorded on its balance sheet did not exist.
The liquidators of the Irish business have been liaising with the insolvency administrator for Wirecard in Germany, the Garda National Economic Crime Bureau and the ODCE as part of their ongoing inquiry, according to the report, seen by The Irish Times.
Funds
In its initial years, between 2006 and 2013, Wirecard UK & Ireland’s business was in merchant acquiring, a process that allows online merchants to sell goods or services to customers using credit cards. However, in 2012, Wirecard in Germany told the Irish unit that it would receive a share of the third-party acquiring revenues generated from the merchant business, according to the report.
All the information on the merchants and associated revenues were provided to the Irish unit on a quarterly basis by Wirecard, with the Dublin-based company receiving funds from an acquiring bank and group partner, Dubai-based Al Alam. Wirecard UK & Ireland’s revenue ballooned by almost 250 per cent over the following eight years, to €250.7 million, while its accumulated profits soared to about €461 million, according to the report.
The first strand of the Irish investigation is into the revenues generated from Al Alam between 2021 and 2020.
The liquidators are also continuing to look into an agreement on how Wirecard UK & Ireland’s profits, under direction from its parent, were paid from late 2015 by Al Alam into an escrow account held by a Singaporean trustee, called Citadelle Corporate Services. The escrow account had a purported balance of €393 million at the end of 2019, which has proven to be untrue, according to the report.
The liquidators said the Irish unit’s auditors routinely received “audit evidences and assurances” from the parent group’s auditors, EY, on the balance held in the escrow account. However, in early 2020, the Irish unit’s auditors encountered difficulties obtaining confirmation from EY. That April, the Wirecard group provided the Irish unit’s directors with a statement listing the balance at €393.4 million. “This statement was subsequently found to be incorrect,” the report highlighted.
Investigation
The third main area of the local investigation centres on the Wirecard group’s move in December 2019 to lend €40 million from the Irish unit to a Singapore-based payments company called Ruprecht Services. The fourth strand relates to another group-sanctioned loan from the unit’s account, amounting to €64 million. This was issued to another company within the group in 2018, called Cardsystems Middle East.
A spokesman for an An Garda Síochána, which carried out a raid on the Irish unit's offices in July last year to assist German authorities carrying out a wider fraud investigation, did not offer any comment. The High Court heard last November, as the liquidators were being confirmed, that the Gardaí are also investigating alleged fraud at the Irish unit.
Representatives for the ODCE did not respond to a request for comment.
While the book value of Wirecard UK & Ireland’s assets were recorded at €556.5 million at the time of its liquidation, mainly comprising cash that was said to be held in the escrow accounts and trade debtors, the liquidators have so far realised €5.27 million. This includes more than €4 million from overseas bank accounts.
The liquidators said are continuing to pursue a possible €43 million corporation tax refund from the Revenue Commissioners, as its reported income in the past had been allegedly overstated. They are also pursuing €70 million owed by debtors.
