Money Men

Money Men Plot Summary

Introduction

In the heart of Germany's financial system, a seemingly unstoppable technology company rose from obscurity to become the nation's most celebrated corporate success story. Wirecard transformed itself from a small payment processor for questionable websites into a financial powerhouse worth over €24 billion, eventually replacing one of Germany's oldest banks in the prestigious DAX 30 index. The company's charismatic CEO, dressed in Steve Jobs-inspired black turtlenecks, promised a cashless future where Wirecard would process billions in global transactions. It was the European answer to Silicon Valley's dominance - a homegrown fintech champion that gave Germany pride in an increasingly digital world. Yet beneath this glittering facade lay one of the most audacious financial frauds in modern history. The Wirecard scandal reveals how corporate deception can flourish even under the watchful eyes of auditors, regulators, and financial markets. Through this extraordinary tale of ambition and deceit, we discover how warning signs were repeatedly ignored, whistleblowers silenced, and journalists intimidated. The story provides crucial insights into the psychology of financial bubbles, the dangers of national champion thinking, and the essential role of skepticism in healthy markets. Whether you're an investor, business professional, or simply fascinated by tales of corporate intrigue, this account offers valuable lessons about the persistent human tendency to believe what we want to believe, even when confronted with mounting evidence to the contrary.

Chapter 1: Origins: From Porn Payments to Financial Darling (2002-2010)

In the early 2000s, as legitimate tech companies struggled to recover from the dotcom crash, a small German payment processor called Wirecard found its niche in the internet's shadowy corners. Founded in 1999, the company was acquired by entrepreneur Paul Bauer-Schlichtegroll in 2002 for a mere €500,000. Wirecard initially specialized in processing credit card payments for pornography websites and online gambling operations – high-risk industries that traditional banks avoided due to reputational concerns and regulatory complications. This willingness to serve customers others rejected would become a defining characteristic of Wirecard's business model. The company's transformation began with the arrival of two Austrians who would shape its destiny. Markus Braun, a computer scientist with a doctorate and experience at consulting firm KPMG, joined as CEO in 2002. Projecting an image of technical brilliance with his trademark black turtleneck, Braun became the company's public face and visionary spokesman. The operational engine behind Wirecard was Jan Marsalek, who joined as a teenager and rapidly rose to become Chief Operating Officer despite lacking formal qualifications. Described as brilliant, charming, and working around the clock, Marsalek managed Wirecard's increasingly complex international operations and relationships with partners in the shadows. By 2006, Wirecard had evolved from processing payments for questionable websites to acquiring a German banking license through the purchase of XCOM Bank. This crucial development gave Wirecard direct access to the Visa and Mastercard networks and the ability to issue its own credit cards. The company developed sophisticated methods to circumvent regulations, particularly after the United States passed the Unlawful Internet Gambling Enforcement Act in 2006. When credit card networks blocked transactions coded as gambling, Wirecard simply recoded them as something else – a practice known as "transaction laundering" that allowed the company to process payments other institutions wouldn't touch. The 2008 financial crisis, which devastated traditional banking institutions, created an unexpected opportunity for Wirecard. As established banks struggled with toxic assets and regulatory scrutiny, Wirecard presented itself as a nimble, technology-driven alternative with consistently growing profits. The company began acquiring payment processors across Asia, creating a narrative of global expansion that impressed investors. When questions arose about Wirecard's accounting practices, particularly regarding its Gibraltar subsidiary, the company aggressively countered by claiming it was the victim of market manipulation by short sellers – establishing a defensive pattern that would continue for years. By 2010, Wirecard had transformed its public image from a questionable processor of porn and gambling payments to a respected financial technology company listed on Germany's TecDAX index. Its market capitalization had grown from millions to billions, and it had survived regulatory challenges and short-seller attacks through a combination of aggressive counterattacks and Germany's desire for a homegrown technology champion. The foundation was set for even more dramatic growth, but the seeds of deception had already been planted. The company's willingness to operate in regulatory gray zones and its complex, opaque business structure provided the perfect environment for what would become one of Europe's greatest financial frauds.

Chapter 2: Expansion Through Fiction: Building a Global Facade (2010-2016)

Between 2010 and 2016, Wirecard embarked on an aggressive global expansion strategy that transformed it from a European payments processor into what appeared to be a global financial technology powerhouse. The company established operations across Asia, acquiring local payment businesses in Singapore, Indonesia, the Philippines, and India. CEO Markus Braun presented Wirecard as a visionary company at the forefront of the digital payments revolution, while COO Jan Marsalek traveled constantly, building relationships with a network of business partners around the world. This period saw Wirecard's market capitalization soar from approximately €500 million to over €5 billion as investors embraced the narrative of a rare European technology champion. The centerpiece of Wirecard's expansion was its acquisition strategy in Asia. In 2015, the company announced its largest purchase to date: the €340 million acquisition of Indian payment processor Hermes i-Tickets, which supposedly handled payments for bus and movie tickets. What investors didn't know was that this transaction involved a complex scheme where a Mauritius-based fund first acquired Hermes for approximately €36 million, then sold it to Wirecard at a massive markup. The difference – hundreds of millions of euros – flowed to offshore companies controlled by Marsalek, his business partner Henry O'Sullivan, and their associates. This pattern of inflated acquisitions became a hallmark of Wirecard's accounting deception, allowing the company to explain where its fictional profits were supposedly being invested. Behind the scenes, Wirecard was constructing an elaborate network of third-party partners, particularly in Asia. Companies like ConePay in the Philippines and Senjo in Singapore were presented as independent businesses processing payments on Wirecard's behalf, generating substantial commissions. In reality, many of these partners barely existed – some were nothing more than mailboxes at residential addresses or empty offices. A small group of finance executives, led by Edo Kurniawan in Singapore, engaged in increasingly desperate measures to maintain the facade, creating fake contracts, forging invoices, and moving money in circles between Wirecard entities to create the appearance of business activity. The company's reported financial results during this period defied industry logic. While competitors in the payment processing industry typically operated on thin margins, Wirecard reported profit margins exceeding 30% – an extraordinary figure that should have raised red flags. When Ernst & Young auditors questioned these results, Wirecard executives would stall, obfuscate, and ultimately provide just enough documentation to satisfy the minimum requirements. The auditors failed to verify whether the third-party business actually existed or to confirm bank balances directly with the banks themselves – basic audit procedures that would have uncovered the fraud years earlier. By 2016, Wirecard had successfully transformed its public image from a processor of gambling and pornography payments to a cutting-edge financial technology company. Markus Braun was regularly featured in German business media, speaking about digital transformation and the future of cashless payments. The company attracted investment from some of Europe's most prestigious financial institutions and was increasingly viewed as Germany's answer to PayPal. What few outsiders realized was that beneath this impressive facade lay a company increasingly dependent on fiction to sustain its growth narrative. The gap between Wirecard's reported results and reality was growing wider each year, setting the stage for an eventual reckoning that would shock Europe's financial establishment.

Chapter 3: First Challenges: Short Sellers and Early Warning Signs (2016-2018)

In February 2016, the first major public challenge to Wirecard's carefully constructed narrative emerged when an anonymous research group calling itself "Zatarra" published a 101-page report alleging the company was engaged in money laundering, accounting fraud, and other criminal activities. Behind Zatarra were short sellers Matthew Earl and Fraser Perring, who had spent months investigating Wirecard's connections to high-risk payment processing and questionable accounting practices. The report sent Wirecard's stock plummeting 42% in a single day, marking the beginning of a years-long battle between the company and a growing army of skeptics who believed its success was built on deception. Wirecard's response established a pattern that would repeat itself numerous times: rather than addressing the substance of the allegations, the company portrayed itself as the victim of market manipulation by unscrupulous speculators. CEO Markus Braun dismissed the report as "all bullshit" and claimed it was motivated by "jealousy and envy." The German financial regulator BaFin launched an investigation – not into Wirecard, but into the short sellers for potential market manipulation. This reflected a broader German suspicion of short selling as an Anglo-American practice that threatened national economic interests. Wirecard's defensive tactics went far beyond public statements; Jan Marsalek orchestrated a sophisticated counter-intelligence operation, hiring private investigators, hackers, and former intelligence officers to surveil, intimidate, and discredit the company's critics. Despite these challenges, Wirecard continued its upward trajectory. In May 2016, the company held an investor day in London where Braun confidently predicted Wirecard would triple in size by 2020. The presentation was light on details but heavy on buzzwords about financial inclusion and digital transformation. Most analysts remained bullish on Wirecard's prospects, with some setting price targets that implied the company could be worth over €30 billion. The company's share price gradually recovered and continued its upward trajectory, suggesting that most investors viewed the short sellers' concerns as unfounded or motivated by profit rather than truth. Behind the scenes, however, cracks were beginning to appear. In 2017, a whistleblower at Ernst & Young sent a letter to the firm's headquarters alleging that Wirecard senior management held stakes in the Mauritius fund that had profited from the Indian acquisition. This prompted EY to assign its fraud team to investigate, but Wirecard managed to delay and ultimately derail the inquiry through a combination of obfuscation and charm offensive. The auditors continued to sign off on Wirecard's financial statements despite mounting red flags, including the company's inability to provide clear documentation about its third-party business relationships. By 2018, Wirecard's share price had soared to over €160, valuing the company at more than €20 billion. It was on the verge of replacing Commerzbank in Germany's prestigious DAX 30 index, a remarkable achievement for a company that had been worth just €300 million a decade earlier. For many investors, this market validation was proof enough that the short sellers' concerns were unfounded. Yet a small group of skeptics continued to question how a payment processor could achieve profit margins that far exceeded those of its competitors. Had regulators or auditors taken the Zatarra allegations seriously and conducted a thorough investigation, the fraud might have been uncovered years earlier. Instead, the company's aggressive counterattacks succeeded in painting its critics as criminals, allowing the deception to continue and grow even larger.

Chapter 4: Whistleblowers Emerge: The Singapore Investigation (2018-2019)

In early 2018, a finance team member in Wirecard's Singapore office approached the company's newly hired legal counsel, Pav Gill, with disturbing information. She described witnessing Edo Kurniawan, head of Wirecard's Asian finance operations, instructing colleagues how to create fake documents and engage in "round-tripping" – moving money in circles between entities to create the illusion of legitimate business activity. This brave whistleblower provided Gill with documents showing forged contracts, backdated agreements, and other evidence of systematic accounting fraud that appeared to be directed from the highest levels of the company. Gill, a lawyer trained at prestigious firms, was shocked by what he discovered. Together with another lawyer, Royston Ng, he began a careful investigation, eventually bringing their findings to Wirecard's head of compliance in Munich. The company commissioned the Singapore law firm Rajah & Tann to conduct an internal investigation codenamed "Project Tiger." The preliminary findings were damning: the lawyers found multiple instances of document forgery, falsification of accounts, and potentially money laundering. Rather than suspending the employees involved or reporting the findings to authorities, Wirecard executives took control of the investigation. Jan Marsalek, who should have been a subject of the inquiry given his oversight of Asian operations, was instead put in charge of managing it. When Gill objected to this obvious conflict of interest, he found himself increasingly isolated. By September 2018, he was forced out of the company, but not before he had secured copies of the Project Tiger documents – 70 gigabytes of evidence documenting Wirecard's fraudulent practices. After months of unemployment and harassment, Gill decided to approach the Financial Times. In January 2019, journalist Dan McCrum published the first article based on Gill's evidence, revealing the existence of "Project Tiger" and detailing how Wirecard staff had engaged in round-tripping and document forgery. The company's stock plummeted 25% in a single day. The Singapore police took the allegations seriously, raiding Wirecard's offices in February 2019 and seizing documents and computers. This action lent credibility to the Financial Times' reporting and further damaged Wirecard's share price. In response, BaFin, the German financial regulator, took the extraordinary step of imposing a two-month ban on short selling Wirecard shares, citing the company's "importance for the economy." Even more remarkably, German prosecutors announced they were investigating the Financial Times for potential market manipulation – a move that reflected how deeply Wirecard had embedded itself in Germany's financial establishment. Throughout this period, Wirecard maintained its aggressive defense strategy. The company portrayed itself as the victim of a conspiracy between short sellers and journalists, filed criminal complaints against Financial Times reporters, and hired private investigators to surveil its critics. CEO Markus Braun continued to project confidence, telling investors that the allegations concerned only a small part of Wirecard's business and had no material impact on its financial statements. This combination of denial, counterattack, and regulatory protection allowed Wirecard to weather the storm once again. By April 2019, the company had secured a €900 million investment from SoftBank (though this later turned out to be a complex financial arrangement rather than a genuine investment), and its share price had largely recovered. The Singapore whistleblowers had broken through years of deception, providing documentation that could not be easily dismissed. Yet the reaction from German authorities – protecting Wirecard rather than investigating it – revealed how deeply the company had embedded itself in the country's financial establishment. The stage was set for a final confrontation between those seeking to expose the truth and a company desperate to maintain its facade.

Chapter 5: Desperate Defenses: Intimidation and Counterattacks (2019)

By mid-2019, Wirecard was fighting for its survival on multiple fronts. The Singapore police investigation was ongoing, short sellers were circling, and the Financial Times continued to publish damaging exposés about the company's accounting practices. With investor confidence wavering, Wirecard needed dramatic gestures to restore faith in its business model and financial stability. In April, the company announced what appeared to be a major vote of confidence: SoftBank, the Japanese conglomerate known for its massive investments in technology companies, would invest €900 million in Wirecard through a convertible bond. Markets reacted positively, with Wirecard's share price jumping on the news. However, like much about Wirecard, the SoftBank deal was not what it seemed. As later revealed, SoftBank itself never actually invested in Wirecard. Instead, the investment came from a fund created specifically for the deal, with money from SoftBank executives and Abu Dhabi's Mubadala Investment Company. The fund immediately sold most of the convertible bonds to other investors, pocketing a quick profit while retaining some of the potential upside if Wirecard's shares increased. It was financial engineering designed to create the appearance of a strategic endorsement without the substance – a microcosm of Wirecard's broader deception. Meanwhile, Wirecard was deploying increasingly aggressive tactics against its critics. Under Jan Marsalek's direction, the company hired private investigators to conduct surveillance on Financial Times journalists and short sellers. In one particularly brazen operation, Wirecard operatives attempted to entrap a London nightclub owner named Nick Gold, who had connections to the Financial Times, in a sting operation. Gold was secretly recorded discussing an upcoming negative article about Wirecard, which the company then used to accuse the newspaper of market manipulation. This intimidation campaign extended to whistleblowers as well, with Pav Gill finding himself followed and believing his phone was being hacked. The company's most significant counterattack came in October 2019, when it filed a lawsuit against the Financial Times and its journalists, accusing them of market manipulation in collusion with short sellers. This legal action was accompanied by a sophisticated public relations campaign portraying Wirecard as a victim of Anglo-American financial interests seeking to profit at the expense of a European success story. In Germany, where short selling was viewed with suspicion, this narrative found a receptive audience among politicians, regulators, and media outlets. The country's financial regulator, BaFin, continued to focus its investigative efforts on the Financial Times rather than on Wirecard itself. Despite these desperate measures, Wirecard couldn't stop the flow of damaging information. In October 2019, the Financial Times published its most devastating exposé yet, revealing that much of Wirecard's reported business with third-party partners appeared to be fabricated. The newspaper obtained internal spreadsheets showing that half of Wirecard's reported revenue and almost all of its profits came from just three opaque partner companies in the Philippines, Singapore, and Dubai. When reporters contacted many of the customers these partners supposedly served, they had either never heard of Wirecard or had terminated their relationship years earlier. Under mounting pressure, Wirecard's supervisory board finally commissioned a special audit by KPMG in October 2019. Unlike Ernst & Young, which had signed off on Wirecard's accounts for years, KPMG would conduct an independent investigation into the allegations. Wirecard promised full cooperation and transparency, but behind the scenes, executives were already working to obstruct the audit. The company's desperate maneuvers had succeeded in delaying its collapse, but the tactics that had worked for years – intimidation, deflection, and nationalist appeals – were finally losing their effectiveness as concrete evidence of fraud continued to emerge.

Chapter 6: The Collapse: Missing Billions and Shattered Trust (2020)

The first half of 2020 brought the long-running Wirecard saga to its dramatic conclusion. In April, after months of delays and obstruction from Wirecard management, KPMG released the results of its special audit. The findings were devastating: KPMG could not verify the existence of €1.9 billion in cash supposedly held in trust accounts, nor could it confirm that Wirecard's relationships with third-party partners were genuine. The auditors reported that Wirecard had failed to provide adequate documentation and had actively impeded their investigation. Despite CEO Markus Braun's attempts to spin the results as a vindication, claiming KPMG had found no evidence of wrongdoing, investors were no longer willing to give the company the benefit of the doubt. Wirecard's share price fell sharply but still traded at a valuation of over €10 billion, suggesting many investors continued to believe in its future. The final act began on June 18, 2020, when Ernst & Young refused to sign off on Wirecard's 2019 financial statements. EY had asked Wirecard to prove it could access the €1.9 billion supposedly held in escrow accounts at two Philippine banks. When the transfer failed to materialize, EY contacted the banks directly and received a shocking response: the documentation Wirecard had provided was "spurious," and the accounts did not exist. Wirecard was forced to admit that €1.9 billion of cash – roughly a quarter of its balance sheet – was "missing" and likely never existed. The company's share price collapsed, falling more than 98% from its peak. Within days, Markus Braun resigned and was subsequently arrested on suspicion of inflating Wirecard's balance sheet to attract investors. Jan Marsalek, the operational mastermind behind much of the fraud, disappeared. He told colleagues he was flying to the Philippines to track down the missing money, but this was his final deception. Immigration records initially showed he had entered the country, but these were later revealed to be falsified. In reality, Marsalek had fled to Belarus on a private jet and is believed to have subsequently made his way to Russia with the help of intelligence contacts. His current whereabouts remain unknown, though intelligence sources believe he is living in Russia under the protection of intelligence services with whom he had cultivated relationships. On June 25, 2020, Wirecard filed for insolvency, admitting it could not meet its financial obligations. Investigations revealed that approximately €1.9 billion of Wirecard's reported €2 billion in profits between 2015 and 2018 were fictitious. The real Wirecard – stripped of its fabricated Asian business – had actually been losing money for years. The company's core European payment processing business was legitimate but far smaller and less profitable than reported. The elaborate network of third-party partners in Asia, which supposedly generated the majority of Wirecard's profits, was largely fictional – a paper construct designed to inflate the company's financial results. The collapse sent shockwaves through Germany's financial and political establishment. BaFin, the financial regulator that had spent years defending Wirecard against its critics, faced devastating criticism for its failures. Its president, Felix Hufeld, was forced to resign in January 2021, along with several other senior officials. Ernst & Young faced lawsuits and reputational damage for its failure to detect the fraud earlier. The German government was forced to acknowledge serious deficiencies in its financial oversight system and introduced reforms to strengthen BaFin's powers and independence. For the thousands of Wirecard employees who had no knowledge of the fraud, the collapse meant sudden unemployment and the shock of discovering their company had been built on lies.

Chapter 7: Aftermath: Lessons from Europe's Greatest Financial Fraud

The implosion of Wirecard sent shockwaves through Germany's financial and regulatory establishments, forcing a painful reckoning with systemic failures that had allowed the fraud to flourish. BaFin, the financial regulator that had spent years defending Wirecard against its critics, faced devastating criticism for its misplaced priorities. Rather than investigating credible allegations of fraud, BaFin had focused on prosecuting journalists and short sellers who raised concerns. The regulator's president, Felix Hufeld, was forced to resign in January 2021, along with several other senior officials. The German government introduced reforms to strengthen BaFin's powers and independence, including enhanced capabilities to investigate suspected fraud and greater protection for whistleblowers. Ernst & Young, Wirecard's longtime auditor, faced equally harsh scrutiny. For over a decade, EY had signed off on Wirecard's financial statements despite red flags that should have prompted deeper investigation. The firm failed to perform basic audit procedures, such as directly confirming bank balances with the banks themselves rather than relying on documents provided by Wirecard. EY partners faced criminal investigations, and the firm lost numerous clients as its reputation suffered. The scandal exposed fundamental weaknesses in the audit process and raised questions about whether the current model of corporate auditing, where companies pay the firms that check their books, is inherently flawed. The criminal aftermath continues to unfold. Markus Braun remains in custody awaiting trial, maintaining his innocence and claiming he too was deceived by Marsalek and others. Several other executives face criminal charges, while Jan Marsalek remains a fugitive on Interpol's most-wanted list. The German government established a parliamentary inquiry committee to investigate the regulatory failures, producing a 675-page report documenting the systematic breakdowns that allowed the fraud to continue for so long. For investors, the collapse was catastrophic. Wirecard's stock, which had traded as high as €191 in 2018, became nearly worthless. Thousands of small investors lost their savings, while major institutions faced billions in losses. Perhaps the most important legacy of the Wirecard scandal is the vindication of those who persisted in questioning the company's claims despite intimidation and attacks. Whistleblowers like Pav Gill, journalists like Dan McCrum and his Financial Times colleagues, and short sellers who spotted the inconsistencies in Wirecard's story were ultimately proven right. Their persistence in the face of powerful opposition demonstrates the crucial role that independent voices play in maintaining market integrity. The scandal has prompted a reassessment of how Germany views short sellers and investigative financial journalism, with growing recognition that these forces can serve as an essential check on corporate malfeasance. For corporate boards and investors worldwide, Wirecard offers painful lessons about the importance of robust corporate governance. The company's supervisory board had failed in its oversight duties, lacking members with relevant financial expertise and maintaining too close a relationship with management. Investors had been seduced by Wirecard's growth story and dismissed critical analysis as the work of market manipulators. The case demonstrated how even sophisticated financial markets can be deceived by determined fraudsters who understand how to exploit weaknesses in the system and leverage nationalist sentiment to deflect scrutiny.

Summary

The Wirecard scandal represents one of the most spectacular corporate frauds in European history – a perfect storm of deception, regulatory capture, and willful blindness. At its core, the fraud relied on a simple mechanism: inventing business that didn't exist and claiming cash balances that weren't real. Yet this simple deception was obscured by a complex web of international transactions, intimidation tactics, and nationalist sentiment. What began as a processor of payments for pornography websites transformed into Germany's most celebrated technology company through a combination of genuine innovation and increasingly elaborate fiction. The company's leadership exploited Germany's desperate desire for a homegrown technology champion, creating a narrative so compelling that regulators, auditors, and investors overlooked mounting evidence of fraud. When critics raised questions, Wirecard responded not with transparency but with intimidation, surveillance, and legal threats – tactics that should have raised red flags but instead reinforced the company's image as a victim of unscrupulous speculators. The lessons from Wirecard extend far beyond Germany's borders. First, the scandal demonstrates the dangers of "national champion" thinking, where regulators and investors become cheerleaders rather than skeptics. Second, it highlights the crucial role of independent journalism and short sellers in exposing corporate fraud, despite attempts to vilify them. Third, it reveals the limitations of our current auditing system, where conflicts of interest can prevent auditors from challenging their clients effectively. Fourth, it underscores the importance of protecting whistleblowers, who often face personal and professional risks when exposing wrongdoing. For investors, regulators, and business leaders alike, Wirecard offers a timeless reminder: when a company responds to legitimate questions with intimidation rather than transparency, when its business model seems too complex to understand, and when its profits defy industry norms, skepticism is not just prudent – it's essential. The most valuable protection against the next Wirecard is a culture that rewards critical thinking and protects those brave enough to ask uncomfortable questions.

About Author

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Dan McCrum

Dan McCrum is a member of the Financial Times investigations team. His reporting on Wirecard has been recognised with prizes from the London Press Club, the Society of Editors, the New York Financial Writers' Association, the Overseas Press Club, and the Gerald Loeb awards. He was also awarded the Ludwig Erhard Prize for economic journalism, a Reporters Forum Reporterpreis and a special award by the Helmut Schmidt prize jury for investigative journalism. In 2020, he was named Journalist of the Year at the British Journalism Awards.

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