Wirecard Probe in Philippines Focuses on Two Bankers Who May Have Forged Documents
23 Juli 2020 - 1:14PM
Dow Jones News
By Feliz Solomon
Philippine investigators say they have identified dozens of
people and entities of interest in their probe into Wirecard AG,
and are focusing on two bank employees who may have facilitated a
multinational accounting scandal at the insolvent German payments
company.
Wirecard had claimed some $2.1 billion in cash on its balance
sheet had been transferred to accounts at two Philippine banks.
Both banks -- Banco de Oro and Bank of the Philippine Islands --
denied the accounts existed, and officials say the money never
entered the country's financial system.
Wirecard later said the money probably never existed at all.
Mel Georgie Racela, executive director of the Philippines'
Anti-Money Laundering Council, a government entity, said
investigators are focusing on two "rogue bank employees" -- one
from Banco de Oro and one from Bank of the Philippine Islands. He
said the council's initial findings indicated they forged the
documents that Wirecard used to mislead auditor Ernst & Young
GmbH about the existence and location of the missing funds.
The two bank employees, who according to the initial findings
were acting "in exchange for financial gain," have been fired. Mr.
Racela said law-enforcement agencies would study the council's
findings and consider possible criminal charges.
Mr. Racela said 55 other individuals and entities are among
those the AMLC is seeking information on.
Banco de Oro and Bank of the Philippine Islands didn't respond
to requests for comment.
Regulators, including Germany's top financial supervisor, have
come under fire from investors and politicians for their failure to
act earlier on concerns about Wirecard's accounting practices.
Authorities in several countries including the U.K., Germany,
Singapore and the Philippines have opened investigations into those
practices.
Chuchi G. Fonacier, deputy governor of the Financial Supervision
Sector at the Philippines' central bank, said the country's
financial sector isn't to blame. "This will not tarnish the
reputation of the Philippines because our strong oversight
protocols proactively identified and addressed the issues," Ms.
Fonacier said. "This case is evidence of bad actors, not evidence
of any fault on the part of the Philippines banking system."
Among the people of interest to Philippine authorities is lawyer
Mark Tolentino. Mr. Tolentino was identified on the forged bank
documents as Wirecard's trustee, according to people familiar with
the company. Mr. Racela said Mr. Tolentino is seen as a possible
gatekeeper, a term for a lawyer or other nonfinancial associate who
acts as a trusted go-between.
Mr. Tolentino didn't respond to requests for comment. He has
previously denied through a statement issued by his lawyer that
foreign currency accounts opened in the name of his law firm were
linked to Wirecard, claiming he was the victim of identity
theft.
German investigators have asked for the AMLC's assistance, Mr.
Racela said. "If German authorities share information about some
sort of criminal activity we will provide them with the necessary
information," Mr. Racela said. "We're open to all options."
Wirecard's dramatic downfall began after a whistleblower in
Singapore alerted compliance officers in 2018 that local finance
staff forged documents to make the company appear more profitable.
A Financial Times report about the whistleblower prompted an
investigation by Singaporean authorities that is continuing.
Short-selling investors also alleged that Wirecard used
third-party partners, tasked with collecting payments in countries
where the company wasn't licensed to operate, to make the business
look larger than it actually was. Three such partners, based in
Dubai, Singapore and the Philippines, were found to account for a
large share of Wirecard's revenue, according to a special audit
conducted by KPMG AG and documents reviewed by The Wall Street
Journal.
Wirecard last October hired KPMG to conduct the special audit
into the allegations. In April, KPMG said it couldn't confirm
whether the revenue was real after third-party partners refused to
cooperate.
The company's market value crashed when Wirecard's auditor,
Ernst & Young, declined to sign off on the company's annual
accounts because it doubted the authenticity of letters from the
two Philippine banks supposed to be holding $2.1 billion in trustee
managed accounts.
The third parties are now the focus of Munich prosecutors'
investigation into Wirecard's collapse.
On Tuesday, the prosecutors arrested former Chief Executive
Markus Brau -- who had previously been arrested and released on
bail -- and two other former executives citing evidence suggesting
they had made up income from the third parties starting in 2015 to
make the company's loss-making businesses appear profitable. Mr.
Braun has denied wrongdoing.
Mr. Braun's right-hand man, former Chief Operating Officer Jan
Marsalek, has been on the run since being fired in late June.
Philippines immigration records appearing to show Mr. Marsalek
transited through the country may have been faked, officials have
previously said. Recent reports by investigative journalism website
Bellingcat and German news magazine Der Spiegel said he may be in
Belarus or Russia. Authorities in both countries didn't respond to
requests for comment.
--Paul J. Davies and Patricia Kowsmann contributed to this
article.
Write to Feliz Solomon at feliz.solomon@wsj.com
(END) Dow Jones Newswires
July 23, 2020 06:59 ET (10:59 GMT)
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