Stories
On July 9 the Garda national economic crime bureau executed a search warrant of Wirecard’s Dublin offices in Foley Street, Dublin 1.
The Gardaí raided Wirecard on the request of the German police, who are investigating the Munich-headquartered payments company over alleged accounting fraud.
The scale of the alleged fraud is massive. Since the investigations and audits started last October, Wirecard shares have shed €24 billion, or 98 per cent, of their value. About €1.9 billion is missing from its accounts. The company filed for insolvency last month with €4 billion owed to creditors.
The Dublin office was a significant part of Wirecard’s business. In 2016 for example, leaked documents show €121 million in fabricated earnings were booked through Dublin — 41 per cent of Wirecard’s total earnings for the year.
The Financial Times has led the way with the Wirecard story. It quoted emails, for example, from an executive with responsibility for Ireland and Britain in its reports about the business last October. He said he did not know everything about how the business recognised revenue in the UK and Ireland. “I only get a report usually quarterly to book revenue without the back up data to support the calculations,” he acknowledged in an email.
Wirecard specialised in high-risk, lucrative transactions such as in porn and gambling. Reporting by the Financial Times shows Wirecard’s commissions from one network of pornographic sites were as high as 15 per cent, when a typical commission in the online payments industry would be 1-2 per cent. These commissions added to €30 million in the period studied in 2017, making the porn network Wirecard’s sixth-biggest customer at the time.
I visited Wirecard’s offices on Foley Street shortly before the Gardaí raid, at the beginning of the month. I got upstairs but, without a search warrant, found myself peering into a locked, abandoned office. I noticed Wirecard’s nameplate had been removed from the building’s facade.
I went to Foley Street to ask about a specific fraud. I wasn’t there to ask about the missing €1.9 billion, but instead wanted to know about one Dubliner’s missing €600,000.
Fobbed off
This man is called David Jago. He told me he had his suspicions for some time — “certain things weren’t adding up,” he said.
He was buying a stake in a business created by a Norwegian business partner when he became concerned about the deal.
He travelled to Oslo to meet “the lawyer” involved in the transaction only to be told by the business partner at the last moment that the lawyer was sick — sick that day, and the next day, and later in the week too.
“That’s when I grabbed [the business partner] and I said, you and I are going to go find a new lawyer right now, and we’re going to sort this out”, Jago says.
That was April 2017. At that point, Jago says he had given €600,000 to his business partner named Pål Heine Magnussen – €500,000 in loans and €100,000 for shares in Magnussen’s company.
Jago is a Dublin businessman who is managing director of a facilities management company. Before that, he bought and sold a chain of betting shops. It was through sports betting that he met Pål Heine Magnussen.
Jago says Magnussen had assured him his money was coming. There had been delays at the bank, Magnussen said. And to prove the money was there, Magnussen furnished Jago with statements documenting €1.4 million in transfers to a bank account in Magnussen’s name. The bank’s name was Wirecard.
A month passed. Jago was agitated. So, in July 2017 he arranged a meeting in Dublin with Markus Fuchs, managing director at the time of Wirecard UK and Ireland, Claire Lynch, an associate of Jago, and another Wirecard employee.
Jago presented Fuchs with Magnussen’s statements, which showed Magnussen’s name, account number and other transaction details. Fuchs entered the details into his computer and pulled up a matching account. The account, he said, had €1.2 million in it.
According to Jago’s account he told Fuchs he was suspicious of Magnussen.
Fuchs then, according to Jago, told him he had frozen the €1.2 million right there on the spot, on the basis that the statements Magnussen had provided to Jago were fakes.
It’s unclear why Fuchs was willing and able to freeze the account so quickly, and why he shared with them sensitive information about the account balance. The name and account number did correspond with the information given by Jago.
Jago left the meeting satisfied that the money was frozen with Wirecard – whatever else was happening in his relationship with Magnussen he now had time to deal with it.
In the following months Jago and his associate Claire Lynch followed up with Fuchs, looking for confirmation that the funds were frozen. They got no response.
The closest they came was an email from Fuchs 17 months later. Jago emailed him setting out the story above – the meeting in Dublin, the account details provided by Jago, the €1.2 million frozen by Fuchs. Fuchs responded with a short email: “Thank you for the reminder, couldn’t remember as it was a while ago. Let me know how I can support you further.”
More months went by. Markus Fuchs left Wirecard UK and Ireland, replaced as MD by Helen Meehan. In January of this year, two and a half years after the first meeting at Wirecard with Markus Fuchs, Jago and Claire Lynch went to Wirecard’s offices in Foley Street, unannounced. They managed to meet with Helen Meehan. She told them she’d look into the matter. There is no suggestion of wrongdoing by Meehan.
By that time, Dan McCrum’s first major investigation into Wirecard’s accounting had been published in the Financial Times. A major KPMG audit of the business was ongoing. The company’s share price was down 41 per cent from the previous September.
Helen Meehan referred the matter to Wirecard’s senior compliance counsel in Munich, Christine Ahlfeld. One month later, on 3 March, Ahlfeld responded with the following short email:
“We internally investigated your case and did not identify any misconduct from Wirecard. Therefore, we consider this matter closed and take no further action.”
Three months later on 18 June, Wirecard announced that €1.9 billion was “missing” from its accounts. Wirecard’s CEO, shortly before being detained by police, said “it is currently unclear whether fraudulent transactions to the detriment of Wirecard have occurred”.
To the ends of the earth
Pål Heine Magnussen, Jago’s Norwegian business partner, was declared bankrupt in Norway in 2019, and suspended from serving as a company director.
A group of 64 of Magnussen’s other alleged victims of his are pursuing him for damages. Anette Holt Tønsberg, a lawyer representing the group, says they’re owed an average of €18,700.
Jens Eide, a forensic accountant acting on behalf of David Jago, says Magnussen frequently relied on Wirecard for payment processing and banking.
“My problem with all of these payment processing companies,” says Jago, “is they’ve enabled [Magnussen] to do this. If Wirecard hadn’t enabled him to do it, I wouldn’t be in the situation that I’m in now.”
Jago is pursuing Magnussen through the Norwegian courts. The date for his civil trial is set for 18 January 2021.
“I’m not giving up on this thing”, he says. “I’ve even told my wife – if anything happens to me, you are to make sure you get this guy.”
Further reading:
