the-mother-and-son-who-uncovered-a-million-dollar-fraudThe mother and son who uncovered a million-dollar fraud

Everything pointed to the fact that the Wirecard company was going to be the next Paypal or at least the German version of the American multinational famous for processing payments. It was listed on the DAX, Germany’s main stock benchmark, valued at almost $26 billion and appeared to have a promising future ahead.

However, everything exploded in 2020 after a worker revealed the accounting tricks the company used to inflate its profits. Wirecard became one of the largest financial scandals in the history of the Federal Republic of Germany overnight.

The share price plummeted by 99% and it became the first company on the DAX to declare insolvency. What had started as a payment processing platform for pornography sites and gambling websites went bankrupt, owing its creditors more than $4 billion.

The CEO, Markus Braun, was arrested and its CEO, the Austrian Jan Marsalek, disappeared. Interpol is still looking for him.

A mother and her son are the protagonists of this story, although both would have liked not to be so involved in such a dirty plot.

What Pav Gill and his mother Sokhbir brought to the table was evidence that some $2 billion the company claimed to have in two accounts in the Philippines did not exist.

The financial engineering carried out by its managers had allowed them to falsely increase their sales figures to make it appear more profitable than it really was.

Arrest warrant for Jan Marsalek
Jan Marsalek is being sought by Interpol.

After years working for the best law firms in the world, in 2018, Pav was contacted for an interview. That’s where we’ll start this story.

“The opportunity arose to work as head of the legal department for the Asia Pacific region at Wirecard, a technology company that was growing very quickly. Although he would work in the Singapore office, he was going to have enormous autonomy, reporting directly to the Munich legal team,” he tells the BBC’s Outlook programme.

International company

They had offices in South America, North America, the entire European Union, Asia, as well as Australia and New Zealand.

“My mother is a single mother, so I am the only child she had when she was 21 or 22 years old. At that time, it was quite difficult. And I used to sit with her when she went to her law classes. So I think that planted a seed in my head from an early age, about this whole law thing,” she says.

“She is very strong, very independent, very firm, as well as sensible.”

Books have been written about Wirecard and there is even a Netflix series.

For her, being a single mother “was very hard because you have to deal with the stigma, you also have to work and raise a child. She also did other part-time jobs, like teaching, just to earn extra income. But Pav was a good boy. He really didn’t give me much trouble.”

Already settled in Singapore, it wasn’t long before a younger Wirecard employee approached him with some pretty serious accusations.

He told her that he had attended a presentation given by Edo Kurniawan, the third most powerful person in the Finance Department of Wirecard’s global operations, in which he explained how to commit serious financial fraud.

Fake numbers

“Edo had a habit of hiring inexperienced staff from neighboring countries and bringing them to Singapore. Right after joining the company, he would quickly promote them and give them higher salaries,” says Pav.

“It was a pattern and it was used to abuse a lot of this staff, asking them to carry out transactions or work that were definitely not totally legal, at least, not ethical. “One of these employees came to me because she feared for her life and she knew what they were asking her was clearly illegal.”

This sounds extreme, but Pav says Edo spent a lot of time boasting about his connections to drug dealers and mafia members.

This worker was being asked to falsify numbers and transfer money to unknown third parties who definitely should not have that type of business relationship with Wirecard.

And this was being done to inflate the accounts and present these third-party companies as legitimate customers of the business.

It was eventually discovered that one of these companies led to a family home in the Philippines. Another was a Manila bus company.

Wirecard Headquarters
At its peak, the company was valued at $26 billion.

This colleague alleged that the company was doing something known in English as “round-tripping.”

It is when one company sells assets to another and then repurchases them and thus increases sales figures. It can be used to make a company appear more profitable than it really is or even to launder money.

Pav had access to accounts and invoices that his partner had that demonstrated the accounting trick. They agreed to meet at a cafe and she brought the documents.

“The invoices I saw were clearly fake. Whoever was making those fake invoices was using the Wirecard template and simply replacing the logo and sending the invoice to be paid,” the lawyer says.

“I was always suspicious of Edo and what he was doing. At first I thought he was misleading my colleagues and counterparts in Germany at the headquarters. The material I saw was objective in nature. And that’s why I immediately told my superiors in Munich.”

They asked him to conduct an investigation. Pav needed to look for more evidence of “round-tripping” and to do so he gave him access to the emails of some of the bosses in Singapore like Edo.

What he found was surprising and practically irrefutable.

Markus Braun
Markus Braun, CEO of financial services and technology company Wirecard, is on trial.

“They were creating fake contracts that all looked the same, signing them, even though they were not directors, transferring money from the company accounts to themselves,” he recalls.

But Pav would soon realize that instead of firing those responsible, Wirecard executives focused attention on him.

Everything started to go wrong. To sound bad and become really sinister.

Bullying and yelling

Pav endured weeks of bullying and yelling at the office. Edo pressured him to take a business trip to Indonesia, while he bragged about his alleged mafia connections there.

In Pav’s mind, all the alarm bells were ringing. From a business perspective there seemed to be no reason why he would have to go to Jakarta.

“I got two anonymous calls from Germany saying, ‘Hi, are you Pav Gill? We know you were asked to go on a business trip to Jakarta. Do not go. It’s a one-way ticket and you won’t come back.’ And then they hung up.”

Wirecard headquarters in Munich.
Wirecard’s headquarters were in Munich.

At this point, Pav had no one else to turn to and that’s when he told his mother.

“I was very upset, mainly because the behavior was extreme when I worked for them but they didn’t stop when I quit either. My mother was extremely stressed. She then decided that she should put an end to this situation. And that was when she approached several journalists to tell what was happening in the company,” she says.

The moment Sokhbir contacted the media was when mother and son started fighting back. The investigative journalist he approached put him in touch with another reporter who was already investigating possible fraud at Wirecard.

Investigation journalism

His name was Dan McCrum and he worked for The Financial Times newspaper in London. When he learned of the evidence Pav gathered, Dan flew to Singapore to meet him.

He summoned him to a source.

“I didn’t know the reason at the time, but soon after I found out that it’s a safer place to meet because of the sound effects and stuff. “If there was any attempt to have someone track me, that would make it more difficult.”

Wirecard Headquarters
The German electronic payment company Wirecard turned out to be a fraud.

Pav handed him some of the evidence he gathered. But when Dan McCrum returned to London, he began a lengthy process of fact-checking and consulting with lawyers before the article could be published.

About four months passed before the first article appeared. These were the most tense moments for Pav and his mother.

But it finally happened.

“I was having dinner at home. When the story was published, the stock price took a big hit and panic ensued. That’s where we feel a big, strong emotion of ‘okay, it’s finally there, and now let’s see what happens. Hopefully, the company would have to face the consequences.’”

German stock market
Wirecard filed for bankruptcy.

As a result of the journalistic investigation and the information provided by Pav, Wirecard had to allow an audit of its accounts. Auditors found more than $2 billion was missing as the company had been inflating its accounts to mislead investors.

“When the news broke that the auditors couldn’t find the money, I said, okay, that’s it, the company is on its last legs, the fraud has come to light and there is no turning back, it’s over.”

Wirecard no longer exists and many of those involved in this fraud scheme will sit in the dock at the end of this year.

Markus Braun, former CEO, is currently on trial in Germany, accused of fraud, breach of trust and accounting manipulation. Brown maintains that he is innocent and that he himself was a victim of fraud.

Jan Marsalek, former COO, disappeared the day after the company collapsed. At Germany’s request, Interpol issued a red notice for his arrest in August 2020.

For his part, Edo Korniawan, vice president of finance at Wirecard’s Singapore office, allegedly conspired with three former colleagues to embezzle funds from the subsidiary in Asia. He is also under a red alert from Interpol for his arrest and his whereabouts are unknown.

*This article is based on a story published in the BBC program “Outlook”. You can listen to it here (in English).

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