Update: June 2020
EY announced €1.9bn of cash missing, CEO arrested, Wirecard AG filed for insolvency

HomeAnatomy of a fraudEdo’s EY accounting

Is Wirecard round tripping with Singapore entities?

September 9, 2019

As we’ve been searching for where Wirecard’s MCA business is (and the bulk of it looks not to be in Brazil, Turkey or Europe), we’ve come across a number of details that have made us take a second look at certain aspects of the business. There are some very odd coincidences and complicated relationships between Wirecard, its current and former executives, and third-party companies, many of which are suspicious in themselves, and, when taken together, raise yet more questions.

What we have found

A company in Singapore, oCap Management, formerly called Senjo Trading, whose MD, Carlos Haeuser worked for 13 years at Wirecard as a senior executive, started claiming to offer merchant cash advance in Singapore in November 2018 at around the same time it received €115M ($131M) of funding from an unknown third party. (Coincidentally, this is also the time when Wirecard started talking about MCA). By the end of December 2018, €113M of these funds had been lent out by oCap, without any sales people and without any advertising spend, and with distribution expenses of just $38K.

Until 2017, oCap was involved in trade financing and ship management, but also referenced etrade finance and blockchain technology on their website. However with Carlos’ arrival, and promotion to MD on the 9th of November 2018, the business shifted tack to offer MCA. Their level of success in just one month seems remarkable considering that, despite claiming to have facilitated $100M of loans in 2017 they had zero revenues in 2017 from interest income. Rather, in 2017 all revenues – on the basis of their audited accounts – were derived from ship management fees.

Following the €115M loan in late 2018, and in just 6 weeks, oCap somehow lent all that of money onwards in EUR, USD and GBP denominated loans from Singapore.

Furthermore in 1Q19, when Wirecard’s MCA program grew further to €400M, oCap formed a Luxembourg subsidiary that is described as “acquiring or assuming the risks associated with loans receivable”.

Why do we think this is interesting?

oCap has multiple close ties to Wirecard, making the timing of their MCA business launch interesting:

  • oCap was formerly known as Senjo Trading. Wirecard lent €25M to Senjo Group, a related business, in May 2017. Senjo was also widely reported as being a material driver of Wirecard revenues, EBITDA and receivables.
  • oCap’s CEO and MD, Carlos Haeuser had been a long-serving Wirecard executive, joining the firm in 2005 and promoted to EVP in 2010. He left the business in March 2018 to join oCap, although paperwork suggests there was some overlap between his time at Wirecard and oCap with his new appointment as director of oCap taking place on 5th March while he only officially left his previous roles as CEO of Wirecard Turkey and CEO of Wirecard Technologies on 15 March 2018 and 22 March 2018 respectively (Source). Of course, it’s also interesting that Turkey is where Wirecard has previously claimed to be doing significant volumes of MCA despite their audited financials showing nothing of the sort and worth remembering that MCA is illegal in Turkey.
  • oCap has also had two auditor resignations so far in 2019. T Ravi, their auditor of 2016 and 2017 resigned in early February 2019 to be replaced by BDO, who resigned in July 2019 without signing the 2018 financials. They were replaced by the less well known OA Assurance who eventually signed the annual report in August 2019. Related party disclosures changed between the 2017 and 2018 accounts – perhaps this is why BDO did not sign the accounts?

Why is this relevant?

While this could all be a coincidence, it is worth examining closely in light of the criminal “round-tripping” investigation that Wirecard is facing in Singapore, where the CAD is investigating Wirecard for allegedly moving money from its balance sheet to undisclosed related parties and then back as revenue, earlier in 2018 than the events described above. We think the CAD in Singapore should be aware of the suspicious timing and similarities of these events.

The FT has previously reported that Senjo (now oCap) had significant unpaid receivables at Wirecard and that a substantial portion of their revenues and EBITDA come from Senjo. It seems reasonable to conclude that Wirecard was the 3rd party that lent the €115M to Senjo. If any of this money has made it back to Wirecard to pay-off the receivables that are owed by Senjo/oCap – that would be round-tripping.

If any of this is true, investors should be very concerned about the quality of that EBITDA given the very curious accounts at oCap / Senjo Trading.

Wirecard claims that it is lending €370M via MCA. This number has fallen, since the previously stated €400M. They’ve also changed their statements regarding where this money is being lent, telling investors at the H1 results call that it’s now less than 1/3 in Brazil and Turkey. According to their CPO, it’s not in Europe. There aren’t a lot of places left it could be, and Wirecard refuses to disclose to investors where it is (contrary to Markus Braun’s statements re transparency).

Sources

oCap Management Pte Annual report

Third party loan of $131M, denominated in Euros. The report states the loan bears an interest rate of 3.8% - 6% charged. Annual interest accrued of $663k shows the loan is between 30-49 days old at the balance sheet date.

In September 2018, www.ocap.com had no mention of MCA on their website, instead mentioning online etrade finance and blockchain technology (Source).

Carlos Haeuser is the CEO of oCap, and was appointed a director on the 5th of March 2018 (Source).

On the 15th of March 2018 Carlos resigned as the Chairman of the board and MD of Wirecard Turkey (replaced as Chairman by Wirecard COO Jan Marsalek) (Source).

On the 22nd of March 2018, Carlos was removed as CEO of Wirecard Technolgoies Gmbh (Source).

This website, its contents and the materials on or accessible through this website (such materials, this website and its contents being the “Materials”) are for informational purposes only and may not be relied on by any person for any purpose. Under no circumstances should any Materials be construed as, investment, financial, legal, tax or other advice or recommendations. The Materials are not intended to be and do not constitute or contain any investment recommendation or any financial product advice under any applicable law or regulation. No information in any of the Materials should be construed as recommending or suggesting an investment strategy or as representing any opinion as to the present or future value of any financial instrument. Investors should seek their own financial, legal and tax advice in respect of any decision regarding Wirecard AG (“Wirecard”). We do not render investment advice to anyone unless we have an investment adviser-client relationship with that person evidenced in writing. You understand and agree that we do not have any investment advisory relationship with you or do not owe fiduciary duties to you. Giving investment advice requires knowledge of your financial situation, investment objectives, and risk tolerance, and we have no such knowledge about you.

By downloading from, or viewing Materials on this website, you agree that use of the content on this website is at your own risk.

Funds and clients managed by us are in the business of trading securities. As of the publication date of the Materials, funds or clients related to us and/or their clients and/or investors (possibly through or along with our partners, affiliates, employees and consultants) have a short position in one or more of the securities of Wirecard (whether they be in stock, contracts for differences, options, swaps, futures or other synthetic instruments and other derivatives related to one or more of these securities). Therefore such funds or clients related to us and/or their clients and/or investors stand to realize significant gains in the event that the prices of either equity or debt securities of Wirecard decline and, on the other hand, may incur losses in the event the prices increase. For this reason, there might be a conflict of interest. We will not update any Materials on our website to reflect changes in positions that may be held by funds and/or investors related to us.

It is possible that there will be developments in the future that cause one or more of such funds or clients from time to time to sell all or a portion of their holdings in open market transactions or otherwise, buy shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls or other derivative instruments relating to such shares, and funds and clients managed by us may currently have such positions whether long, neutral or short. Consequently, short positions or (beneficial) ownership of Wirecard shares (long position) by funds and clients managed by us may vary over time depending on various factors, with or without regard to our views of Wirecard's business, prospects or valuation (including the market price of Wirecard shares), including without limitation, other investment opportunities available to us and funds and clients managed by it, concentration of positions in the portfolios managed by us, conditions in the securities markets and general economic and industry conditions.

The views, forward-looking statements, estimates, projections, assessments and beliefs expressed in the Materials represent the opinions of the authors thereof (“we”, “us” or “our” as the context requires) and are based on publicly available information with respect to Wirecard. We recognize that there may be confidential information in the possession of Wirecard that could lead Wirecard to disagree with our conclusions.

Certain (financial) information and data used in the Materials have been derived or obtained from public filings made by Wirecard and from other generally available and free accessible third party reports and sources. We have not sought or obtained consent from any third party to use any statements or information indicated herein as having been obtained or derived from generally available statements made or published by third parties. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Materials. No warranty or representation, whether express or implied, is made by the inclusion of any data or information, whether derived or obtained from public filings made by Wirecard or from any third party, that such data or information is accurate, complete or comprehensive.

The Materials may include content or quotes from, or hyperlinks to, news coverage or other third party source. The content of such third party materials has not been independently verified by us and does not necessarily represent our views. The authors and/or publishers of such third party materials are independent of, and may have different views to, us. The Materials may not be representative of all relevant news coverage or views expressed by other third parties on the stated issues. Neither we nor any of our affiliates shall be responsible or have any liability for any misinformation contained in any Wirecard filing or third party report.

Nothing in the Materials is intended to be a prediction of the future trading price or market value of securities of Wirecard. There is no assurance or guarantee with respect to the prices at which any securities of Wirecard will trade, and such securities may not trade at prices that may be implied herein. The Materials do not recommend the purchase or sale of any security.

We reserve the right to change any of our opinions expressed in the Materials at any time as it deems appropriate. We disclaim any obligation to update the data, information or opinions contained in the Materials.

Under no circumstances are the Materials intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security. We are not offering, selling or buying any security to or from any person through this website or Materials on this website.

We also reserve the right to take any actions with respect to investments in Wirecard as we may deem appropriate, including, but not limited to, communicating with management of Wirecard, other investors and shareholders, stakeholders, industry participants, and/or interested or relevant parties about Wirecard, and to change our intentions with respect to our investments in Wirecard at any time.