Money Men: A Hot Startup, A Billion Dollar Fraud, A Fight for the Truth
By the FT reporter who pursued the story for five years; also issued as House of Wirecard.
Summary
McCrum, a Financial Times reporter, wrote a first-person account of his six-year investigation into Wirecard, the German payments company that joined the DAX index before collapsing in 2020 when nearly two billion euros of supposed cash could not be found.
The investigative narrative is the substance. McCrum started from a short seller's tip in 2014 and published a series of articles questioning the company's accounts, focusing on the acquisitions in Asia, the round-tripping of funds through related parties, and the third-party acquiring arrangement under which Wirecard claimed a large share of its profits came from partners in Dubai, Manila and elsewhere that processed payments on its behalf. Documents showed those partners were largely fictitious or vastly smaller than claimed.
The response is what makes the book unusual. Wirecard hired lawyers and private investigators, surveilled McCrum and his colleagues, attempted to entrap them, and ran a campaign presenting the reporting as a market manipulation conspiracy. BaFin, the German financial regulator, responded by opening a criminal investigation into the journalists and by banning short selling in Wirecard shares, a step taken against speculators rather than against the company. German institutional investors, politicians and the accounting firm continued to support the company. The Financial Times faced substantial legal and reputational risk.
McCrum's argument is that the failure was institutional rather than technical: the fraud was detectable from public documents, and every institution charged with detecting it instead defended the company because it was a national technology success.
The book is a participant's account and centres the author's own experience, which some readers find intrusive. It was written before the criminal trials concluded. The description of how a regulator, an auditor and a national press can align against the evidence is the durable content.
Key takeaways 7
- Wirecard claimed a large share of its profits came from third-party acquiring partners that were largely fictitious.
- The fraud was detectable from public filings and from the implausibility of the reported margins in the claimed geographies.
- The German regulator investigated the journalists and banned short selling in the shares rather than examining the company.
- The auditor accepted confirmations of cash balances that it did not independently verify with the banks named.
- National pride in a domestic technology champion caused investors, regulators and politicians to discount evidence against it.
- The company used surveillance and legal threats against reporters, which raised the cost of investigation beyond what most outlets would accept.
- Short sellers supplied the initial analysis, and their financial interest was used to discredit accurate findings.
Who should read it
Investors and auditors who want a documented case of how a large accounting fraud survived years of published evidence because institutions defended it.
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