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Money Men: A Hot Startup, A Billion Dollar Fraud, A Fight for the Truth
'The financial investigation of the decade... Money Men instantly enters the canon of great financial crime books' Bradley Hope, author of The Billion Dollar Whale
'A rip-roaring ride into the underworld of the global economy' Tom Burgis, author of Kleptopia
This is the stranger-than-fiction story of Wirecard, once a $30 billion tech darling, now a smouldering wreck, by the journalist who brought it crashing down - perfect for those who loved Bad Blood and Empire of Pain.
When journalist Dan McCrum followed a tip to investigate the hot new tech company challenging Silicon Valley, everything about Wirecard looked a little too good to be true: offices were sprouting up around the world, it was reporting runaway growth and the CEO even wore a black turtleneck in tribute to Steve Jobs. In the space of a few short years, the company had come from nowhere to overtake industry giants like Commerzbank and Deutsche Bank on the stock market.
As McCrum dug deeper, he encountered a story stranger and more dangerous than he ever imagined: a world of short sellers and whistleblowers, pornographers and private militias, hackers and spies. Before long he realised that he wasn't the only one in pursuit. Shadowy figures were following him through the streets of London, high-flying lawyers were sending ominous letters to his boss, and he was named as the prime suspect in a criminal inquiry. The race was on to prove his suspicions and clear his name.
Money Men is the astonishing inside story of Wirecard's multi-billion-dollar fraud, Europe's biggest new tech darling revealed as a house of cards. Uncovering fake bank accounts, fake offices and possibly even a fake death, McCrum offers a searing exposé that will finally lay bare the truth.
'A rip-roaring ride into the underworld of the global economy' Tom Burgis, author of Kleptopia
This is the stranger-than-fiction story of Wirecard, once a $30 billion tech darling, now a smouldering wreck, by the journalist who brought it crashing down - perfect for those who loved Bad Blood and Empire of Pain.
When journalist Dan McCrum followed a tip to investigate the hot new tech company challenging Silicon Valley, everything about Wirecard looked a little too good to be true: offices were sprouting up around the world, it was reporting runaway growth and the CEO even wore a black turtleneck in tribute to Steve Jobs. In the space of a few short years, the company had come from nowhere to overtake industry giants like Commerzbank and Deutsche Bank on the stock market.
As McCrum dug deeper, he encountered a story stranger and more dangerous than he ever imagined: a world of short sellers and whistleblowers, pornographers and private militias, hackers and spies. Before long he realised that he wasn't the only one in pursuit. Shadowy figures were following him through the streets of London, high-flying lawyers were sending ominous letters to his boss, and he was named as the prime suspect in a criminal inquiry. The race was on to prove his suspicions and clear his name.
Money Men is the astonishing inside story of Wirecard's multi-billion-dollar fraud, Europe's biggest new tech darling revealed as a house of cards. Uncovering fake bank accounts, fake offices and possibly even a fake death, McCrum offers a searing exposé that will finally lay bare the truth.
352 pages, Hardcover
First published June 16, 2022
About the author
Dan McCrum
4 books28 followersDan McCrum is a member of the Financial Times investigations team. His reporting on Wirecard has been recognised with prizes from the London Press Club, the Society of Editors, the New York Financial Writers' Association, the Overseas Press Club, and the Gerald Loeb awards. He was also awarded the Ludwig Erhard Prize for economic journalism, a Reporters Forum Reporterpreis and a special award by the Helmut Schmidt prize jury for investigative journalism. In 2020, he was named Journalist of the Year at the British Journalism Awards.
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Displaying 1 - 30 of 164 reviews
July 3, 2022
Really looked forward to this book. A payment processing crime thriller with all sorts of twists and turns. The author though managed to make an incredible truth stranger than fiction story just boring. It was far too centered around the author's story and totally glossed over the actual crimes being committed. There were so many boring threads the author pulled on and then left the most exciting ones unexplained. I actually didn't even understand the crimes in the end or how they managed to commit the fraud. Disappointing writing. Now need to find a better account of what happened.
November 15, 2022
I love stories of accounting scandals, especially startups. I like to understand the people who perpetuate large-scale frauds and the details of how they pull it off. So when Money Men came out, the story of the Wirecard scandal by Dan McCrum, the Financial Times journalist who broke the story, I had to rush out and buy a copy.
I'm glad I read it. If you're into financial scandals, it's a must-read. But I was kind of disappointed by the storytelling. What should have been an exciting read of international conspiracy, corruption, spying, and even criminal charges lodged against the writer, was kind of a slog.
I can't help comparing Money Men to Bad Blood, the story of the Theranos scandal by Wall Street Journal reporter John Carreyrou. That book told the intimate stories of founder Elizabeth Holmes and a few senior staff members who risked their careers and their health to blow the whistle. We got to know each of them, their lives and their struggles. We saw what was actually going on inside of Theranos as Holmes hid the reality of an impossible product from employees, from regulators, from customers, and from investors. It was a page-turner.
Money Men covered 7 years of investigation with every detail. Every meeting MeCrum had, every trip he took, every glass of beer he drank in a London bar. The book lists a cast of characters at the beginning because dozens of people play a part, but there is no focus other than findkng a way to get the truth out about Wirecard.
We never see the inside of Wirecard, never really understand how their scam worked. There's a cat and mouse game between the company and McCrum that ought to be exciting, but by describing the hundreds of other cats and mice all playing small (or unknown) roles, it feels like reading a company's annual report.
In the end, I'm left learning much more about how the Financial Times operates and the layout of their desks than I did about the inside of Wirecard.
An important read and valuable investigative journalism, but could have been a more interesting book.
I'm glad I read it. If you're into financial scandals, it's a must-read. But I was kind of disappointed by the storytelling. What should have been an exciting read of international conspiracy, corruption, spying, and even criminal charges lodged against the writer, was kind of a slog.
I can't help comparing Money Men to Bad Blood, the story of the Theranos scandal by Wall Street Journal reporter John Carreyrou. That book told the intimate stories of founder Elizabeth Holmes and a few senior staff members who risked their careers and their health to blow the whistle. We got to know each of them, their lives and their struggles. We saw what was actually going on inside of Theranos as Holmes hid the reality of an impossible product from employees, from regulators, from customers, and from investors. It was a page-turner.
Money Men covered 7 years of investigation with every detail. Every meeting MeCrum had, every trip he took, every glass of beer he drank in a London bar. The book lists a cast of characters at the beginning because dozens of people play a part, but there is no focus other than findkng a way to get the truth out about Wirecard.
We never see the inside of Wirecard, never really understand how their scam worked. There's a cat and mouse game between the company and McCrum that ought to be exciting, but by describing the hundreds of other cats and mice all playing small (or unknown) roles, it feels like reading a company's annual report.
In the end, I'm left learning much more about how the Financial Times operates and the layout of their desks than I did about the inside of Wirecard.
An important read and valuable investigative journalism, but could have been a more interesting book.
September 7, 2022
It’s an unbelievable story. You ask yourself how come regulators, investors, board, auditors are fooled by a few and mislead for almost 20 years to run a scam of a company that actually never had a truly viable business. You see the wrong side of national pride to support a local company and it’s management.
A story that is worth your time to know about and makes a very interesting read / listen. It beats many a thrillers in plots, subplots, characters and revenge .
A definite read .
A story that is worth your time to know about and makes a very interesting read / listen. It beats many a thrillers in plots, subplots, characters and revenge .
A definite read .
June 24, 2022
This book strongly reminds me of the 5 minutes of hate from 1984. Here are the bad guys. Hate them. Bad, bad capitalists. And oh, my god! They were doing business with the porn sites?!? That is unacceptable.
Only this is the basis for an article, not a book. The book should have been about how these were included in DAX. How Ernst and Young simply failed to notice anything, while getting paid generously. And you know, EY, and KPMG seem to still be in business. How the company declares KPMG has cleared them, KPMG says nothing, only one month later they cover their behinds saying they didn't have access to enough documents. It's about the endless stream of bureaucratic agencies in many countries that take money from the people, to protect the people, only to react after a scandal in the press.
Does this makes Wirecard less criminal? No. The problem is McCrum is just another humble servant of the system: ignore the ongoing scams, concentrate on those who don't have the political clout of a Visa or Pfizer.
Only this is the basis for an article, not a book. The book should have been about how these were included in DAX. How Ernst and Young simply failed to notice anything, while getting paid generously. And you know, EY, and KPMG seem to still be in business. How the company declares KPMG has cleared them, KPMG says nothing, only one month later they cover their behinds saying they didn't have access to enough documents. It's about the endless stream of bureaucratic agencies in many countries that take money from the people, to protect the people, only to react after a scandal in the press.
Does this makes Wirecard less criminal? No. The problem is McCrum is just another humble servant of the system: ignore the ongoing scams, concentrate on those who don't have the political clout of a Visa or Pfizer.
August 19, 2022
A spiritual successor to Bad Blood, transplanted to German Fintech. Money Men is a business book paced as a thriller, in which the reporter is also the protagonist and the story seems unbelievable, even though you know it's true. If you enjoyed the chronicle of Theranos, you'll love this.
I remember seeing headlines about fraud at Wirecard, but I had no idea the extent of it. It was brazen and widespread - and connected to organised crime. McCrum tells terrifyingly how he and others were personally targeted by the company, using private investigators and worse. He cuts through the terror with a wry sense of humour.
As with Theranos, the wildest thing about Wirecard is just how long the fraud carried on for. You keep expecting the downfall, and it just doesn't come. There's a litany of errors by regulators and auditors, but McCrum focuses on telling a good story rather than petitioning for institutional change. I think the book is better as a result - readers will draw their own conclusions.
I'd recommend this widely, although it may fall flat if you're completely uninterested in finance.
I remember seeing headlines about fraud at Wirecard, but I had no idea the extent of it. It was brazen and widespread - and connected to organised crime. McCrum tells terrifyingly how he and others were personally targeted by the company, using private investigators and worse. He cuts through the terror with a wry sense of humour.
As with Theranos, the wildest thing about Wirecard is just how long the fraud carried on for. You keep expecting the downfall, and it just doesn't come. There's a litany of errors by regulators and auditors, but McCrum focuses on telling a good story rather than petitioning for institutional change. I think the book is better as a result - readers will draw their own conclusions.
I'd recommend this widely, although it may fall flat if you're completely uninterested in finance.
March 29, 2024
Interesting story made boring by rambling storytelling. Felt like the author’s career story was focused on a bit too much.
These types of books typically name drop quite a bit but it got overkill in this book.
This book could have been 50 pages shorter and more focused on the facts and crimes in Wirecard.
These types of books typically name drop quite a bit but it got overkill in this book.
This book could have been 50 pages shorter and more focused on the facts and crimes in Wirecard.
January 5, 2023
I really wanted to be enamored with this book and enjoy it to the degree of Smartest Guys in the Room, Billion Dollar Whale, or Bad Blood. However, the author tends to focus more on his own personal experience and various hearsay/anecdotes without evidence (e.g., HF manager being punched in NY without video evidence and loosely insinuating it might have come from Wirecard), and less on the crimes committed. I'm still giving 3 stars since its a wild story - but I was expecting better.
July 15, 2022
Fraud and Fury at Wirecard.
McCrum got some information from whistleblowers that everything wasn't all-right in the company which was hailed as the German ideal fintec startup.
Wirecard was a small payment processor, working with dodgy porn and gambling companies, when it suddenly started growing. It bought a bank, and expanded world-wide by buying small companies, and collaborating with regional operations that paid them royalties for using the Wirecard software.
Wirecard was a successful payment processor, and thousands of people did decent work there, but somehow some people invented dodgy deals and made paper profits, causing the stockmarket to fall in love with their shares.
In reality, though, many of their smaller collaborators either didn't exist at all, or were just mailboxes that received bills for millions, that were never actually paid. When the story finally broke, the company collapsed, and the CEO is under arrest, and coud face up to 15 years in prison. The person identified as the main man behind most of the dodgy dealings, COO Marsalek, escaped, and there are rumours that he's living under the protection of GRU in Moscow.
The book follows in rather too much detail the internal bickering at Financial Times, anbd the doings of various short-sellers, rather than the murky dealings at Wirecard. In the end the reader is left wondering what really happened. There is room for an insider story about what actually happened inside the company!
McCrum got some information from whistleblowers that everything wasn't all-right in the company which was hailed as the German ideal fintec startup.
Wirecard was a small payment processor, working with dodgy porn and gambling companies, when it suddenly started growing. It bought a bank, and expanded world-wide by buying small companies, and collaborating with regional operations that paid them royalties for using the Wirecard software.
Wirecard was a successful payment processor, and thousands of people did decent work there, but somehow some people invented dodgy deals and made paper profits, causing the stockmarket to fall in love with their shares.
In reality, though, many of their smaller collaborators either didn't exist at all, or were just mailboxes that received bills for millions, that were never actually paid. When the story finally broke, the company collapsed, and the CEO is under arrest, and coud face up to 15 years in prison. The person identified as the main man behind most of the dodgy dealings, COO Marsalek, escaped, and there are rumours that he's living under the protection of GRU in Moscow.
The book follows in rather too much detail the internal bickering at Financial Times, anbd the doings of various short-sellers, rather than the murky dealings at Wirecard. In the end the reader is left wondering what really happened. There is room for an insider story about what actually happened inside the company!
October 10, 2022
A great read, full of details that were never in the FT articles, for good reason!
February 2, 2023
3.5 stars. Very interesting case but writing could have been presented more clearly.
April 11, 2023
An account of the Wirecard scandal written by an FT journalist who has battled for years to uncover the truth about this company. I don't recall hearing much about this in the news which is surprising given the scale of fraud and corruption (and some seriously shady characters involved). I listened to the audiobook which made it a little difficult to follow at times given the large cast of characters and attempts to explain fraudulent activities (which were convoluted and complicated by design). The author uses some good analogies and the audiobook is read well by the author.
October 14, 2022
Holy crap! After reading this book, this is all I can say. I’m speechless. Wirecard’s rise and fall has got to be one of the most shocking, ineffable yet fascinating contemporary stories of corporate fraud. The way Wirecard managed to deceive so many stakeholders it encountered in its path to growth is riveting. This reads like a fictional thriller but couldn’t be further from reality. For me, this is surely one of the books of the year!
June 1, 2023
I don't think I have ever read something like this! It was an unbelievable journey to go from one page to the next. Wild in its account, it covers everything that is wrong with crony capitalism. One aspect of the book I quite enjoyed, was that it challenges the stereo type of Germany as a clean, boring financial system. Exposing the government's ridiculous light hand on the important corporations.
April 24, 2023
A very long build up to a interesting crescendo. The writing was fine, but it did uncover a lot of interesting shenanigans that occurred at wirecard prior to its fall.
July 5, 2023
Genuinely fascinating book and strangely close to home regarding work. I Cant believe this went on only 2 years ago! Encourage everyone in finance to read.
August 24, 2022
Page turner. If you're in to the genre and interested in financial fraud related true crime you're likely to enjoy it immensely. I am glad McCrum (Easter egg for Borat fans) didn't try and deify the short sellers as most of them are complete scumbags.
June 11, 2023
read this book and watch the documentary 4.75 stars
November 17, 2023
Interesting but also very, VERY, detailed.
March 9, 2023
So I had this notion that alternating fiction/non-fiction titles would help avoid my non-fiction binge-to-burnout cycle, but in a minute we'll see how that didn't really work out :D
I picked this up in the same spirit as I did Bad Blood: Secrets and Lies in a Silicon Valley Startup (about Elizabeth Holmes' Theranos start-up) and Empire of Pain: The Secret History of the Sackler Dynasty (about the Sackler family and their drug OxyContin, a catalyst drug to the opioid crisis), namely to learn about something that had very bad intentions/consequences and that I didn't know much about to begin with. With Money Men, however, I went in not even aware of what Wirecard was.
In this sense, McCrum does a great job of walking you through all of that if Wirecard is a completely new name to you too. I found the subject perhaps a bit more forbidding than I expected, mostly because I am no economist and the more you read about money under capitalism, the less it feels it has anything to do with real money as any layperson would understand it, and the more it becomes fuzzy entities like "assets" and "stocks". It was partly that inability to really know for sure I understand how global money fraud is committed, even at the end of all of this, that brought this down to a 4 (and no, I don't mean why wasn't this a blueprint to financial crime, I just mean I am not certain off the top of my head I could adequately explain how Wirecard did it, even though I understood how some of the schemes they were running were managing it). It seems ridiculous to me (as an average person and not a financial entity) to imagine that you can just essentially magic money on paper that translates into basically thin air in reality, and no one would ever figure you out (including audits by big legal powerhouses such as Ernst and Young and KMPG), but that seems to be exactly what happened here. You'd imagine a big financial crash would have taught capitalism a thing or two but well, you'd be wrong.
What I found McCrum less accomplished in is really following his own investigative threads through. There were plenty of details brought up that didn't really seem to ever be followed through, or even brought to some resolution of the type "the trail went nowhere", while other, frankly uninteresting discoveries get pages-worth of attention. Perhaps this was also a bit harder to really get invested in, as all the crimes really were so opaque to the average person who still saves money in a savings account, and to whom all these high-stakes schemes are best summed up as "rich people are the worst"; this is not the same as in the previous two titles mentioned, where the real damage is felt by oftentimes poor, desperate people- the kinds of people that would get blamed for what's happened to them and left out of a solution as well, even when the crime is known (I mean, the Sacklers still get to be a name largely associated with philanthropic endeavours, never mind the thousands whose lives were waylaid by opioid-graduating-to-fentanyl addictions, with no support or understanding at all).
All in all, not a completely inaccessible book about a financial start-up, but just not quite able to grab me all the way through.
I picked this up in the same spirit as I did Bad Blood: Secrets and Lies in a Silicon Valley Startup (about Elizabeth Holmes' Theranos start-up) and Empire of Pain: The Secret History of the Sackler Dynasty (about the Sackler family and their drug OxyContin, a catalyst drug to the opioid crisis), namely to learn about something that had very bad intentions/consequences and that I didn't know much about to begin with. With Money Men, however, I went in not even aware of what Wirecard was.
In this sense, McCrum does a great job of walking you through all of that if Wirecard is a completely new name to you too. I found the subject perhaps a bit more forbidding than I expected, mostly because I am no economist and the more you read about money under capitalism, the less it feels it has anything to do with real money as any layperson would understand it, and the more it becomes fuzzy entities like "assets" and "stocks". It was partly that inability to really know for sure I understand how global money fraud is committed, even at the end of all of this, that brought this down to a 4 (and no, I don't mean why wasn't this a blueprint to financial crime, I just mean I am not certain off the top of my head I could adequately explain how Wirecard did it, even though I understood how some of the schemes they were running were managing it). It seems ridiculous to me (as an average person and not a financial entity) to imagine that you can just essentially magic money on paper that translates into basically thin air in reality, and no one would ever figure you out (including audits by big legal powerhouses such as Ernst and Young and KMPG), but that seems to be exactly what happened here. You'd imagine a big financial crash would have taught capitalism a thing or two but well, you'd be wrong.
What I found McCrum less accomplished in is really following his own investigative threads through. There were plenty of details brought up that didn't really seem to ever be followed through, or even brought to some resolution of the type "the trail went nowhere", while other, frankly uninteresting discoveries get pages-worth of attention. Perhaps this was also a bit harder to really get invested in, as all the crimes really were so opaque to the average person who still saves money in a savings account, and to whom all these high-stakes schemes are best summed up as "rich people are the worst"; this is not the same as in the previous two titles mentioned, where the real damage is felt by oftentimes poor, desperate people- the kinds of people that would get blamed for what's happened to them and left out of a solution as well, even when the crime is known (I mean, the Sacklers still get to be a name largely associated with philanthropic endeavours, never mind the thousands whose lives were waylaid by opioid-graduating-to-fentanyl addictions, with no support or understanding at all).
All in all, not a completely inaccessible book about a financial start-up, but just not quite able to grab me all the way through.
February 4, 2024
Great story, but difficult to read as it's a real story and there are so many names and plot unfolding.
August 23, 2022
The book has kind of an awkward flow and all the best salacious details had already been shared in podcasts before this book was published.
July 10, 2023
What was Wirecard? Was it a payments facilitator like paypal? Was it a savy mergers and acquisitions player? Was it a showcase for German business acumen? Or was it a palace of jello, susceptible to meltdown under the hot lights of intense scrutiny?
Dan McCrum, a journalist with the Financial Times, unspools a lurid tale of accounting fraud, corruption, money laundering, market manipulation, wire-tapping, and intimidation spread across two decades. It all began in 2001 when a failed payments processor called Wirecard was swallowed by Electronic Billing Systems. The newly incarnated Wirecard exploited a dodgy niche servicing online gamblers and pornographic websites. It created Click2Pay, an e-wallet that shielded the nature and identity of online payments, securing them from scrutiny by credit card companies and banks.
Absorption of InfoGenie, a publicly traded company bestowed that same status on Wirecard without the bothersome details of due diligence in 2004. Two years later Wirecard acquired its own bank by purchasing XCOM, allowing it to issue its own credit cards. In 2007 Wirecard acquired G2Pay, a processor for Absolute Poker, Full Tilt, and Poker Stars. G2Pay kept these customers alive in a world where the U.S. Unlawful Internet Gambling Enforcement Act had been passed toward the end of 2006. However, the writing was on the wall, and Wirecard needed a way to make G2Pay look like a profit machine.
The mechanisms of fraud which McCrum details were difficult for me to follow due to their complexity. The simplest examples were miscoded transactions that made illegal transactions appear legal. Chargebacks or disputed transaction stats were closely monitored and shuffled to keep the company from raising red flags about its real customer base.
McCrum's suspicions were aroused when he finds so-called licensing fees paid by a partner company in Bahrain fail to show up in Wirecard's books. He flies to Bahrain to query the payer only to embark on a serpentine journey finally leading to a construction site where the company's lawyer refers him to a local actress who then refers him to her “business partner,” Christopher Bauer. McCrum surmises that no money changed hands. The deception was to increase profits on Wirecard's books, thus increasing shareholder confidence and pumping up the share price. Leo Perry of Ennismore Fund Management tells McCrum: “'Faking profits, you end up with a problem of fake cash. At the end of the year the auditor will expect to see a healthy bank balance, it's the first thing they check. So what you have to do is spend that fake cash on fake assets.'” (p.72)
Those fake asset purchases proliferated faster than rabbits, but to uncover the fraud meant knocking on doors in places like India, Singapore, and the Philippines – places with obscure address systems and people suspicious of foreigners looking under rocks.
Another ploy, although merely a stopgap, was to create fake invoices – money owed to Wirecard for licensing fees and consulting which would show up on the balance sheet as receivables, an asset.
McCrum uncovered another way to commit fraud called “Round-tripping.” The idea ws to move actual cash across a series of fake subsidiaries and then back to the originator, Wirecard's bank. The movement would give the illusion of robust financial health for each of these entities which the cash passed through.
By 2019 McCrum had an epiphany. He learns that the FTC has reached a settlement with a company called Allied Wallet. The name rings a bell. It was listed as a Wirecard customer on a spreadsheet he has. However, when he questions Allied Wallet the company denies any connection to Wirecard or to its Middle East partner Al Alam Solutions. Scrutiny of other customers on the spreadsheet reveals them to be mirages as well. McCrum exclaims: “'None of it's real. The customers are fake. There's nothing there.'” (p.211)
Of course none of this would be interesting if billions of euros were not at stake. In 2006 Wirecard had a market capitalization of €300 million. By 2014 it had risen to €4.2 billion. The company was not about to let some nosy journalist wreck their money-making machine.
By 2015 Wirecard was on the offensive. It's lawyers threatened to sue the Financial Times and McCrum. Private security operatives were hacking cell phones and computers. The bank accounts and trades of suspected “enemies” were being monitored for evidence of bribery or market manipulation. The website of Zatarra Research, an anonymous group which had released a report connecting multiple dots of accounting fraud, was hacked. Fake emails were circulated and rumors of a possible merger which if true would have boosted Wirecard's sagging share price were being whispered. Finally, Wirecard would accuse McCrum of conspiring with short-sellers to topple the company's share price.
It was shocking how BaFin, the German equivalent of the SEC, Wirecard's auditor Ernst & Young, and the investment community as a whole remained complacent as the evidence kept piling up. Detailing the enabling role of Deutsche Bank and SoftBank, McCrum exclaims in frustration: “How many times does a company need to be accused of fraud for those overseeing it to start playing detective?” (p.287)
Equally interesting was McCrum's depiction of the heady and tight-knit world of the billionaire ecosystem. We cling to the myth of the bold technology visionary reaping rewards for game-changing innovations. The reality is quite sobering. It is a world of private clubs and exclusive vacation properties where gossip is the coin of the realm. The excesses of luxury made the Roys of “Succession” seem paltry by comparison. Information exchange and peddling were the bread-and-butter of this world.
This book is at times difficult to follow. McCrum's chronology tracks the revelations he learns about Wirecard. However, he is then forced to backtrack to fill the history of each of those events. There are scores of people to keep track of and a rudimentary knowledge of stocks and bonds is required. However, the effort is well worth the time.
Dan McCrum, a journalist with the Financial Times, unspools a lurid tale of accounting fraud, corruption, money laundering, market manipulation, wire-tapping, and intimidation spread across two decades. It all began in 2001 when a failed payments processor called Wirecard was swallowed by Electronic Billing Systems. The newly incarnated Wirecard exploited a dodgy niche servicing online gamblers and pornographic websites. It created Click2Pay, an e-wallet that shielded the nature and identity of online payments, securing them from scrutiny by credit card companies and banks.
Absorption of InfoGenie, a publicly traded company bestowed that same status on Wirecard without the bothersome details of due diligence in 2004. Two years later Wirecard acquired its own bank by purchasing XCOM, allowing it to issue its own credit cards. In 2007 Wirecard acquired G2Pay, a processor for Absolute Poker, Full Tilt, and Poker Stars. G2Pay kept these customers alive in a world where the U.S. Unlawful Internet Gambling Enforcement Act had been passed toward the end of 2006. However, the writing was on the wall, and Wirecard needed a way to make G2Pay look like a profit machine.
The mechanisms of fraud which McCrum details were difficult for me to follow due to their complexity. The simplest examples were miscoded transactions that made illegal transactions appear legal. Chargebacks or disputed transaction stats were closely monitored and shuffled to keep the company from raising red flags about its real customer base.
McCrum's suspicions were aroused when he finds so-called licensing fees paid by a partner company in Bahrain fail to show up in Wirecard's books. He flies to Bahrain to query the payer only to embark on a serpentine journey finally leading to a construction site where the company's lawyer refers him to a local actress who then refers him to her “business partner,” Christopher Bauer. McCrum surmises that no money changed hands. The deception was to increase profits on Wirecard's books, thus increasing shareholder confidence and pumping up the share price. Leo Perry of Ennismore Fund Management tells McCrum: “'Faking profits, you end up with a problem of fake cash. At the end of the year the auditor will expect to see a healthy bank balance, it's the first thing they check. So what you have to do is spend that fake cash on fake assets.'” (p.72)
Those fake asset purchases proliferated faster than rabbits, but to uncover the fraud meant knocking on doors in places like India, Singapore, and the Philippines – places with obscure address systems and people suspicious of foreigners looking under rocks.
Another ploy, although merely a stopgap, was to create fake invoices – money owed to Wirecard for licensing fees and consulting which would show up on the balance sheet as receivables, an asset.
McCrum uncovered another way to commit fraud called “Round-tripping.” The idea ws to move actual cash across a series of fake subsidiaries and then back to the originator, Wirecard's bank. The movement would give the illusion of robust financial health for each of these entities which the cash passed through.
By 2019 McCrum had an epiphany. He learns that the FTC has reached a settlement with a company called Allied Wallet. The name rings a bell. It was listed as a Wirecard customer on a spreadsheet he has. However, when he questions Allied Wallet the company denies any connection to Wirecard or to its Middle East partner Al Alam Solutions. Scrutiny of other customers on the spreadsheet reveals them to be mirages as well. McCrum exclaims: “'None of it's real. The customers are fake. There's nothing there.'” (p.211)
Of course none of this would be interesting if billions of euros were not at stake. In 2006 Wirecard had a market capitalization of €300 million. By 2014 it had risen to €4.2 billion. The company was not about to let some nosy journalist wreck their money-making machine.
By 2015 Wirecard was on the offensive. It's lawyers threatened to sue the Financial Times and McCrum. Private security operatives were hacking cell phones and computers. The bank accounts and trades of suspected “enemies” were being monitored for evidence of bribery or market manipulation. The website of Zatarra Research, an anonymous group which had released a report connecting multiple dots of accounting fraud, was hacked. Fake emails were circulated and rumors of a possible merger which if true would have boosted Wirecard's sagging share price were being whispered. Finally, Wirecard would accuse McCrum of conspiring with short-sellers to topple the company's share price.
It was shocking how BaFin, the German equivalent of the SEC, Wirecard's auditor Ernst & Young, and the investment community as a whole remained complacent as the evidence kept piling up. Detailing the enabling role of Deutsche Bank and SoftBank, McCrum exclaims in frustration: “How many times does a company need to be accused of fraud for those overseeing it to start playing detective?” (p.287)
Equally interesting was McCrum's depiction of the heady and tight-knit world of the billionaire ecosystem. We cling to the myth of the bold technology visionary reaping rewards for game-changing innovations. The reality is quite sobering. It is a world of private clubs and exclusive vacation properties where gossip is the coin of the realm. The excesses of luxury made the Roys of “Succession” seem paltry by comparison. Information exchange and peddling were the bread-and-butter of this world.
This book is at times difficult to follow. McCrum's chronology tracks the revelations he learns about Wirecard. However, he is then forced to backtrack to fill the history of each of those events. There are scores of people to keep track of and a rudimentary knowledge of stocks and bonds is required. However, the effort is well worth the time.
November 5, 2023
What a terrific book.
I've watched the Netflix documentary on Wirecard so knew what I was getting into.
Dan crafts a great story...interweaving his own journey into it as well.
The whole thing was a scam and left BaFin with more than egg on it's face, let alone some
other regulators.
Yet another story of greed, fintech slight of hand and good investigative journalism.
I've watched the Netflix documentary on Wirecard so knew what I was getting into.
Dan crafts a great story...interweaving his own journey into it as well.
The whole thing was a scam and left BaFin with more than egg on it's face, let alone some
other regulators.
Yet another story of greed, fintech slight of hand and good investigative journalism.
August 2, 2022
Badly written. Names and events mix so much the reader loses track of what's going on. Also, too much information. Could have been a best seller if this story was written by Michael Lewis.
July 9, 2022
After a tantalisingly lead conspiratorially whispered by eccentric Bronte Capital fund manager John Hempton in the summer of 2010, journalist Daniel McCrum begins his decade-long investigation into European payment processing company Wirecard. He draws aside the velvet curtin and offers glimpses into the avaricious world of panelled boardrooms.
As McCrum’s tour casts light into the shadowed recesses, he shows how paper moon shysters and brutish thuggery are by no means relegated to organised crime. McCrum (with backing from the Financial Times) admirably pursues his quarry until steadfast short-sellers are finally vindicated: the scales fall from investors’ eyes and agencies are shaken awake from their regulatory slumber. Wirecard is delivered a coup de grâce into insolvency and accounting fraud charges.
McCrum’s pursuit and the whistleblowers’ courage is made all the more admirable due to the adversity they faced. They’re confronted with opposition from enamoured government regulators, organised crime leg-breakers, morals-for-hire corporate law firms, chummy “auditors”, and unscrupulous private espionage firms. Easy to see why many choose to continue cradling the shepherd’s crook rather than grasping the sling.
Wirecard’s deception rested on a few pillars. Their hall of mirrors was constructed by generating revenue through mis-labeling transaction categories to process otherwise illegal payments; faking income then using the “profit” to acquire failing companies for multiples above market value (and bribing former owners into complicity); and cowering dissenters through aggressive PR counter-messaging, legal action, and phishing attacks from cyber security contractors.
A corporate chicanery highlight includes registering a shell company in Britain to use as a paper factory. An enterprising young fellow in Consett had punters from the local watering hole sign legal documents (at 50 quid a piece) to become company directors so the Wirecard affiliate could fraudulently process high-risk transactions. Admirable in its brazen simplicity. The story could have only been topped if McCrum discovered verifiable evidence (as it surely exists) of the local dart-throwers scrawling their mark on the legal documents for a coupla’ spins of the fruit machine.
Another sage lesson is that penalties for breaches, even when in the tens of millions, were insufficient to deter behaviour. The payment processing architecture heavyweights (Visa and Mastercard) unquestionably process astronomical transaction volumes. One may ask, however, where were these companies during the Wirecard saga? Their mea culpa arrived in 2020, days after Wirecard began its collapse. Executives from the companies noted they had “concerns” with Wirecard since 2015. So concerned, they were content to continue quietly enjoying commissions from flowing transactions for another 5 years. At best, it’s an indictment on their compliance controls. At worst, their fines for excessive chargebacks and purposefully misidentified merchant IDs appear little more than window-dressing solutions to appease regulators.
A sceptical reader couldn’t help but wonder if the wilful ignorance towards Wirecard’s flagrant fraud was partially born from the EUs tragic desperation for a home-grown technology MNC. A woeful state of affairs if political élites’ contemporary aspirations involve nurturing an overvalued tech company of questionable social utility. One hopes the Davos crowd instead returns to their old form: condescending, paternalistic rhetoric lecturing other countries on how they ought to conduct their sovereign affairs.
As McCrum’s tour casts light into the shadowed recesses, he shows how paper moon shysters and brutish thuggery are by no means relegated to organised crime. McCrum (with backing from the Financial Times) admirably pursues his quarry until steadfast short-sellers are finally vindicated: the scales fall from investors’ eyes and agencies are shaken awake from their regulatory slumber. Wirecard is delivered a coup de grâce into insolvency and accounting fraud charges.
McCrum’s pursuit and the whistleblowers’ courage is made all the more admirable due to the adversity they faced. They’re confronted with opposition from enamoured government regulators, organised crime leg-breakers, morals-for-hire corporate law firms, chummy “auditors”, and unscrupulous private espionage firms. Easy to see why many choose to continue cradling the shepherd’s crook rather than grasping the sling.
Wirecard’s deception rested on a few pillars. Their hall of mirrors was constructed by generating revenue through mis-labeling transaction categories to process otherwise illegal payments; faking income then using the “profit” to acquire failing companies for multiples above market value (and bribing former owners into complicity); and cowering dissenters through aggressive PR counter-messaging, legal action, and phishing attacks from cyber security contractors.
A corporate chicanery highlight includes registering a shell company in Britain to use as a paper factory. An enterprising young fellow in Consett had punters from the local watering hole sign legal documents (at 50 quid a piece) to become company directors so the Wirecard affiliate could fraudulently process high-risk transactions. Admirable in its brazen simplicity. The story could have only been topped if McCrum discovered verifiable evidence (as it surely exists) of the local dart-throwers scrawling their mark on the legal documents for a coupla’ spins of the fruit machine.
Another sage lesson is that penalties for breaches, even when in the tens of millions, were insufficient to deter behaviour. The payment processing architecture heavyweights (Visa and Mastercard) unquestionably process astronomical transaction volumes. One may ask, however, where were these companies during the Wirecard saga? Their mea culpa arrived in 2020, days after Wirecard began its collapse. Executives from the companies noted they had “concerns” with Wirecard since 2015. So concerned, they were content to continue quietly enjoying commissions from flowing transactions for another 5 years. At best, it’s an indictment on their compliance controls. At worst, their fines for excessive chargebacks and purposefully misidentified merchant IDs appear little more than window-dressing solutions to appease regulators.
A sceptical reader couldn’t help but wonder if the wilful ignorance towards Wirecard’s flagrant fraud was partially born from the EUs tragic desperation for a home-grown technology MNC. A woeful state of affairs if political élites’ contemporary aspirations involve nurturing an overvalued tech company of questionable social utility. One hopes the Davos crowd instead returns to their old form: condescending, paternalistic rhetoric lecturing other countries on how they ought to conduct their sovereign affairs.
July 27, 2022
A riveting read. McCrum is the investigative journalist at Financial Times who's exposé of the DAX 30 company Wirecard's accounting fraud took their market capitalisation from €24 billion (more than Deutche Bank) to € 0.0012 billion. I knew superficially about the financial scandal of course, as it is surely the biggest in Europe since the Kreuger crash of 1932.
I read some of McCrum's articles before the house of cards collapsed and was surprised at the time that sophisticated investors thought that the company was correctly valued. (Much like I have been surprised for a year now that Swedish fintech company Klarna with a revenue model that is not known to be profitable led by people who have been conmen since their teens has such high level of capitalisation.)
What I did not know was just how much of a pure criminal enterprise Wirecard was. I picked up the book because I am interested in how cycles of hype and big promises get driven both by investors who wants entrepreneurs to dream big and entrepreneurs who need hype for cash to create new tech, and went in to it assuming that it there would be some grey-zones of unjustified tech hype which would eventually turn in to fraud to cover expenses, but was surprised to learn that it was one hundred percent pure gangsterism from day one. Despite the story being different than I though I was hooked, and read it in one sitting.
Apart from Wirecard's management lots of people and institutions come out bad from this scandal, in particular the German financial authorities, Handelsblatt (Germany's financial journal of records) and the auditing firm Ernst & Young who all abetted this criminal enterprise.
It is fascinating and a bit scary to read about the legal and surveillance pressure Wirecard put on the journalists at FT, how they used the legal system against them. In all likelihood the surveillance of McCrum and his boss by hacking groups and private investigators is the largest private surveillance operation ever.
I also really liked to learn more about the colourful characters who are living their lives as professional short sellers. That they are willing to take enormous risk, and bend every available rule comes with the territory I assume. The understandably tense relationship between financial authorities, analysts and this ragtag bunch of semi-scoundrels was well described and one of the highlights for me.
I think the book is well worth reading for any investor of individual stock, and a reminder to do your own research even before investing into listed companies partly owned by respectable institutions.
I read some of McCrum's articles before the house of cards collapsed and was surprised at the time that sophisticated investors thought that the company was correctly valued. (Much like I have been surprised for a year now that Swedish fintech company Klarna with a revenue model that is not known to be profitable led by people who have been conmen since their teens has such high level of capitalisation.)
What I did not know was just how much of a pure criminal enterprise Wirecard was. I picked up the book because I am interested in how cycles of hype and big promises get driven both by investors who wants entrepreneurs to dream big and entrepreneurs who need hype for cash to create new tech, and went in to it assuming that it there would be some grey-zones of unjustified tech hype which would eventually turn in to fraud to cover expenses, but was surprised to learn that it was one hundred percent pure gangsterism from day one. Despite the story being different than I though I was hooked, and read it in one sitting.
Apart from Wirecard's management lots of people and institutions come out bad from this scandal, in particular the German financial authorities, Handelsblatt (Germany's financial journal of records) and the auditing firm Ernst & Young who all abetted this criminal enterprise.
It is fascinating and a bit scary to read about the legal and surveillance pressure Wirecard put on the journalists at FT, how they used the legal system against them. In all likelihood the surveillance of McCrum and his boss by hacking groups and private investigators is the largest private surveillance operation ever.
I also really liked to learn more about the colourful characters who are living their lives as professional short sellers. That they are willing to take enormous risk, and bend every available rule comes with the territory I assume. The understandably tense relationship between financial authorities, analysts and this ragtag bunch of semi-scoundrels was well described and one of the highlights for me.
I think the book is well worth reading for any investor of individual stock, and a reminder to do your own research even before investing into listed companies partly owned by respectable institutions.
December 9, 2023
The story about Wirecard is fascinating. Starting as a payment provider for various parties who were rejected by normal banks, it fully adopted the shady tint of their customers and started deceiving everyone themselves.
The book is written by Dan McCrum, the Financial Times journalist that headlined the articles bringing the company to court.
Marcus Braun was the CEO of the company but the book is not primarily about him but about his right hand man Jan Marsalek who went all over the world talking to the rich and the shady and the criminal. Since the book is based on a number of sources telling their stories to the author I can only assume the lack of Braun in it is because McCrum did not have any whistleblower or other sources close enough to the CEO. It seems Braun was reasonably good at covering his tracks, keeping conversations out of records, though he's currently in German jail awaiting trial so maybe there are still enough proof to get him convicted.
Part of the book reads as a thriller. It seems Wirecard hired goons to monitor and scare those they believed were investigating them. It would not have been problematic for them to find people with a lot of muscle and a scary look since that was Wirecard's original customer group.
There was several reasons for Wirecard to fear investigations. One reason was that they had defrauded investors with phony profits. Another reason was that Wirecard did its best to hide the nature of its customers from other banks, and especially from Visa and Mastercard. Customers of Wirecard's customers typically had Visa or Mastercard and if those had stopped working, Wirecard would lose all business. Better for Wirecard if nobody investiged them.
The book is written by Dan McCrum, the Financial Times journalist that headlined the articles bringing the company to court.
Marcus Braun was the CEO of the company but the book is not primarily about him but about his right hand man Jan Marsalek who went all over the world talking to the rich and the shady and the criminal. Since the book is based on a number of sources telling their stories to the author I can only assume the lack of Braun in it is because McCrum did not have any whistleblower or other sources close enough to the CEO. It seems Braun was reasonably good at covering his tracks, keeping conversations out of records, though he's currently in German jail awaiting trial so maybe there are still enough proof to get him convicted.
Part of the book reads as a thriller. It seems Wirecard hired goons to monitor and scare those they believed were investigating them. It would not have been problematic for them to find people with a lot of muscle and a scary look since that was Wirecard's original customer group.
There was several reasons for Wirecard to fear investigations. One reason was that they had defrauded investors with phony profits. Another reason was that Wirecard did its best to hide the nature of its customers from other banks, and especially from Visa and Mastercard. Customers of Wirecard's customers typically had Visa or Mastercard and if those had stopped working, Wirecard would lose all business. Better for Wirecard if nobody investiged them.
July 2, 2022
An enthralling story of a rogue business, Wirecard, told like an adventure - which it clearly was for those that set up the business and for the extraordinary Financial Times like Dan McCrum that chased it down.
This is a book that can be read by those that want to understand how corrupt businesses can grow so large (to multi-billions of Euros / $ of perceived value) while not actually doing much that was legal. It shows how the accounting firms (EY in particular here) and regulators (especially the German BaFin) are so easily misled by multinational businesses that can hide their scams in hard-to-see locations like the Philippines let alone in secrecy jurisidictions that we know so well about (many in former British Empire locales).
The FT staff involved in this muti-year pursuit deserve every credit for their tireless work and ingenity in driving down a corrupt business that not just threw everything at their pursuers but worked hard to put them (and auditors and regulators) off the scent and often engaged in methods of real subterfuge, spying and actions more suited to the Mafia.
There are many characters highlighted in the book and it is to Dan's credit that the story works as a continuing and enticing narrative - here is Dan's interview with Gideon Rachman from 30 June https://www.ft.com/content/927d86db-7... as a short-cut into an excellent book on a great and successful corporate pursuit of a 'business' still 'valued' at €16bn in early 2020, just a few months before its demise.
This is a book that can be read by those that want to understand how corrupt businesses can grow so large (to multi-billions of Euros / $ of perceived value) while not actually doing much that was legal. It shows how the accounting firms (EY in particular here) and regulators (especially the German BaFin) are so easily misled by multinational businesses that can hide their scams in hard-to-see locations like the Philippines let alone in secrecy jurisidictions that we know so well about (many in former British Empire locales).
The FT staff involved in this muti-year pursuit deserve every credit for their tireless work and ingenity in driving down a corrupt business that not just threw everything at their pursuers but worked hard to put them (and auditors and regulators) off the scent and often engaged in methods of real subterfuge, spying and actions more suited to the Mafia.
There are many characters highlighted in the book and it is to Dan's credit that the story works as a continuing and enticing narrative - here is Dan's interview with Gideon Rachman from 30 June https://www.ft.com/content/927d86db-7... as a short-cut into an excellent book on a great and successful corporate pursuit of a 'business' still 'valued' at €16bn in early 2020, just a few months before its demise.
September 23, 2023
TL;DR: Interesting read, oftentimes a bit technical in capital markets/ financial lingo, but astonishing work of investigation and resilience by the FT investigative journalism team. Recommended for people who enjoyed books like Patrick Radden Kieffe's Empire of Pain or John Carreyrou's Bad Blood.
You'd think a company in one of the most heavily regulated industries (Payments) with one of the stricter financial regulators in Europe (BaFin) in one of the most sophisticated countries in the World (Germany) wouldn't be able to pull off a fraud in this scale at plain sight. You'd also think that the journalistic world would come together in the face of an attack on one of theirs, and not throw the victims to the wolves to be eaten. While reading this book, you might have to think again.
This is a story of deceit, money, and power, but also of resilience, courage, and search for the truth. It's one where you'll oftentimes end up thinking 'This can't possibly get worse', and then find out on the next pages that it actually can. The German regulators and the German journalistic and finance community tried so hard to protect their unicorn, in a mix of arrogance with incompetence, that they failed to see the problem with it: it was indeed a mythical creature that doesn't exist. Once again, as we've seen happen with Elizabeth Holmes' case, money finds a way to bring power by gathering influential people, who are able to give the appearance of legitimacy to the most striking of frauds.
These stories always pose the question for me: who's responsible for the scale of damage this provoked? Only the main players, or all of those around them that 'legitimized them' by not looking deep enough, when their sponsorship works as a certificate of good standing for the rest of the world?
From a structural point of view, I enjoyed the fact that the book was divided into two alternate storylines, one chapter each, that ultimately converged: one from the perspective of the events happening inside Wirecard, and one from the author's perspective, as events were happening to him. I enjoyed the suspense that was created, allied with the information about Wirecard's stock price at the beginning of every chapter, which really allowed me to understand the impact of events on the Company's valuation (sometimes, inversely to what I was expecting!!).
You'd think a company in one of the most heavily regulated industries (Payments) with one of the stricter financial regulators in Europe (BaFin) in one of the most sophisticated countries in the World (Germany) wouldn't be able to pull off a fraud in this scale at plain sight. You'd also think that the journalistic world would come together in the face of an attack on one of theirs, and not throw the victims to the wolves to be eaten. While reading this book, you might have to think again.
This is a story of deceit, money, and power, but also of resilience, courage, and search for the truth. It's one where you'll oftentimes end up thinking 'This can't possibly get worse', and then find out on the next pages that it actually can. The German regulators and the German journalistic and finance community tried so hard to protect their unicorn, in a mix of arrogance with incompetence, that they failed to see the problem with it: it was indeed a mythical creature that doesn't exist. Once again, as we've seen happen with Elizabeth Holmes' case, money finds a way to bring power by gathering influential people, who are able to give the appearance of legitimacy to the most striking of frauds.
These stories always pose the question for me: who's responsible for the scale of damage this provoked? Only the main players, or all of those around them that 'legitimized them' by not looking deep enough, when their sponsorship works as a certificate of good standing for the rest of the world?
From a structural point of view, I enjoyed the fact that the book was divided into two alternate storylines, one chapter each, that ultimately converged: one from the perspective of the events happening inside Wirecard, and one from the author's perspective, as events were happening to him. I enjoyed the suspense that was created, allied with the information about Wirecard's stock price at the beginning of every chapter, which really allowed me to understand the impact of events on the Company's valuation (sometimes, inversely to what I was expecting!!).
July 6, 2022
Wirecard, the most significant fraud in German corporate history. A tale of greed, avarice, hubris, ignorance and good old pride. National pride, the last refuge of the scoundrel.
I enjoyed this book for the story, Dan McCrum does a great job of narrating the insanity of his experience uncovering the Wirecard fraud in excruciating detail. He tells it very much from his own perspective which is obviously his prerogative given how personal the experience has clearly been for him, however he maintains a level of objectivity which facilitates the story-telling aspect and which keeps it from being one of those irritating books where participants in an event justify their actions (eg, most of the books about the financial crisis, the worst example being the one by Hank "useless" Paulson, the best GS alumni ever).
I think there is an element of Anglo-pride which comes through this book and a somewhat disdainful treatment of the German corporate class which while warranted from Dan McCrum's perspective is not entirely fair for the broader German business class. One bad apple does not indicate the entire barrel is rotten. You could draw similar parallels with some of the behaviour of the British in defending their own companies from "furreners" before seeing them collapse into bankruptcy. Or more often than not, lecturing other countries about "standards" and then not applying them to their own dealings.
I enjoyed this book for the story, Dan McCrum does a great job of narrating the insanity of his experience uncovering the Wirecard fraud in excruciating detail. He tells it very much from his own perspective which is obviously his prerogative given how personal the experience has clearly been for him, however he maintains a level of objectivity which facilitates the story-telling aspect and which keeps it from being one of those irritating books where participants in an event justify their actions (eg, most of the books about the financial crisis, the worst example being the one by Hank "useless" Paulson, the best GS alumni ever).
I think there is an element of Anglo-pride which comes through this book and a somewhat disdainful treatment of the German corporate class which while warranted from Dan McCrum's perspective is not entirely fair for the broader German business class. One bad apple does not indicate the entire barrel is rotten. You could draw similar parallels with some of the behaviour of the British in defending their own companies from "furreners" before seeing them collapse into bankruptcy. Or more often than not, lecturing other countries about "standards" and then not applying them to their own dealings.
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