Compliance department at Wirecard? "I"

In the court proceedings about the fraud at Wirecard, a witness testified this Wednesday who had held one of the most thankless jobs in the German financial industry for years: she was the compliance officer for the defunct payment service provider.

Lawyer Christine A. could hardly have guessed that her job description alone would sound ironic in hindsight when she started her new job in Aschheim near Munich in January 2017 at the fintech group, which was considered a model German company at the time.

Her task was to set up compliance management at Wirecard – of all things in a company that would soon be at the center of the biggest economic fraud in post-war history. Ensuring compliance there was no easy task for the young lawyer. Because A. had a very small team available, as she explained right at the beginning of her questioning, which lasted the entire day of the trial. When asked by the judge how many employees had worked in her area, the 41-year-old lawyer replied succinctly: "I did."

In retrospect, not surprisingly, the compliance department at Wirecard was apparently completely toothless and probably installed more as a fig leaf. According to A.'s testimony, the lawyer soon realized that her new employer didn't think too highly of compliance. "Compliance was not very important at Wirecard," she said.

On the contrary, her department, which in the first few years was managed almost on the side by the deputy head of the legal department, was vilified as a "hinder to success". Among other things, the chief accountant Stephan von Erffa, who is sitting in the dock next to CEO Braun and Dubai governor Oliver Bellenhaus at the trial in Munich, once said that compliance was “bad for business”.

The organizational suspension of the office responsible for compliance with the rules in the company was not professional, says A.. As a kind of subdivision of the legal department, it lacked the necessary independence. It was not until the end of 2019, when the indications of gross violations of the law at Wirecard could no longer be covered up, that the company formed an independent, better-staffed compliance department headed by Daniel S., who was already responsible.

This body then carried out a "reality check" on Wirecard's so-called third-party partner transactions - in parallel with external auditors. Only in the course of these investigations did she realize that this business was apparently invented on a large scale, the compliance expert said in court.

It was "a shock" for her. A. remained vague about the details of these investigations and, when asked by the defense, could not recall any evidence that CEO Markus Braun was involved in the crime.

However, the fact that not everything is running smoothly at Wirecard must have been obvious to the lawyer beforehand. At Wirecard, according to the quintessence of her testimony, violations of the rules in day-to-day work seem to have been part of the corporate culture. It started with supposed little things like cell phone use. The devices were apparently viewed at Wirecard as useful tools for covering up tracks.

According to A., the use of messenger services such as WhatsApp or Telegram was prohibited at Wirecard under its own compliance regulations. In fact, however, they were the common means of communication for many employees, "because the Management Board lived it that way," reports A.

The sales director and suspected mastermind Jan Marsalek – who is still wanted by international arrest warrant – introduced Telegram at Wirecard as the form of communication of choice because it was particularly “hack-proof”, according to the witness. Marsalek himself spurned the computers and company mobile phones provided by Wirecard and only used his own devices.

He also used a special voice encryption. "Jan", as Marsalek was only called within the company, "was always afraid of being spied on," said the witness. For good reasons, as we now know.

What else ended up on the compliance officer's desk over the course of time was sometimes highly dubious. Colleagues from other departments sent e-mails asking for rules that would steer Board Marsalek's business practices in an orderly manner. He had concluded various consulting contracts on his own, some with a monthly fee of 10,000 euros, without the service to be provided being specified in detail.

In one case, an alleged consultant from Lithuania was named as the contractual partner, but the bill then came from London. In another case, the compliance officer and her manager were informed of a dubious case in which proof of payments to a former Libyan intelligence chief were being sought.

She repeatedly pointed out the problems in contracts and pushed for changes, says the former compliance officer. But apparently nobody was interested. "You often never saw the contracts again." When asked about proof of performance, it was said regularly: "Jan does that."

In many cases, "der Jan" apparently did without the involvement of the in-house lawyers anyway. The witness reports that various consultancy contracts were found in his office during a later search, which were not “initialed”, i.e. did not bear the otherwise obligatory test abbreviations of the specialist departments involved.

The contracts with third-party partners that ultimately proved disastrous for Wirecard were also not initialed. Outside a narrow circle of insiders, the impression was that anyone who might have noticed the fraud was being systematically dumbed down.

Wirecard's compliance department then specifically intervened immediately before the collapse. The day before a raid by the public prosecutor's office, the employees were informed about the correct behavior when visiting investigating authorities - in a "search guide".

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