The Wirecard Debacle: Shades of Enron and WorldCom

Published on
June 26th, 2020
Duration
57 minutes

“Extend and Pretend”: Moral Hazard in the Debt Markets


The Wirecard Debacle: Shades of Enron and WorldCom

The Interview ·
Featuring Roddy Boyd

Published on: June 26th, 2020 • Duration: 57 minutes

Individual market cycles, and particularly their crescendos and finales, have unique characteristics that we use to categorize and differentiate them from other past cycles – the dotcom bubble, the housing crisis, and now, potentially the COVID crisis. One thing that they all have in common, though, is the failure of major companies from either mismanagement or fraud. In this interview, Roddy Boyd of the Foundation for Financial Journalism and Real Vision's Ed Harrison examine financial impropriety through the lens of Wirecard, the German mobile payments company that has transitioned from a source of German pride to an embarrassment, exposing shoddy work by the lawyers, auditors and regulators tasked with investigating potential frauds and protecting the public. Whether Wirecard is in fact a fraud seems to be clearer with every passing day, but many questions still remain – will the bad actors both inside and outside the company be held accountable, will the company go belly up or be saved by governments increasingly willing to protect companies that are "too big to fail", and will Wirecard be another shining example of the malfeasance and mismanagement that always seems to be exposed at the end of a market cycle? Filmed on June 24, 2020.

Comments

Transcript

  • JC
    Jan C.
    30 June 2020 @ 16:55
    Maybe it's time for RV to start a new series. Call it "The Bezzle." Ed would be a perfect host. Next up Francine McKenna to talk about Jay Clayton and the SEC. I think over the next few years the supply of interviews could be quite fascinating and sadly, large.
    • SG
      Syed G.
      10 July 2020 @ 17:16
      Haha so true!
  • CW
    C W.
    2 July 2020 @ 09:40
    I am just a few minutes into the interview and will leave my comments on it till later. Just want to mention that when I first googled 'Roddy Boyd', I couldn't believe the amount of negative press out there on him! Many of these are on somewhat kitschy websites, most are very personal attacks, questioning his character, his integrity and how he'd exaggerated his role in the uncovering of various frauds in the past. Geez Mr Boyd must have riled a lot of feathers!
  • JH
    Jim H.
    1 July 2020 @ 20:57
    I thought this was fascinating. Thank you for finding this guy. Maybe a quarterly guest?
  • CB
    Chris B.
    27 June 2020 @ 20:59
    Excellent interview. Really enjoying Ed’s interviews.
    • GG
      George G.
      28 June 2020 @ 10:58
      Absolutely! Ed is very talented.
    • DJ
      D J.
      30 June 2020 @ 20:11
      Totally, he has a calm demenour and lest the guests speak, and instead of interrupting them, he kind of guids them.
  • MC
    Mario C.
    26 June 2020 @ 12:07
    Everytime I start to feel negative about what RV has become, RV pulls out a jewel video. Fantastic one, both interviewer and interviewee clear, interesting, it s working like a ping pong match. There is material to make a great movie!
    • JO
      Jack O.
      29 June 2020 @ 02:36
      I'm curious what you mean by "what RV has become"? I've seen this sentiment expressed in a few places before. I've been following them for a couple years and they've definitely expanded the amount of content they put out which brings with it a reduction in quality but I still think it's the best stuff out there. You just need to filter through what you want to pay attention to.
  • TZ
    Tibor Z.
    28 June 2020 @ 20:15
    As a crisis starts you always going to see skeletons falling out of the closet! Waiting for the rest!
  • LW
    Luke W.
    28 June 2020 @ 19:02
    This was a really good one.
  • LP
    Lauri P.
    27 June 2020 @ 16:49
    Excellent video! Blows my mind these kinds of frauds can continue for so many years without being stopped. Begs the question how many more will show up before this cycle is over? Wouldn't surprise me if the final count ends up being multiples of that in 2008 and 2000.
  • Am
    Abdul m.
    27 June 2020 @ 15:24
    I really like Ed harrison. He seems like a nice guy.
  • PW
    Peter W.
    27 June 2020 @ 08:59
    An amazingly good and timely piece. Many important issues raised here. I had heard of the Wirecard collapse, of course, but before this interview, the most important issue hadn't occurred to me - the potential blowback from the consequent investigation of the German regulators, financial markets and banking system. Great work, Ed, in setting up this interview.
  • AP
    Ash P.
    26 June 2020 @ 23:34
    "HSBC cleared narco-terrorists...and yet wouldn't touch these guys" I love it. This is why I get my fix on RV versus CNBC. Truthiness.
  • PB
    Patrick B.
    26 June 2020 @ 20:23
    Great interview and good to hear something a bit different
  • JV
    Jonny V.
    26 June 2020 @ 10:54
    Great with something very topical, interesting story for sure. I enjoyed it but somehow still felt like I had expected and wanted more. Roddy could probably have been a bit sharper in his delivery, he obviously know this content very well. He was not super clear about his current take on that crazy 300 million Euro purchase in India. From what I gather the secret seller (that KPMG could also not identify), the holding company in Mauritious, would have been working with or was controlled by Wirecard/the scamers within it. First buying the Indian businesses at a somewhat reasonable price, then re-selling it to Wirecard with a 300 Million mark up. Although those 300 were just fake profit/cash flow that never existed, and thus needed to be hidden this way. So instead of the cash/profit (that never existed) Wirecard instead coud should how they had expanded into India. That part obviously worked well enought. It took the more sloppy set up with the Philippine banks to finally burst the ballon. EY has been taken for a big and pretty long ride, they really should expect their Enron moment.
    • CD
      Colin D.
      26 June 2020 @ 16:39
      Self-inflicted wound by EY. Article in FT now confirms "EY failed for more than three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash." It audited without even seeing bank statements!!!
  • VB
    Vikram B.
    26 June 2020 @ 13:29
    I am so glad that there are people like Roddy Boyd in the world.
  • Nv
    Nick v.
    26 June 2020 @ 11:17
    Similarities with Steinhoff I have been in markets for >25 years Fraud, today, is as rife as I have ever seen. From Facebook users, Tesla sales, Alibaba The market caps are just much larger
  • FN
    Frans N.
    26 June 2020 @ 10:57
    Great interview. See if you can get the guys from Viceroy on their Steinhoff Holdings reporting. Also had German, as well as Dutch regulators in the mud.
  • CD
    Chris D.
    26 June 2020 @ 07:59
    Classic comment "...it's a poor analogy as Paypal is real" Drop mic. Nothing more to be said!
  • JB
    Jamie B.
    26 June 2020 @ 07:50
    You just couldn't make this stuff up. It's mind-blowing how many people/companies must have been complicit in either allowing this to happen or profiting from allowing it to happen? Amazing work by Roddy Boyd & Dan McCrumb who put their own personal safety on the line to expose such insidious companies for not a lot of financial gain, given the risks to expose them. Another stellar interview Ed.