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The man at the center of Wirecard’s deal machine

Henry O’Sullivan, an outside adviser, was paid on 10 Wirecard deals, some of which are the focus of investigators trying to unravel the company’s collapse

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German prosecutors allege that Wirecard executives overpaid for a string of companies, causing massive losses to shareholders of the now disgraced financial technology company.

Playing a key role in some of the Wirecard deals was Henry O’Sullivan, a behind-the-scenes payments consultant who was paid as an adviser on at least 10 separate Wirecard acquisitions, according to former senior company officials. The acquisitions he advised on were among a larger group of deals done at inflated values, the officials said. His paid role on the deals, not previously reported, builds out a picture of what investigators say was a key aspect of the company’s collapse.

O’Sullivan helped identify acquisition targets in Asia and Africa that are at the center of investigators’ questions about whether funds were misappropriated. More than $1bn was lost from the company through overpayment for deals, and other alleged malfeasance such as bogus software contracts and sham loans, according to a calculation by one of the former officials who has access to company records.

Wirecard went from being a listed company worth more than $14bn to bankruptcy in a little more than a week in June, after admitting that more than $2bn of cash it had reported on its balance sheet didn’t exist.

The German company processed electronic payments, a fast-growing business driven by the expansion of internet shopping and entertainment as well as declining cash use world-wide. Wirecard boosted its growth by making around €1.2bn in acquisitions in the past decade, according to a report by Wirecard’s bankruptcy administrator.

Prosecutors in Germany say a major fraud took place and allege inflated acquisitions, among other factors, played a role. Some acquisitions were never properly integrated into the group and some were done at high valuations even though the businesses were loss-making, the former company officials said.

The Munich prosecutors office is investigating Wirecard for potential cases of embezzlement, including linked to acquisitions, but it hasn’t drawn any conclusions, according to a spokesperson.

Several former Wirecard executives and board members were called to appear this week for questioning in a German parliamentary investigation into the government’s oversight of the company before its collapse.

O’Sullivan didn’t respond to requests for comment. His whereabouts couldn’t be determined. Lawyers for Wirecard’s senior executives who Munich prosecutors allege to be conspirators in the alleged fraud didn’t respond to requests for comment on the details of this article.

O’Sullivan, a U.K. native, was well known to some Wirecard executives as a payments-industry entrepreneur, according to people who knew them. He entertained them regularly from his home base in Singapore, including at events such as the Singapore Grand Prix motor racing.

He lived a luxury lifestyle, often dining at a high-end restaurant on top of the Marina Bay Sands hotel, which dominates Singapore’s harbor. He had a brand new convertible Rolls-Royce in Singapore, where import taxes can double the sticker price of cars. He built an aquarium in his house for three hammerhead sharks, according to former business associates.

O’Sullivan was a confidant of Wirecard’s former chief operating officer Jan Marsalek, whom authorities in Germany suspect of having committed “commercial gang fraud” in the downfall of the once mighty payments technology company. Marsalek is on the lam and couldn’t be reached for comment. A lawyer for Marsalek has previously declined to comment.

Wirecard presented O’Sullivan as a special consultant and adviser to  Marsalek in several acquisitions for which he was paid, according to one of the company officials.

But O’Sullivan kept a low profile in his business dealings. He isn’t listed as an owner or director of Singapore-based Senjo Group, but people familiar with its operations say he made management decisions for the company, The Wall Street Journalpreviously reported. Senjo was one of three key partner businesses of Wirecard identified in a special audit performed by KPMG AG as the source of more than $2bn in cash that turned out not to exist, precipitating the company’s collapse.

Senjo Group is being investigated by Singapore police and financial regulators in connection with the Wirecard scandal, the authorities said in July. Senjo didn’t respond to requests for comment.

A Singapore-based entrepreneur who met O’Sullivan several times when Senjo was considering making an investment in his business said that he asked O’Sullivan multiple times for his surname but that he refused to give it. Eventually another person told him who he was.

O’Sullivan was a key player in one of Wirecard’s biggest deals, the €340m takeover of several Indian payments businesses in 2015, the Journal has reported, citing people familiar with the deal. Wirecard bought the businesses from a private Mauritius-based investment fund and agreed to pay more than eight times what the fund had paid for businesses just six weeks before.

O’Sullivan was described as “the architect of the whole transaction” by an Indian accountant in an email discussing the deal that has been reviewed by the Journal. O’Sullivan also arranged for the owners of the Indian businesses to meet Marsalek and later outlined potential terms of a deal in emails filed in an Indian court case, according to filings reviewed by the Journal.

In July, the central bank and financial regulator of Mauritius opened an investigation into whether Wirecard used the deal for round-tripping, a practice by a company to recycle the proceeds of a transaction back into its own books.

KPMG AG, which Wirecard hired to conduct a special audit of its operations before its collapse, examined accusations that the Indian payments deal was fraudulent, and was unable to identify the ultimate owners of the fund.

KPMG spoke to O’Sullivan about the India deal, but he told the auditors he would only cooperate if his name was kept out of the auditor’s report, according to a person who has read an annex to KPMG’s final report. The auditor wouldn’t agree to anonymity for O’Sullivan, so he refused to say anything.

O’Sullivan acted as an adviser to Wirecard’s former COO Marsalek on the group’s acquisition of a South African payments company, MyGate, according to the former Wirecard company officials. Wirecard paid €23.1m for the company, according to its announcement at the time, which included €18.2m in cash up front and the remainder to be paid depending on future earnings growth.

Former MyGate executives didn’t respond to requests for comment.

Some of the proceeds for MyGate were paid to a counterparty in Russia who wasn’t the owner of the business, the former company officials said. The payment appeared suspicious to people examining the wreckage inside Wirecard in recent months, they said.

Wirecard supervisory board members at the time knew about O’Sullivan’s involvement in this deal and others, according to one of the former company officials. It couldn’t be determined what they were told about the payment to the Russian counterparty. Board members at the time either declined to comment or didn’t respond to requests for comment.

—Ruth Bender contributed to this article.

Write to Paul J. Davies at paul.davies@wsj.com

From The Wall Street Journal

Source: https://www.penews.com/articles/the-man-at-the-center-of-wirecards-deal-machine-20201120

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Techware Group B.V – 859415831-11012022C

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” The Leapfunder Note is a sensible and attractive way to place capital in start-ups in the Netherlands “

” Diversification is important in angel investing. Leapfunder is a platform that allows angels to spread their investments. “

” Leapfunder investing allows you to become actively involved in a start-up, just as in classical angel investing, while taking all the hassle out of transaction execution “

” Leapfunder is ideal for investing smaller amounts in a start-up in the very early stages. Such investments can be a powerful addition to a portfolio “

” With Leapfunder you get a great opportunity to build up a diversified portfolio of start-up investments, often investors can play an active role in developing the company “

” When I saw the Leapfunder proposition I thought straight-away: this is what start-ups need. I am an entrepreneur and wish this system had been available when I started my company. “

Pieter ter Kuile

Investor

Wouter Kneepkens

Investor

Ronald Bazuin

Investor

Eric van der Maten

Investor

Eric van Gilst

Investor

Donald Res

Investor

Source: https://www.leapfunder.com/companies/154

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Private Equity

Techware Group B.V – 859415831-­‐11012022B

Avatar

Published

on

” The Leapfunder Note is a sensible and attractive way to place capital in start-ups in the Netherlands “

” Diversification is important in angel investing. Leapfunder is a platform that allows angels to spread their investments. “

” Leapfunder investing allows you to become actively involved in a start-up, just as in classical angel investing, while taking all the hassle out of transaction execution “

” Leapfunder is ideal for investing smaller amounts in a start-up in the very early stages. Such investments can be a powerful addition to a portfolio “

” With Leapfunder you get a great opportunity to build up a diversified portfolio of start-up investments, often investors can play an active role in developing the company “

” When I saw the Leapfunder proposition I thought straight-away: this is what start-ups need. I am an entrepreneur and wish this system had been available when I started my company. “

Pieter ter Kuile

Investor

Wouter Kneepkens

Investor

Ronald Bazuin

Investor

Eric van der Maten

Investor

Eric van Gilst

Investor

Donald Res

Investor

Source: https://www.leapfunder.com/companies/154

Continue Reading

Private Equity

Techware Group B.V – 859415831-11012022

Avatar

Published

on

” The Leapfunder Note is a sensible and attractive way to place capital in start-ups in the Netherlands “

” Diversification is important in angel investing. Leapfunder is a platform that allows angels to spread their investments. “

” Leapfunder investing allows you to become actively involved in a start-up, just as in classical angel investing, while taking all the hassle out of transaction execution “

” Leapfunder is ideal for investing smaller amounts in a start-up in the very early stages. Such investments can be a powerful addition to a portfolio “

” With Leapfunder you get a great opportunity to build up a diversified portfolio of start-up investments, often investors can play an active role in developing the company “

” When I saw the Leapfunder proposition I thought straight-away: this is what start-ups need. I am an entrepreneur and wish this system had been available when I started my company. “

Pieter ter Kuile

Investor

Wouter Kneepkens

Investor

Ronald Bazuin

Investor

Eric van der Maten

Investor

Eric van Gilst

Investor

Donald Res

Investor

Source: https://www.leapfunder.com/companies/154

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