Singapore police brought their first criminal charges against an individual linked to the suspected fraud at Wirecard AG WDI -5.57%, the one-time German technology star that collapsed at the end of June after admitting more than $2 billion of cash on its balance sheet was fake.
The city-state’s white collar crime division charged R. Shanmugaratnam, a director and owner of Citadelle Corporate Services Pte Ltd., with falsifying papers that showed more than €100 million ($118 million) in three separate escrow accounts held on behalf of Wirecard, according to charge sheets reviewed by The Wall Street Journal.
The charges were filed in early July against Mr. Shanmugaratnam, a 54-year-old Singapore citizen. They alleged he falsified the letters from Citadelle to Wirecard in March 2016 and 2017 and that he did so willfully “and with intent to defraud.”
Citadelle provides corporate management services, such as company formation and accounting services, and acted as a trustee in charge of bank accounts that supposedly held Wirecard funds from the fintech company’s business partners.
The three escrow accounts purportedly held €143.4 million ($169.5 million) in total at the end of 2015, and one of them held €177.5 million at the end of 2016, according to the charge sheets. In reality, the three accounts didn’t hold those funds, they said.
Mr. Shanmugaratnam is currently out on bail of S$150,000 ($109,386), according to the Attorney-General’s Chambers in Singapore. His lawyer, Narayanan Sreenivasan, declined to comment. If found guilty, Mr. Shanmugaratnam faces a maximum sentence of 10 years in jail and a fine for each of the four charges. Citadelle Corporate Services couldn’t immediately be reached for comment.
Wirecard, one of Europe’s fastest-growing electronic-payments companies, stunned investors in June when it revealed that it couldn’t locate more than $2 billion in cash. Its shares plunged and the company filed for bankruptcy within weeks as the accounting scandal deepened.
Several former Wirecard executives were arrested last month by prosecutors in Munich, who accused them of colluding to inflate the company’s results by booking fake income from as early as 2015.
The suspected fraud was uncovered when auditors at Ernst & Young GmbH declined to sign off on Wirecard’s 2019 accounts, saying that bank letters confirming that €1.9 billion ($2.2 billion) was held in escrow accounts controlled by a trustee were forged. Those letters related to a trustee and two banks in the Philippines that had supposedly taken over the accounts in late 2019 from a Singapore-based bank and trustee.
In early July, Singapore police and the Monetary Authority of Singapore launched an investigation into Citadelle and another company with links to Wirecard called Senjo Group Pte Ltd., the authorities said at the time.
Mr. Shanmugaratnam and Citadelle have worked closely for years with a string of Singapore companies that have done business with Wirecard. According to public documents, Mr. Shanmugaratnam has acted as a director, secretary or shareholder of several companies that the Journal previously reported were controlled by Henry O’Sullivan, citing people familiar with him and the companies. Mr. O’Sullivan was a close associate of Jan Marsalek, Wirecard’s former chief operating officer, the Journal also reported, citing people who knew the men.
The companies where Mr. Shanmugaratnam held director, secretary or ownership roles include Senjo Group and its payments arm.
That business, Senjo Payments, was one of three third-party partners of Wirecard that supposedly processed billions of dollars in payments on behalf of the German company in countries where it didn’t have licenses. Revenue generated by their activities was supposed to be paid into accounts controlled by Citadelle as trustee, and held there for risk-management purposes before the end of 2019.
Citadelle also provided corporate services for another company, Bijlipay Asia, the Singapore-based parent of an Indian business called Bijlipay. Bijlipay was used by employees at Senjo and Wirecard in a backdated software transaction in 2016, the Journal previously reported, citing company emails and a law firm’s report into a whistleblower complaint.
The whistleblower at Wirecard in Singapore in 2018 had referred to this transaction and others in a complaint about accounting irregularities at the German company. Singapore police are still investigating that complaint.
Wirecard said at the end of June it was examining whether any of this business was actually conducted for the benefit of the company. Senjo Group and Mr. O’Sullivan didn’t respond to requests for comment. A lawyer for Mr. Marsalek declined to comment. A representative of Bijlipay couldn’t be reached for comment.
A special audit of Wirecard by KPMG AG earlier this year found that third-party partners accounted for the vast majority of reported sales of three Wirecard divisions. They also made up a major part of the group’s reported earnings before interest and tax from 2016 to 2018.