SINGAPORE: Two former employees of Wirecard Asia were jailed on Tuesday (Jun 20) for helping their superior embezzle funds from the subsidiary of the German-registered international payment services company.
The alleged mastermind, Wirecard Asia vice-president of controlling and international finance Edo Kurniawan, escaped Singapore before he could be apprehended. He is at large, with an Interpol red notice issued against him.
This is the first Wirecard-related conviction in Singapore and globally. The Wirecard scandal broke three years ago after its auditor could not verify €1.9 billion (US$2.07 billion) supposedly held abroad in escrow by third-party partners, and subsequently refused to sign off on 2019 accounts.
Top executives, including former chief executive Markus Braun, face allegations of fraud and market manipulation in what has been termed Germany’s biggest post-war fraud.
Prosecutors in the Munich trial against Braun charged that those involved had invented phantom revenue through bogus transactions with partner companies to mislead creditors and investors.
THE SINGAPORE CASES
Former head of finance at Wirecard Asia, 44-year-old Singaporean Chai Ai Lim, was sentenced by a Singapore court to 10 months’ jail on Tuesday for one count of abetting Edo in conspiring to embezzle S$47,000 (US$35,000) from Wirecard Asia’ bank account. Another charge was considered.
Indonesian citizen and Singapore permanent resident James Aga Wardhana, 39, was handed 21 months’ jail in a separate case.
The former international finance process manager of Wirecard Asia pleaded guilty to three charges of conspiring with Edo to commit criminal breach of trust from Wirecard Asia, instigating someone to falsify an invoice and transferring criminal proceeds. Another six charges were taken into consideration.
The court heard that both Wardhana and Chai reported to Edo when they worked at Wirecard Asia, which was the Asian headquarters of Frankfurt Stock Exchange-listed international payment services company Wirecard AG.
In 2018, Edo turned to Wardhana and Chai separately to ask them to help transfer funds from Wirecard.
He told Chai in early October 2018 that he needed to transfer S$100,000 and asked her if Wirecard Asia had the available funds. Chai told him there were.
Edo then approached controlling manager Krystal See Lee Wee and told her he needed cash urgently. He asked See to take a loan from Wirecard Asia before withdrawing the cash for him. He claimed that the loan would be converted into a “bonus” for her, so that she did not need to worry about repaying the loan.
Edo then told Chai about the plan. Although Chai was uncomfortable as she knew the transfer was not really an employee loan, she arranged for a transfer of S$47,000 from Wirecard’s account to See’s personal account, after Edo tweaked the amount to be transferred.
See acted on Edo’s instructions and withdrew S$40,250 in cash, which she passed to an unidentified man.
She withdrew another S$3,310, which she passed to Edo, and spent the remainder of about S$3,440 on her own expenses.
See’s loan was never converted into a bonus. Wirecard Asia suffered a total loss of S$88,200 because of Chai’s offences – including the charge taken into consideration.
She made restitution of S$70,000 to Wirecard Asia a week before pleading guilty, which the prosecution took as a mitigating factor. Their submitted sentence was reduced as a result.
WARDHANA’S OFFENCES
Wardhana was responsible for setting up standard operating procedures for the finance department in Wirecard Asia and also reported to Edo.
In May or June 2018, Edo asked Wardhana many times to find means of obtaining S$100,000. He also told Wardhana that he could arrange for Wirecard Asia to pay the money to Wardhana as a bonus.
Wardhana tried to ask what the money was for, but Edo would not say. Wardhana then said he did not have any means to get the money.
In July 2018, Edo emailed his superior, head of accounting at Wirecard AG Stephan von Erffa, lying that Wardhana wanted to resign.
Edo suggested that the company pay Wardhana S$100,000 as a variable bonus to retain Wardhana, and Mr von Erffa replied: “This is more than OK.”
The email chain was forwarded to Wardhana, who knew that the contents were a lie, and that the purported bonus was for Edo’s use.
Edo arranged for the money to be transferred to Wardhana. Before Wardhana had received the money, Edo asked him to withdraw S$100,000 from his personal bank account and pass it to a person.
Edo did so, and received the S$100,000 “bonus” from Wirecard later. He took this as reimbursement and retained the money for his own use.
Wardhana also followed Edo’s instructions and helped prepare falsified invoices and meet other parties for money transfers. Wardhana’s offences led to Wirecard Asia suffering a total loss of S$223,070.
SENTENCING ARGUMENTS
The prosecution had asked for 10 to 12 months’ jail for Chai. Defence lawyer Riko Isaac asked for no more than seven months’ jail, saying the money was not actually pocketed by Chai.
Chai was acting on Edo’s instructions and received no benefit, said the lawyer.
District Judge Soh Tze Bian said: “If someone asks you to do something unlawful, how can you carry it out and then claim you just followed instructions? I think that cannot be a defence or even be regarded as a mitigating factor.”
Deputy Public Prosecutor Vincent Ong asked for 21 to 28 months’ jail for Wardhana. Defence lawyer Chenthil Kumarasingam tried to argue that Edo had wielded a substantial amount of influence over other Wirecard Asia employees, but Judge Soh interjected.
“If any employee is asked by their employer to commit crime, he has to resign,” said the judge. “He has no choice. Otherwise, a lot of employer crooks will employ employees to do their (crimes), and they will, like Edo, run away.”
Judge Soh also mused over whether it was correct to say the employee did not benefit in this case.
“He doesn’t benefit – but he benefited from keeping his job. In that sense he has benefited,” he said.
The defence lawyer countered that there was no evidence that Wardhana could have lost his job. This was not a case where he was “happily participating in the profits”, he added.
But Judge Soh said Wardhana was a senior executive of the finance department which oversaw the German parent company, and Wardhana was an active participant in the conspiracy, always aware of its moving parts.