Wirecard’s sentinel helps trigger anti-fraud regulations

FROM THE PRESIDENT AND CEO
Bruce Dorris, J.D., CFE, CPA

Two years after the implosion of German financial services provider Wirecard, the story continues to make news. The executives blamed for their roles in the accounting scandal are still fugitives, and just recently, the whistleblower’s identity was revealed.

His name is Pav Gill, and the ACFE is honoring his bravery in exposing fraud at Wirecard by presenting him with this year’s Cliff Robertson Sentinel Award, which it bestows annually on a person who, without regard to personal or professional consequences, publicly discloses wrongdoing in business or government.

He talks to Fraud Magazine in this issue’s cover story, recounting his experiences at Wirecard and what it means to be a whistleblower in countries that often lack sufficient support for those willing to expose wrongdoing.

When Gill first started at Wirecard as its first legal counsel for Asia-Pacific, it was an up-and-coming German online payments platform expanding across the globe. This was an exciting place for a young lawyer like Gill who was looking to break into the fintech world.

Gill soon grew suspicious, however. The regional CFO had little experience as a finance manager and appeared ill-qualified to run the Asia operations of a multibillion-euro-listed company. Yet it wasn’t until that CFO came back with profitable financials for Wirecard’s loss-making Hong Kong entity that Gill spied his first big red flag.

History shows us that many frauds are essentially the same — the only difference is they’re executed with new technology. In this case, one such scam involved the regional CFO allegedly creating false software transfer agreements for several million euros between bogus third-party shell companies and Wirecard.

Sadly, Gill’s efforts to bring these frauds to the attention of management proved to be another chapter in a long history of whistleblowers who’ve been punished rather than rewarded for their good deeds. Even after corrupt Wirecard executives forced Gill to resign, they continued to harass him. In the end, it was ultimately Gill’s mother who encouraged him to blow the whistle and act as a source for the Financial Times journalists who brought the scandal to the public’s attention.

Often it takes such a scandal to force lawmakers to pass long-needed, anti-fraud legislation (think of the Sarbanes-Oxley Act after Enron). And Wirecard’s demise has acted as a similar catalyst in Germany, where efforts are underway to give regulators more firepower against corporate fraud and to shield whistleblowers.

Indeed, more and more countries are adopting tougher measures to promote whistleblower activity and protect them from harm. The EU Whistleblower Directive is one such recent initiative. Some Asia-Pacific countries are also enacting stronger whistleblower protections.

We hope to see more such laws and regulations. Whistleblowers must be protected. As CFEs, we should look for opportunities to support reporting programs and protect people who are willing to risk their jobs and reputations to expose fraud. Others like Pav Gill (and his mother) are counting on us.

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners