ANZ probes its travel-card unit amid Wirecard fallout

ANZ is investigating a multi-million-dollar fraud against its travel-card business amid fears the swindle could be an inside job.

ANZ is investigating a multi-million-dollar fraud against its travel-card business, much of which is outsourced to troubled payments processor Wirecard, amid fears the swindle could be an inside job.

It can also be revealed that ANZ’s Indonesian bank used as a “major information technology partner” a Wirecard subsidiary that is at the centre of an accounting scandal involving allegations of forgery and the unusual payments of large sums of money.

Singaporean police are investigating the allegations, which include potential falsification of Wirecard’s Australian and New Zealand financial accounts, raiding the German company’s regional headquarters last week and interviewing senior staff on Monday.

The Munich-headquartered Wirecard has denied wrongdoing by any of its employees, including finance head Edo Kurniawan, who a company whistleblower has accused of being responsible for the alleged accounting fraud.

But the saga has again rocked the share price of the European-listed company that for the past few years has been targeted by short-sellers and sceptical journalists who don’t buy its tech-inspired story of exponentially increasing revenue and uninterrupted global growth.

It has also exposed the increased reliance of Australian banks on outsourcing so-called “non-core” functions, a trend that is likely to accelerate as finance groups shrink back towards their traditional business of borrowing and lending money following the Hayne royal commission.

In the case of travel cards, which are loaded up with foreign currency by overseas travellers so that they can make purchases through the Visa or Mastercard systems, they represent a very small part of ANZ’s business.

An ANZ spokesman declined to comment on the travel-card fraud, which is believed to involve a batch of card numbers that lacked the usual security protections designed to protect against misuse.

Because of this, fraudsters believed to be based in Brazil were able to withdraw cash when they should not have been able to.

Suspicions that the scam was run with the involvement of someone within Wirecard or ANZ have been raised because some of the card numbers used involved cards that had not yet been physically issued.

No customers are known to have been affected by the con. A spokesperson for Wirecard declined to respond to questions about the issue, saying the company did not discuss its clients with third parties.

Meanwhile, ANZ’s Indonesian subsidiary, Bank ANZ Indonesia, most of which it offloaded to Singapore’s DBS last year as part of a general retreat from Asia, has used Wirecard subsidiary Aprisma to provide payment technology since at least 2012, annual reports show.

Aprisma is at the core of allegations made against Mr Kurniawan, who could not be reached, by a whistleblower codenamed “Bobby” that were investigated by lawyers for Wirecard last year.

In a preliminary report to the company dated May 4, 2018, lawyers at top Singaporean firm Rajah & Tann said there was evidence to suggest that Mr Kurniawan, international finance project manager James Wardhana and Aprisma director Widhayati Darmawan “have worked together to sign backdated agreements in order to support invoices that have been billed by PT Aprisma to third parties”.

Among documents uncovered by the lawyers were a €2.5 million contract agreement in which Aprisma agreed to supply a product named “Prisma Digital Modular” to a company in the Maldives named MILE & Associates, dated July 25, 2017, but sent by Mr Wardhana to Mr Kurniawan for execution more than six months later, on February 5 last year.

Confusion also surrounds an agreement between Aprisma and a company called Right Momentum that the lawyers said might also not be genuine.

The agreement was for Aprisma to provide the company with the “Prisma Mobile Platform” in return for €2.5m, but a March 2018 email shows Aprisma thought it was Right Momentum that owed the Wirecard subsidiary the money, “instead of the other way around, as reflected by the invoices”, the Rajah & Tann lawyers said.

In another case examined in the report, a Singaporean company called Flexi Flex supposedly billed Aprisma €3m to provide the Wirecard subsidiary with “3D Secure Tokenisation”.

While the agreement was dated February 5, 2018, the lawyers found it was signed by Mr Darmawan on February 22.

“It does not appear to us that the agreement is genuine,” the lawyers said.

Flexi Flex, which sells pipes, pumps and hoses, has denied ever doing business with Wirecard.

The accounting scandal follows a 2016 attack on Wirecard by Zatarra Research, a then-anonymous research group now known to be associated with the man behind short-sellers Viceroy Research, who found success late in 2017 by attacking Steinhoff, the South African-listed owner of Australian furnishing retailers Freedom and Fantastic Furniture.

In a 100-page report, Zatarra accused Wirecard of a list of wrongdoing, including money laundering, helping internet gambling companies evade US restrictions and defrauding Visa and Mastercard. “The conduct of Wirecard’s senior officers, their criminal actions and the executive board’s gross negligence leaves equity holders with worthless paper,” Zatarra said.

In both cases, German markets regulator BaFin chose to investigate potential market manipulation around the release of the reports, instead of the alleged misconduct within Wirecard.

In December German media reported prosecutors had asked a court to fine Mr Perring, but he says he has had no contact with the Munich prosecutors’ office since May last year.

And on Thursday, Germany’s Frankfurter Allgemeine Zeitung reported that a short-seller had admitted to Munich prosecutors that he knew about a Financial Times report about the alleged accounting fraud in Singapore before it appeared last week.

The Financial Times denied it leaked any information.

“Any allegation of market manipulation against the FT, or any of its reporters or staff, is false and is a smokescreen obscuring the serious allegations that fraudulent accounting was committed by Wirecard employees in Singapore,” a spokeswoman for FT said.