Two men in Wirecard case claim trial to charges relating to false documents

The former director of a local accounting firm and a Briton are claiming trial in a case of falsifiying documents connected to collapsed German payments company Wirecard.

Singaporean R. Shanmugaratnam, 57, the former director of Citadelle Corporate Services, and British national James Henry O’Sullivan, 48, appeared in a Singapore district court in a joint trial on Monday.

Shanmugaratnam, who faces 14 counts of falsifying documents with intent to defraud, is accused of faking letters stating that Citadelle held millions for Wirecard AG or its related companies in escrow accounts in Singapore, when in reality, the accounts did not have such money.

Escrow is an essential service in capital markets that supports transactions such as mergers and acquisitions.

O’Sullivan, who faces seven counts of abetting the falsification of documents, is alleged to have instigated Shanmugaratnam to falsify several of these letters.

Prosecutors proceeded with 13 charges and five charges against Shanmugaratnam and O’Sullivan, respectively.

In his opening address, Deputy Public Prosecutor (DPP) Gordon Oh said this case occurred against the backdrop of the collapse of Wirecard AG in June 2020, which had been accused of fraudulently inflating sales and profits to potentially mislead auditors.

A subsequent investigation by auditor KPMG AG in Germany reported that it could not verify Wirecard AG’s revenues as its receivables mainly involved payments to escrow accounts held with third parties, and these third parties’ records only confirmed how much the accounts held without stating individual transactions.

The company then admitted that €1.9 billion (S$2.8 billion) in cash was missing from its accounts. In June 2020, its chief executive officer Markus Braun resigned, while its chief operating officer Jan Marsalek was dismissed.

Some time in 2010, O’Sullivan became acquainted with Shanmugaratnam when he engaged Citadelle’s services to set up companies in Singapore.

Prosecutors said Shanmugaratnam got to know Marsalek and Oliver Bellenhaus – the then managing director of Cardsystems Middle East FZ LLC, a related company of Wirecard AG based in Dubai – through O’Sullivan.

Shanmugaratnam entered into three escrow arrangements with Wirecard AG and its subsidiary companies.

Marsalek is on the run and currently on Interpol’s most wanted list, while Bellenhaus is on trial in Germany.

Between March 2016 and April 2018, prosecutors said, Shanmugaratnam falsely created 13 letters from Citadelle addressed to Wirecard AG, its related companies and auditors, confirming the balances in Citadelle’s escrow accounts to be between €20 million and €327 million.

Said DPP Oh: “(Shanmugaratnam) knew Citadelle did not have these monies in Citadelle’s accounts, and in the case of five of these letters, Citadelle did not have the bank accounts that he represented in the letters.”

Prosecutors alleged that Shanmugaratnam faked these letters at the behest of Marsalek and Bellenhaus.

Shanmugaratnam is said to have prepared three letters using wordings provided by Marsalek and sent them to auditors in Germany in March 2016. One of the letters claimed that Citadelle held about €47 million in an escrow account, while in reality, the account had no money at all.

In May 2016, Shanmugaratnam used wordings provided by Bellenhaus to prepare a letter addressed to Wirecard UK & Ireland, stating that Citadelle held about €41 million in an escrow account. However, its actual balance was zero.

Prosecutors argued that Shanmugaratnam falsified the letters wilfully and with intent to defraud, while his lawyer, Ms Megan Chia from Tan Rajah & Cheah, denied he had any intention to defraud.

For five of the fake letters, Shanmugaratnam is also said to have asked O’Sullivan for advice on how to respond to confirmation requests from auditors about the monies held in escrow by Citadelle.

O’Sullivan allegedly instructed Shanmugaratnam on or provided him with the contents to be reflected in the confirmation letters. Shanmugaratnam then purportedly used these contents.

O’Sullivan’s lawyer, Mr Tito Isaac from Tito Isaac & Co, denied that his client had abetted or instigated the falsification of these letters.

DPP Oh said the prosecution will rely on the statements of the two accused taken during investigations, as well as documentary evidence, e-mails and Telegram messages from Shanmugaratnam to prove its case.

The prosecution, which includes DPPs Ng Jean Ting and Shamini Joseph, will also show through evidence that Shanmugaratnam “stood to benefit financially from creating these letters and also from a continuing business relationship with Marsalek, Bellenhaus and (O’Sullivan)”, said DPP Oh.

The trial is scheduled to take place over the next two weeks.