Fraud

Gary Cohn channels Goldman minus self-awareness

2 Dec 2020

The ex-COO is sitting on $10 mln the Wall Street firm wants back as a rap for its 1MDB scandal. Even if he’s on safe legal ground it doesn’t look good for him or for Goldman, which calls its staff “culture carriers.” Cohn’s former employer at least knows when a gesture is needed.

Goldman’s clawback is small but pointy

22 Oct 2020

CEO David Solomon and others will forfeit $174 mln of bonus payments to resolve the 1MDB bribery scandal. But there’s a question mark over former COO Gary Cohn, who cashed in when he went into politics in 2017. That career change shouldn't shield anyone from past sins.

Big scandals explain small client auditing cull

19 Oct 2020

PwC quit as Boohoo’s auditor amid supply chain failures and governance concerns at the UK fast-fashion retailer. After backlash over EY’s failure to spot $2 bln missing at Wirecard, the Big Four is nervous. Dumping customers who inspire bad headlines and pay low fees is sensible.

Review: London is global corruption’s top offender

2 Oct 2020

“Kleptopia” catalogues the corporate crooks who sanitise their ill-gotten gains. Though the problem is global, the British capital plays a central role. Tom Burgis shows how banks, stock markets and real estate are all complicit. But the flow of cash also erodes London’s appeal.

2020 is ideal year to hide Wall St trading scams

30 Sep 2020

JPMorgan is paying a $920 mln fine and admitting its traders manipulated metals and Treasury markets. It’s the latest of a long list of industry wrongdoing. Online chats helped snare the perpetrators. Remote work means there are more ways to conceal such shenanigans.

Money-laundering fight starts with transparency

21 Sep 2020

Bank shares fell after leaks suggested lenders moved allegedly dodgy funds despite red flags. They will keep doing so if they can plead ignorance about where cash ultimately comes from and ends up. Better visibility on company ownership, and cross-border data sharing, will help.

Stock markets in China grow governance teeth

5 Aug 2020

The Supreme Court will allow class-action lawsuits similar to those that won big settlements for Enron and WorldCom shareholders. Liberalisations have unleashed massive rallies on domestic bourses, and restraint on executive abuse is overdue. China Inc had better lawyer up.

Wirecard’s red flags offer lessons for investors

20 Jul 2020

Shareholders couldn’t have known that $2 bln of the payments group’s cash was missing. But its seemingly unnecessary reliance on debt finance raised questions. A weak board and short-term executive pay packages were further warning signs. All three serve as a teachable moment.

Tencent’s hot sauce fraud exposes expired tech

3 Jul 2020

The Chinese video-games titan appears to have been taken by crooks pretending to work for Lao Gan Ma, a popular spicy condiment, using a forged company seal to ink an advertising deal. Such old-fashioned methods have embroiled others including SoftBank. Digitisation is overdue.

BaFin’s rejuvenation starts with finding new boss

2 Jul 2020

The German regulator investigated journalists and investors rather than fraudulent Wirecard. Beefing up oversight of payments and auditing will have little impact if the watchdog doesn’t properly use its powers. Change is unlikely while President Felix Hufeld remains in charge.

Hadas: Wirecard woes show need for fraud-busters

1 Jul 2020

Accountants EY may have been particularly inept in missing fraudulent bank balances at the German payments processor, but auditors are normally right to presume companies are fairly honest. Sniffing out cheating is a job for separate, licensed and powerful forensic specialists.

Wirecard UK saga exposes payments regulation holes

1 Jul 2020

Clients of the collapsed group’s British arm had their accounts frozen while the watchdog tried to pin down its cash balances. That hurt blameless retail customers. Supervisors urgently need a way to monitor payments firms more closely before they get into trouble.

Wirecard is argument for a Big Four pay clawback

30 Jun 2020

Audit giant EY is embroiled in the German scandal after signing off accounts when $2 bln was missing. Remedies like splitting bookkeeping from consulting or using two auditors may focus minds on finding frauds. But until pay is linked to clean accounts, scandals will continue.

Wirecard collapse is real-life fintech stress test

25 Jun 2020

The German group is filing for insolvency a week after saying $2 bln of cash was missing. Its collapse will test whether fast-growing and lightly regulated payments firms can fail without damaging customers or other lenders. The fallout has consequences for the entire sector.

Wirecard’s bankers might as well keep it alive

22 Jun 2020

ABN Amro, Commerzbank and others could tip the payments group into insolvency by calling in 2 bln euros of loans. Given Wirecard’s lack of cash and tangible assets, they might not get their money back. Better to see if new CEO James Freis can salvage something from the wreckage.

Wirecard could prove a nail in BaFin’s coffin

22 Jun 2020

Despite repeated allegations of fraud at the payments group, the German watchdog until recently focused on short-sellers and journalists. The scandal poses big questions about its oversight of Wirecard’s bank unit - and about financial regulation in Europe’s largest economy.

Wirecard scandal turns into an existential crisis

18 Jun 2020

Markus Braun’s payments group lost over half of its market value after EY found indications that 1.9 bln euros of cash balances might be “spurious”. Loan covenants may be triggered, threatening its access to finance. Regulators, lenders and auditors have lots of explaining to do.

Wirecard CEO is approaching his day of reckoning

16 Jun 2020

The $14 bln payments group is due to publish its delayed 2019 annual results on Thursday. If EY flags issues with its accounts, Markus Braun’s position will be untenable. Even the auditor’s seal of approval may not save the chief executive from investors who want him out.

Samsung’s M&A controversy will have a final act

9 Jun 2020

Seoul is stepping up a probe into a 2015 group merger led by scion Jay Y. Lee. That might help U.S. fund Elliott which opposed the $8 bln deal and wants payback. Samsung went to great lengths to only narrowly win the first time around. Pressure on the conglomerate is building.

Chinese online tutor gets lesson in multiplication

29 May 2020

GSX Techedu deflected one sloppy short-seller attack and a second sensational one. A third from Muddy Waters calling the $7 bln company a fraud hit as Luckin buckled and Congress moved on U.S.-listed Chinese stocks. Growing scepticism will require targets to have strong defences.