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I remember reading about the Wirecard scandal when it happened, and the key learning wasn't that it was some very complex financial scam that no one could have seen coming (quite the opposite in fact), but rather that the entire state machinery – politicians, regulators, intelligence agencies, banks – was complicit in the fraud because they wanted to take credit for a German company making its name among the silicon valley elites.
A passage from the article:
> On February 18, 2019, Germany’s financial regulator, known as BaFin, issued a ban on creating new short bets against Wirecard, citing the company’s “importance for the economy.”
> The same day, prosecutors in Munich confirmed to a German newspaper that they had opened a criminal investigation. But they weren’t going after Wirecard—they were going after the F.T.
A similar thing happened with FlowTex [0]. FlowTex was founded in 1994 by Manfred "Big Manni" Schmider [1, second on the right] and Klaus Kleiser as a business for selling horizontal drilling machines. After a few years, they claimed to have sold over 3000 machines, each for 1.5 million marks. In reality, they had only sold around 270. They sold non-existing machines to leasing companies and immediately leased them back, without ever delivering the machines. This made it look like there was actually demand for these machines, which encouraged banks to give FlowTex more loans to buy (non-existing) machines. When the banks wanted to see the machines, they showed them a few in one hall and then served dinner. During dinner, they replaced the serial numbers on the machines, drove them to the next hall, showed them again to the bank representatives, created another disruption, replaced the serial numbers again, and so on. This went on for years.
When the scam collapsed in 2000, "Big Manni" was living in a palatial mansion on 15 acres of land [2], had houses in Cannes, Miami, Ibiza and St. Moritz, and owned a 55 meter yacht that previously belonged to the prince of Brunei. He had 2 private jets and a helicopter to fly him 10 km to work every day. In total, FlowTex had received over 4 billion DM (over 2 billion euros) of loans for buying fake machines. It quickly became clear that people in the ministry of finance and the tax office knew about the scam for years and did nothing to stop it. FlowTex paid taxes on the money "earned" from selling the fake machines to the leasing companies, politicians were proud to have such a successful company in their home state, and he was a large donor to the governing parties. I recall seeing a documentary once where it was hinted that even people inside the banks at least suspected it, but profited from provisions for giving out the loans and did not raise any alarms.
[0] https://en.wikipedia.org/wiki/FlowTex
> This made it look like there was actually demand for these machines, which encouraged banks to give FlowTex more loans to buy (non-existing) machines. When the banks wanted to see the machines, they showed them a few in one hall and then served dinner. During dinner, they replaced the serial numbers on the machines, drove them to the next hall, showed them again to the bank representatives, created another disruption, replaced the serial numbers again, and so on. This went on for years.
I see sitcom potential here. Maybe an episode of Seinfeld: George, actually trying his hand at being a real importer/exporter for once, manages to stumble upon a similar idea, that of buying and renting drilling equipment, shipping it, etc. Of course then he overbooks and has to play elaborate games to hide the systems when customers come looking for it, etc. etc.
> 2 billion euros
I think you meant DM here.
No, in DM the damage was actually way over 4 billion. I made it clearer above.
Ah, fair enough. It is a little confusing taking the changing currency, and then potentially also inflation into account. Interesting story overall though.
The EURO was introduced on January 1st 1999
2002 for Germany mate.
Euro as a currency and unit of accounting was introduced in 1999, including in Germany. Euro notes and coins were released in 2002.
I googled this, and it seems like you're right! I had the false memory (since I was a child at the time), that the DM-EUR exchange rate was determined when the EUR came out. But I still do vividly remember the number 1.95583, which was the exchange for DM:EUR.
Kinda weird how they celebrated it, but I think Nutella burnt it into my brain :)
Technically you are right, but I would argue that the date when the Euro actually started to be used as a currency by people was much more significant than the introduction as an abstract financial term (especially considering that this "abstract Euro" was actually only another name for the ECU - https://en.wikipedia.org/wiki/European_Currency_Unit - which had been in use since 1979, with initially 8 and then 12 currencies pegged to it).
Not really. Pre-1999 ECU it's on a crawl peg to multiple currencies, post-1999 euro it's a reverse hard peg (since while ECU is pegged to its currencies and some more including British Pound and US Dollar, post-1999 the currencies that were in ECU (except for Greek drachma) are now pegged in euro) and are being used by some pan-European companies (for example Airbus) to denote their accounting. Technically some of the currencies that are on EMU still exists until this day (although you'll get confused faces when you used old notes, only the central banks that issued them are the ones currently redeeming them).
(edit: didn't noticed that drachma autocorrected to dharma)
> politicians were proud to have such a successful company in their home state
How would most politicians know?? They are going to do an audit. Why would they? Make the minister of finance might know, but you didn't say that.
In both of these cases, it is just stupidity to blame the politicians when the experts were fooled.
It's not so clear-cut. Seeing the minister of finance, the minister president, and the former minister president being friendly with someone might certainly stop a low-level tax office servant from following his instinct and investigate further. Fear of public disgrace for a high-ranking party friend who repeatedly endorsed the company might certainly be enough for a politician to ignore any rumors, and not actively encourage further investigations.
which is why separate watchdog organizations must exist to watch gov't departments.
And the media must be free to publish things like scandals. the fear of public outrage will often prevent such things.
> but rather that the entire state machinery – politicians, regulators, intelligence agencies, banks – was complicit in the fraud because they wanted to take credit for a German company
It's interesting how The New Yorker still made the "links to Russian intelligence" the lead in their headline. Foreign boogiemen are always more palatable than blaming regular old politicians/businessmen domestically. Or at least the more juicy tidbit for clickbait.
Jan Marsalek, who shoulders much of the responsibility of this criminal enterprise was extremely cosy with the GRU and is now living in Moscow. I do think the fact that russian intelligence services are involved is pretty important.
It provides additional evidence to the hostility of the russian government to western countries long before the Ukraine war which is of public interest.
But this does not absolve the german corrupt poltical and buerocratic underbelly of this affair.
> and is now living in Moscow.
Do you have a source for this ?
https://dossier.center/yan-german-en/
It looks like he was living there and had at least one Russian passport in 2021. The Dossier Center site is funded Khodorkovsky for anyone who cares this seems to be the source for several of the other articles about him being in Moscow.
> It's interesting how The New Yorker still made the "links to Russian intelligence" the lead in their headline. Foreign boogiemen are always more palatable than blaming regular old politicians/businessmen domestically. Or at least the more juicy tidbit for clickbait.
I don't see Russia anywhere in the headline, only a passing mention in the subheadline after mentioning the German elite and a facade of innovation. The subheadline correctly prioritizes the two according to how they appear in the story, in the exact manner which you suggest it does not. Lol.
You, on the other hand, were very quick to "Russia Hoax!" post. Agenda much?
https://i.imgur.com/uXJRq74.png
It's relevant you think anyone questioning this well established instinct by national papers is pro-Russian though. Pretty standard these days. I don't feel the need to defend my support of Ukraine or being anti-Russia or w/e, I've done that enough elsewhere. I tend to give HN enough credit where I don't feel the need to make that sort of thing apparent (similar to using /s for the subset who always miss the obvious). But I guess nuance is potentially lost among Twitter-brained social media users which risks derailing threads.
Your post was a knee-jerk repeat of a very common conservative talking point. It had no nuance to lose.
Regulatory capture & open transparent fraud are not necessarily a new or new or unique combination.
The golden child is often given the benefit-of-the-doubt in human culture. Especially when people bet their horse on them being the golden child. And especially in tech (humans inherently love their popular stories and stereotypes).
It makes it easy for the golden-child to skate off their early reputation for years, before it comes time to really ask whether they became the golden-adult everyone expected them to become.
Yes. WeWork, Theranos, FTX, RE bubble era banks, Dotcom tech, etc.
Really just go back and read a "30 under 30" or "40 under 40" list 5 years later and I'm sure you'll find a handful on the list, every time.
The difference is that other than Theranos, none of those had politicians backing them up and protecting them from regulatory investigations like Wirecard had.
Theranos didn't either. There were a few influential people on the board, but they were more for providing prestige and legitimacy in front of investors and customers than pulling any strings in the government. The FDA and other agencies more or less did their job (which wasn't enough, but that's how regulation works in general in the USA).
Tell me again about all of that money that FTX donated, and then tell me there weren't politicians backing them up
> the entire state machinery – politicians, regulators, intelligence agencies, banks – was complicit in the fraud because they wanted to take credit for a German company making its name among the silicon valley elites.
I like how we all seem to accept this as a fact, like Germany couldn't actually have a great financial company, and seem to completely ignore the possibility of good old real corruption. But yeah, corruption luckily doesn't exist in this country.
> I like how we all seem to accept this as a fact, like Germany couldn't actually have a great financial company
what, Deutsche Bank doesn't count?
When you're looking for a national champion fintech company, a 150-year-old stodgy bank doesn't quite fit the bill
In the Netherlands stodgy banks are responsible for 80% plastic card use, SEPA instant money transfers and internet banking.
I think you should probably poll some current and former DB employees on this one.
The commercial side of DB is rock solid. They are considered a powerhouse corporate lender, deeply embedded within the German economy. On the whole (compared to other highly advanced economies), Germany companies prefer to borrow money from corporate banks directly, instead of issue bonds. (The aversion to capital markets in Germany is bizarre to me.) And corporate borrowers prefer a national champion, rather than a foreign competitor. (Massive lending [infra, etc.] that requires syndicates of commercial banks are another story.)
On the other hand, the investment bank side of DB... Sigh, that is another story. Wildly incompetent management. (See also: Credit Suisse) I cannot believe that the regulator or Bundestag (Parliment) did not force them to spin out the IB. If the corporate bank sinks with the IB, it would cause serious economic damage in Germany.
I guess obvious sarcasm isn't so obvious
European culture largely precludes big leaps in innovation, especially corporate innovation.
I say this as a Canadian. Our culture has the same problem for different reasons.
Google could never have arisen in Canada. Not Tesla.
> European culture largely precludes big leaps in innovation
This is such a bizarrely popular statement on here. It's a huge claim and usually presented without evidence or nuance. Just start deconstructing it by asking simple things like, "what are the biggest innovations to come out of Europe that Google relies on?" and start from there.
You missed this part: > , especially corporate innovation.
And it's true. Europe is great at inventing the stuff that the US then uses to make billions.
That’s not what I responded to which is why I left it out. The main claim is explicitly stating Europe cannot innovate due to culture. Which is just ridiculous and I wish that such claims weren’t so prevalent. By all means lets have discussions about relative levels of financing, entrepreneurship, research and development. But let’s not be lazy in our comparisons and also present even just the tiniest little bit of evidence when making a dramatic claim. Let’s be curious in the spirit of this forum but not let hyperbole pollute the discussions.
...He/she posted on the World Wide Web, invented by a Brit in Switzerland.
There's a fair chance you even used an ARM-powered device to do it. Also British.
Tesla, of course, based their first car on a Lotus. British.
It's a Tax problem and a Socialism problem more than culture problem. Socialism means taxes, and high taxes stifle innovation.
Do you think total tax burden is materially higher in Canada than the United States? For high earners, I doubt it.
And this:
high taxes stifle innovation
I would chalk it up to size of internal market -- only ~30 million -- more than anything else. Canada has produced loads (loads!) of brilliant computer scientists over the years. Sadly, they all seem to move to the US and get rich.
I'm talking about corporate tax and VAT, I'm not talking about personal income tax. EU has quite higher corporate tax and VAT than US' corporate tax and sales tax.
My argument is not against high taxes through personal income tax and property tax. It's against corporate tax and VAT/sales tax.
Ireland has one of the lowest corporate tax rates in among highly developed nations. And, in Holland, it is so easy to avoid corporate tax with transfer pricing via the Carribean. But yes, corporate taxes are high in France, and hard to avoid.
They were probably not complicit in the fraud. They just looked the other way, because a scam in that scale was unthinkable for them. As far as I know there are no cases of bad faith or corruption known. They „just“ didn’t do their job carefully enough.
Selectively prohibiting certain types of bets in an allegedly "free market" system is complicity regardless of knowledge. Rules for thee but not for me!
>They „just“ didn’t do their job carefully enough.
How is selectively not doing your job carefully enough a.k.a. looking the other way, different than corruption?
That's literally corruption. You bribe people or pull strings for authorities to look the other way when you comit your illegal activities.
If that's the public attitude it's going to keep happening.
Sure, but technically you need to know about the fraud, or at least that you are doing something wrong, to be complicit in it. I think they genuinely though they were doing the right thing.
>I think they genuinely though they were doing the right thing
Your job as a government regulator/agency isn't "to believe", it's to be impartial, do your due diligence and apply the law indiscriminately. Selectively looking the other way is blatant corruption.
Ask any accountant at any company. They double check everything. If you miss something and fuck up you can't just tell your boss "well, I didn't check it because I believed there couldn't be anything wrong here". It doesn't matter what you believe, your job is to check.
To commit fraud you need an intent. That’s how fraud is defined. You can’t commit fraud if you don’t intend to.
Same goes for being complicit in a crime. Just by doing some things in good faith, you can’t be complicit. For example: if you help somebody carrying stolen goods, you are not a complicit, if you don’t know (and don’t have to suspect) that it’s stolen.
See Wikipedia: In law, fraud is intentional deception to secure unfair or unlawful gain, …
> If you miss something and fuck up you can't just tell your boss "well, I didn't check it because I believed there couldn't be anything wrong here". It doesn't matter what you believe, your job is to check.
Fraud and conspiracy require intent. So yes, if you are accused of fraud, “I didn’t check as I didn’t suspect anything was wrong” is a defence.
If you genuinely think you are doing the right thing then don't do insane things like suing the whistle blowers.
Just like parent wrote: complicit for wanting to take credit, not (necessarily) complicit for participation in a material sense. They wanted to believe, wanted to believe very hard.
> A German parliamentary inquiry held a hundred witness hearings and reviewed nearly four hundred thousand pages of documents, concluding that the behavior of Wirecard and its enablers was “the largest financial scandal in the history of the Federal Republic of Germany.” The report blamed “collective supervisory failure,” “the longing for a digital national champion,” and “the German mentality toward non-Germans”—specifically, Quadir and McCrum. “German supervisory authorities are not fit for the ‘Internet Age,’ ” the report concluded.
It's not just “the longing for a digital national champion”, but also the idea that american startups are more successful because they are more ruthless, more willing to lie, to commit fraud, an idea which I also see on this forum.
> “collective supervisory failure,”
> “the longing for a digital national champion,”
Ultimately, you get what you incentivize.
The German tax regime is not friendly to start-ups and entrepreneurs, to put it very mildly, and infrastructure is lacking. Fertile ground it sure isn't. (There are other issues, like a digital economy that's not concentrated in one region but is diffuse around the entire nation -- and public attitudes, which are best described as being "staid," and favor employment at large existing firms or at research institutions.)
Legitimate entrepreneurs -- especially the good ones with foresight and low time preference -- will leave for greener pastures. And you can bet your last Euro that many of those who remain are grifters merely preying upon “the longing for a digital national champion.”
Ok, so it seems like the German preference for stability over risk-taking is still the same as when I left Germany in the 90s. I only worked at a few startups and have been at a stable company for 20 yrs now.
What I'm noticing is that we buy a lot of German motors, valves, optics, automation equipment. Even things like terminal blocks, hand tools, etc. etc. We all prefer them even to American brands, much less Asian. My well-off coworkers drive German cars unless they are pickup truck guys.
Maybe it's good to have a high-power economy based on conservative tech alongside our US high-risk but ultimately amateurish approach. Best of both worlds. Having said that I would never consider going [edit: move] back to Germany, for different reasons.
If I might offer a nuanced take? Risk-aversion and risk-friendliness are tools. They solve specific problems. They have to be judged by how well they solve the problem at hand, or else you wind up judging a drill by its ability to hold a joint in place.
Being risk-averse is, perhaps, exceptionally valuable when you are concerned with fine-tuning production of hellishly expensive factories producing precision-engineered physical goods. Tolerances are tight and error is the enemy because the cost is so high.
Risk-friendliness, on the other hand, addresses a different problem. When new things can be made quickly, iterated rapidly, and each round is cheap? You can prioritize avoiding failure, but you can afford to fail.
These categories map pretty well to manufacturing and software, respectively.
May I ask the reasons why you will not set foot in Germany again?
Oh, I visit regularly, should have clarified, but would not move back there. I very much enjoy the lack of bureaucracy and the amount of open space here in the NW of the US.
> Ultimately, you get what you incentivize
I've already claimed this for my tombstone
You're not totally wrong, but it's a bit more nuanced than that. What I see, from living in America and from spending a very small amount of time in Germany, is that in Germany the rules are the rules, whereas in America it is not quite like that. Small companies, especially new ones, employ "better to ask forgiveness than permission" a lot. However, as they grow, they are required to ask forgiveness, and this is given, but then you have to start following rules which are not enforced (usually) on small startups. Some, such as Uber/Lyft, grow so quickly that they can achieve some size before finding out that cities and states can impose requirements on you, but in the end regulation does come for them (perhaps not perfectly, but much more than when they were starting up).
In Germany my impression is more "get your ducks in a row before you startup", which does make sense and has some advantages. I don't even think that it is that much easier to startup in the U.S., if all the rules (tax and otherwise) were enforced all the time. However, because in the U.S. you aren't (usually) as harshly punished for not having your ducks in a regulatory row before starting, the company is able to get big enough to afford accountants, lawyers, etc.
I'm not saying the American "system" here is perfect, or even really a designed system at all, but it does have the effect (normally) of requiring more regulatory compliance as you grow in size, much like we as individuals are allowed to do things when 2 years old that we are sanctioned for if we do them when adults.
All varies a lot by sector, etc. of course, but that's the general trend.
>spending a very small amount of time in Germany, is that in Germany the rules are the rules, whereas in America it is not quite like that
That's the impression you'll get as a foreigner who spent a little time in Germany, but if you're long timer deep in the system you'll realize that "rules are rules" is only true for the little guy whereas the wealthy elite and old-money individuals and companies can and do bend and break the rules with the help of regulators, politicians and courts all the time who kindly look the other way because they are directly or indirectly invested in those companies or tied to the individuals who run the companies.
High level corruption in Germany is rampant and the scandals are numerous. VW, Wirecard, Deutche, Axel Springer, real estate giants, basically pick any rich big German company, chances are they have powerful friends in politics greasing the gears for them making sure the regulatory authorities are always looking the other way.
Fairly long-term .de resident. Just try crossing the road against the red man......"rules are rules", to the nth degree.
And, I agree of course, the rich have a better system.
>Just try crossing the road against the red man......"rules are rules", to the nth degree
Meh, that's just a rule OCD public façade since people are watching and so kids don't learn bad habits and get killed by cars, but privately many Germans are more than willing to break rules if it benefits them and nobody is looking and won't find out about it, just that they don't openly talk about such things since the Germans are super private about their personal affairs and finances, and you also won't hear about such things if you only hang abound in bubbles of SW devs and other repeople with corporate jobs in big cities.
My favorite is them not paying taxes on cash earnings. Cash is king for a reason in Germany: many small businesses, self employed or side hustles love doing business in cash since they can dodge the tax man and pad their incomes with untaxed earnings.
Please tell them that "rules are rules" when it comes to paying their taxes on cash earnings and they'll tell you to shut up and piss off because "everyone is doing it" and "it's always been like that".
It's so true. When I'm in Germany with my wife, I like to take her to restaurants and ask for a real bill at the end (not hand-scribbled on a piece of paper) because I want to pay by card. My wife gets annoyed because this pretty much guarantees we'll stay there another 20 minutes while the staff pretends to mishear, then the internet is down, then the terminal doesnt work, "but are you sure you dont have cash", etc etc. It's hilarious and never gets old, still happens in 2023 right in the center of Munich.
Yes as someone from the Netherlands (which is quickly becoming a "cashless society) it's like going back in time 20 years.
Which ... why do you think we have GDPR? Data privacy to Germans is what the second amendment is to Americans, a defence against tyranny
You can have data privacy without normalizing tax fraud, except in Germany one is used as an excuse for the other which is unfair to those who can't dodge taxes and have to carry the burden of financing the government costs for everyone else.
Financial transparency is a big thing in Scandinavian countries where cash is basically non existent and you can view the tax returns of others, and they still have GDPR and no tyranny while having low corruption and high government transparency. It's the sign of a fair and high trust society.
So I'm not baying it.
> but if you're long timer deep in the system you'll realize that "rules are rules" is only true for the little guy
Is there anywhere this isn’t true? The later bit (which I haven’t quoted) about corruption of politicians and courts might be less true in other locations, but it’s certainly a lot easier being wealthy.
I think there’s a difference of degree. There’s definitely some small level of corruption going on in UK politics for example, and some questions to be asked about contract awards during Covid, but the amount would seem absolutely laughable and parochial by the standards of most countries.
Bojo was brought down by (amongst other things) having had some colleagues drinking at his official residence during Covid (and lying about it) and questions over who had paid for the wallpaper at his official residence (and lying about it).
The press in the UK usually does what it’s meant to, and sniffs out corruption and unfairness and then makes a huge deal out of them if it was someone from the other side.
EDIT: that said, the UK desperately needs to revise non-dom rules and libel laws, which are waaay too favourable to those with power money as compared to your regular joe.
> “the longing for a digital national champion,”
Meh, these seem like lame excuses for what is basically blatant corruption at the level of government authorities. Try not paying your taxes in Germany as a small time freelancer and watch how fast the tax man comes after you. If I tell him, "please look the other way, I'm trying to build you a national tech champion" I'm pretty sure it's not gonna fly. Probably because I'm not politically connected well enough at the higher echelons like wirecard was.
Hey Germany, if you're so longing for a digital champion, why aren't you massively lowering taxes for start-ups, flooding them with funding and cutting their red tape, instead of aiding the corrupt enterprises of well connected crooks?
>“the German mentality toward non-Germans”
The truth has been spoken. This skepticism towards anything non-German is one of the reasons the SW sector and digitalization in Germany is in such a dire shape.
>“German supervisory authorities are not fit for the ‘Internet Age"
Here here. You can add to that the courts too and the politicians who need to have their "internet printed".
> Hey Germany, if you're so longing for a digital champion, why aren't you massively lowering taxes for start-ups, flooding them with funding and cutting their red tape, instead of aiding the corrupt enterprises of well connected crooks?
What makes you think opening a firehouse of funding isn't going to be immediately siphoned up by corrupt enterprises of well-connected crooks?
THIS. If you've had a crappy environment for ~honest, competent young business leaders for a long time - then your local ecosystem will be dominated by the other sort. Like watering & fertilizing a field that has mostly been seeded with weeds, then expecting a good harvest.
> „the German mentality toward non-Germans” This skepticism towards anything non-German is one of the reasons the SW sector and digitalization in Germany is in such a dire shape.
In Germany the „Michelin“ tires are pronounced in a German way in advertisements (and not in French, like in most other countries), because Germans wouldn’t buy something that has a name that doesn’t sound German.
This is such a weird example. Michelin the tire company is certainly not pronounced French in the US, either. (Not sure how, say, Poles or Indonesians pronounce it, but french pronunciation is notoriously unrelated to how it's written)
Michelin is a company with a very long history, with an active presence Germany dating back well over a hundred years. They were already large by then. Maybe German pronunciation made things more palatable for consumers, but it was certainly well know that the company was French. And by now, it's an established brand that has a fixed pronunciation.
As the obvious frame of reference in this case is the notoriously "open to all things not from here" USA: remind me again how Americans pronounce Volkswagen or Continental, let alone Huawei. (Or _any_ foreign or even British word)
Curiously, Germans generally try to use the "French" pronunciation of Guide Michelin.
Anyway point being people everywhere pronounce things the way they do because it puts the least strain on their cognitive and physical vocal system. Your example doesn't support the (possibly valid) point you're trying to make the point that Germans have a bad attitude toward foreign concepts, things and people.
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How many people do you think Wirecard bribed? Why did everyone else look away?
For the same reason why they all looked away when Scholz was bribed by Warburg: they were following orders.
"...Russian consulate in Munich, where he held meetings with spies and government officials..."
"Wirecard scandal: German Finance Minister questioned" - https://www.dw.com/en/wirecard-scandal-german-finance-minist...
> but also the idea that american startups are more successful because they are more ruthless, more willing to lie, to commit fraud, an idea which I also see on this forum.
The US law allows for more so that's not exactly unjustified...
American start ups are definitely more willing to ignore regulations in the name of growth, but not sure that’s fraud.
Selling self-driving technology with a next-year time horizon for 7 years seems quite fraudulent.
Except it's hard NOT to see a self-driving car (including cars without anyone inside) if you walk around SF these days. Please don't conflate Musk and Tesla with the Waymos of the world.
Please don't conflate SF with the rest of the world.
Incredibly rare to see self driving cars outside of the Bay Area. Up here in Canada I have my doubts about ANY self driving car achieving true autonomy in our conditions, and I live in the part that doesn't see much snow.
Cough Uber cough Airbnb.
What part of taking an Uber is fraudulent?
They were caught bribing politicians and circumventing labour laws.
Which brings me to my point: adapt to local circumstances don't assume society will adapt to yours because they've been around a thousand years longer and sooner or later you will be crushed.
The part where they tell you the driver has been carefully vetted and they haven't been?
Idk about ruthless, but clearly the market size, investment possibilities, the labor and tax laws and maybe also immigration laws are favorable to US startups.
Biggest fraud in German history I don't know either, what about the Hitler diaries or the (political instrumentalization of the) Reichstag fire, on this date 90 years ago btw?
> Clearly the market size, investment possibilities, the labor and tax laws and maybe also immigration laws are favorable to US startups.
Sure. Of course, many of these things are the responsibility of german legislators, and their longing for a german tech success story might be at least in part explained by a desire to avoid thinking about them.
Related fact: German entrepreneur Christian Angermayer was paid €13 million for arranging SoftBank's investment in Wirecard [1]. He's well-known for hyping Bitcoin, Psychedelics, and SPACs [2]...the perfect financial woo-woo combo.
1- https://www.ft.com/content/3c561ccf-2e95-46f7-ac43-a8e04db21...
2- https://www.bloomberg.com/news/articles/2021-04-23/billionai...
you say that like its a bad thing ?
I worked for Wirecard in ~2017. Now that the company is no more I guess I'm free to talk about it.
Wirecard is without a doubt the worst company I worked for. Nevermind the legacy ball of mud, the whole work environment was toxic. Blaming, finger pointing, sexist and racist remarks weren't rare. This is the only company where I've seen people screaming out of their lungs and slamming doors during meetings.
Back in the day I used to think Wirecard was a living example that you don't need a good tech stack or working enviroment to be a successful company.... oh boy was I wrong.
In many ways a toxic work environment seems great when committing fraud. People don't develop the kind of bonds that it would take for them to otherwise expose the fraud together and you have a lot of opportunities for misdirection
I was part of the Cards and Accounts Management team, and I never witnessed anything that would make me think of fraud. Sure, I saw some weird things, but not "billions of euros fraud" weird.
I honestly doubt that anyone but a very few selected people were privy to what was happening there. For the rest of us it was just a dysfunctional-trying-to-be-cool "startup".
Wirecard Had a Wild Run by Matt Levine
https://www.bloomberg.com/opinion/articles/2023-02-27/wireca...
Dan McCrum from the FT wrote a book about it as well: https://constantinecannon.com/whistleblower/book-review-mone...
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I have always thought the most troubling aspect of these frauds(Theranos/Madoff/Enron/Wirecard) is the fact that they are not sophisticated, are complete and total frauds, and yet they persist for years or decades. It makes me wonder how much companies get away with when they only do a little bit of fraud.
One thing that seems to connect some of these are how they play to being outsiders and for people who otherwise can't get in. The best place to set up a fintech company in Europe is obviously London and if you wanna start up in Munich there's a lot of car industry around to service. But for (fintech) fraud Munich is pretty good, partially because there's less employee overlap with legitimate business for you and the regulators are not really set up to catch you (the way they would be in London). The investors in Theranos were also largely people on the sidelines of VC and the Madoff investors were people who would have a hard time getting into legitimate hedge funds
London is a pretty notorious money laundering hotspot. One of the tensions between the EU and the UK was that the EU wanted better scrutiny and regulation of British tax havens which the dirty money sector in London is not keen on.
Really good point. I remember from Carreyrou's book how big name biotech VCs were notably absent from the list of Theranos investors. People who were capable of making good decisions did just that
It struck me that both in this case and Theranos, they exploited the weakness in "sampling audits" where external parties are shown only a sample of the product on the faith that the rest of the inventory is the same. Like showing a few machines and switching around the serial numbers here, or in Theranos case showing one blood test machine but not the off-the-shelf tester actually performing the assays. It's actually pretty difficult for an auditor to do an exhaustive search - what would they do, ask to visit 3000 machines?
Ask for a spreadsheet of the 3000 machines, pick one at random, and go visit it wherever it is (without warning them ahead of time). But auditors get lazy like everyone else.
Fraud is very common.
That's the legal part.
Then there's the questionable.
I quit a company when I learned the higher up staff was billing government contracts at full time (40 hours) while working about ten. Happy customers, so all is fine, right? I also discovered they would each take on 2-4 contracts billing a full 40 hours on each. $75/hr X 4 is an easy half million.
By the time they were discovered, six to 18 months later, they left the company.
Very interesting that they did the same thing India is doing with Adani. Defending them as "local champions", talks of suing the entity that exposed them and stopping shorting
Who is defending Adani? Could you provide some citations please? News I tracked shows Adani is getting investigated by SEBI[0].
[0] https://www.business-standard.com/article/companies/adani-gr...
Term defending seems to have lost its meaning. Since when investing became defending?
Moreover anonymous Hindenberg,crazy George Soros are more credible than LIC and SBI!!
Also the Netflix documentary is pretty good https://www.netflix.com/title/81404807
> A young woman suggested that they go around the table and share their real aspirations, most of which required years of training or an advanced degree. “And when it came to me, without hesitation, I was, like, ‘I’d be a journalist,’ ” he said. “And the woman who had asked the question just looked at me as if I were a bit stupid and said, ‘Well, you know, you can just do that.’”
That's how a lot of people became a software engineer. (Personally, I also wanted to be a lawyer, USSC justice, scientist, artist, business person, etc., but computer programming had much lower barriers to entry, including less class gatekeeping.)
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Germany has its own share of big shady fraud and corruption cases.
Deutsche Bank being raided for laundering Russian money was an annual happening before the 2022 Russian invasion of Ukraine.
We have a chancellor who has acute Alzheimer symptoms when it comes to CumEx.
If you're into that I suggest watching the SWR documentary around Big Manni / FlowTex.
Still waiting for an investigation into vivid.money, and their front, Solaris Bank. BaFin will get there ...eventually
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I worked for a national champion fintech, for a while. One of the things I noticed was how it received clearly preferential treatment from its home government. Eventually things went sideways and it lost 75% of its value in one day.
Wirecard may have been the German case, but more than one country has fallen prey to this problem.
Wirecard? I came here to read about diesel emissions!
the fine totals are higher, but I guess that's multiple companies and punitive measures so maybe the negative externality of air quality is lower?
The wish for a "national" digital champion besides SAP is the cause for this. German Politicians are desperate to have a google/amazon/meta of there own. Eastern europe (poland, slovakia, the baltics) get this done, but germans cultural self-image rejects abstract products. The gap between the wished for and the possible, is exploited by fraudsters and scammers like the wire card gang.
While it’s very interesting, sadly, it doesn’t come close to biggest frauds in Germany.
German top politicians pushing legislations and projects for Russian gas, then going to work directly for the Russian companies anyone ?
The one about them being a master race had pretty big costs as well I’d say.
That one wasn’t technically a fraud though, but a coup.
Is that the right way to put it? The NSDAP's rise to power was the result of relatively free elections, and it's not like they were lying about their intentions.
In order to make the coup and retain the power you have to make the biggest fraud.
No, the coup didn’t work. They went the semi-legit route and used the system.
Matt Levine had an excellent analysis of this today
> “In an ‘accident,’ he’d routed all of the company’s internet traffic through his own PC, rather than the dedicated hardware in the server room—a set-up ideal for snooping.” But Marsalek, a talented hacker, couldn’t be fired; […]
Interesting. I had not heard this nugget before.
So I had no idea what I would be reading when I started, but WOW what an amazing story. I could not stop. Halfway through I thought to myself this would make an amazing TV series as it seemingly has everything: finance, politics, spies, assassinations, backdrops of the UK, Germany, Libya, Singapore, Philippines, Russian mercenaries, private mansion gatherings, a cunning mastermind (Marsalek)...I'll just call it now and say that one day a production company will make a killer TV series out of this (a movie is too short to do it complete justice).
There may have even been Russian involvement on a state level. Parts of Wirecard were maybe a Russian FSB operation. Jan Marsalek was from Vienna, which is still one of the most important FSB outposts in Europe. There are some threads connecting Marsalek and the Russians to the government and the administration in Austria, that may be connected.
But it’s just speculation, no real evidence backing it up (yet).
Isn't he (Marsalek) hiding in Russia now?
Yes, he probably still is. A while ago he was allegedly observed by german intelligence living in a villa in Russia. But it seems like Russia doesn’t want to extradite him, similar to Ed Snowden.
This story was as stinky as the subject. It even went out of its way to paint a bunch of obvious certified a-holes as heroes.
Matt Levine's blog at Bloomberg also discusses Wirecard
https://www.bloomberg.com/opinion/articles/2023-02-27/wireca...
How does paying short sellers to close their positions work? Doesn't that just encourage others to open them to collect the "bribe"? Maybe that's where the "turkish boxers" come into play
Wirecard wasn't trying to pay short sellers to close their position, but trying to pay FT journalists to stop reporting. The short sellers were just intermediaries.
Of course, Philippines is involved. We are still in Financial Action Task Force's gray list because of shit like this. Reminds me also of the Bangladesh Heist perpetuated by North Korea. Smh.
The best scams need a willing victim of low moral character.
"Biggest Fraud in German History" -> would be careful with that bit of hyperbole ...
Biggest fraud spots are usually reserved for … … for … … governments
Not to be overly dramatic, but that's hardly the biggest fraud in German history.
If you go by the numbers, it clearly is. Or what incident are you referring to?
When I saw the title, I thought it must be about the Hitler diaries:
https://www.independent.co.uk/news/uk/home-news/hitler-diari...
I think you'd have to call that a bigger fraud.
In comparison to Wirecard that was just a funny prank.
What an interesting read. I don’t know about the Hitler diaries.
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I guess we're not counting the fraud that was Nazism. snickersnicker
Biggest? Hear me out…
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