Image Source: BBC
A recent order issued by the Enforcement Directorate’s (ED) adjudication authority in Chennai has uncovered a Tamil Nadu-based firm’s role in the financial scandal that brought down Germany’s largest fintech company, Wirecard. The downfall of Wirecard, first exposed by the Financial Times, led to its insolvency in 2020 and has since been chronicled in a book and the Netflix documentary, Skandal! Bringing Down Wirecard.
The ED order, dated October 30, detailed how Wirecard significantly inflated the purchase price of Chennai-based fintech company Hermes I Tickets Pvt Ltd (HITPL). Initially valued at ₹275 crore in 2015, HITPL’s sale price was artificially increased to ₹2,400 crore in 2016 through a Mauritius-based intermediary, Emerging Markets Investment Fund (EMIF). The ED labeled this as a “pre-planned insider agreement” aimed at siphoning off the excess funds.
The Financial Times had earlier flagged concerns about the inflated transaction in 2019, suggesting it was part of a broader fraud to falsely boost Wirecard’s revenues and profits. The scandal culminated in Wirecard filing for insolvency in June 2020, with €1.9 billion missing from its accounts.
Insider Links And Shady Offshore Payments
According to the ED, the original owners of HITPL, brothers Ramu and Palaniyappan Ramasamy, played a pivotal role in the deal. After selling the company to EMIF for ₹275 crore in 2015, the fund resold it to Wirecard just months later at nearly ten times the price. The ED investigation revealed that the brothers, along with their family members, received ₹195 crore in offshore payments. These payments were allegedly funneled through UAE-based firms, VR Payments and NSC Consulting, which were created to act as conduits for the illicit transactions.
The ED also noted that the business model of HITPL underwent a significant transformation after being sold to EMIF, shifting from a travel services agency to a payments-focused company. This drastic change in operations, coupled with the 900% spike in valuation, underscored the insider nature of the transaction, the agency claimed.
The ED order cited evidence showing that Ramu and Palaniyappan had multiple meetings with Jan Marsalek, Wirecard’s former COO, during the course of the transaction. Marsalek, who is now a fugitive and suspected of being a Russian intelligence operative, is believed to have played a key role in the deal. The Ramasamy brothers even traveled to Germany in late 2016 to finalize the settlement with Marsalek.
Following its investigation under the Foreign Exchange Management Act (FEMA), the ED imposed a penalty of ₹566.5 crores on the Ramasamy brothers, their families, and their firm GI Retail Pvt Ltd. Additionally, the agency confiscated properties worth ₹195 crores connected to the illicit offshore payments.
(With inputs from The New Indian Express)
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