Two men convicted over falsified documents by Singapore-based company in multi-million-dollar Wirecard case

SINGAPORE: Two men were convicted on Monday (Sep 22) over the falsification of documents involving hundreds of millions of dollars by a Singapore-based company linked to Wirecard AG, a German payments company whose leaders were slapped with allegations of fraud and market manipulation in the wake of its billion-dollar collapse.

The two men convicted are R Shanmugaratnam, a 59-year-old Singaporean director of local accounting firm Citadelle Corporate Services, and James Henry O'Sullivan, a 50-year-old Briton who instigated him to issue letters falsely confirming that money was held in escrow in certain accounts when it was not.

Escrow refers to when a third party holds a sum of money while a transaction is being completed.

District Judge Kow Keng Siong said in a brief hearing that he found the two men guilty of their respective charges. He did not give any reason for his decision, but said he should be able to release his full written grounds by Friday.

Shanmugaratnam was convicted of 13 charges for falsifying 13 balance confirmation letters between 2016 and 2018 with fraudulent intent.

O'Sullivan was found guilty of five charges for abetting Shanmugaratnam, by instigating him to fraudulently issue five of those letters in 2017.

In the letters, Shanmugaratnam falsely represented that his company Citadelle held sums totalling over 1.1 billion euros in escrow for Wirecard AG and its related companies for financial periods between 2015 and 2017 in its bank accounts.

The pair became acquainted in 2010 when O'Sullivan engaged Citadelle's services to set up companies in Singapore and to provide company secretarial services, the prosecution said.

Citadelle offered corporate secretarial services to 30 of O'Sullivan's companies, and Shanmugaratnam was registered as a director of Vertical Point, an entity used to register O'Sullivan's employment pass in Singapore and to pay O'Sullivan a monthly salary of S$50,000 for providing consultancy work to other companies.

These included companies he was an ultimate beneficial owner of, said prosecutors.

As a director, Shanmugaratnam's role included managing the accounts, making payments for O'Sullivan's salary and other personal bills such as his housing and utility bills.

O'Sullivan was a long-time business partner and friend of Jan Marsalek, the chief operating officer of Wirecard AG. He introduced Marsalek to Shanmugaratnam sometime before July 2015.

According to Shanmugaratnam, Marsalek asked him to act as an escrow agent between Wirecard entities and O'Sullivan's companies.

Wirecard was made insolvent in 2020. Marsalek has been named in an Interpol Red Notice and was allegedly responsible for Wirecard's business in Asia, where the company reportedly admitted that nearly 2 billion euros in cash it supposedly held did not exist.

The prosecution, led by Deputy Public Prosecutor Gordon Oh, said Shanmugaratnam was a trained accountant and the formal letters issued by Citadelle contained "serious misrepresentations that Citadelle held millions on behalf of Wirecard".

"There is no innocent explanation for his conduct," said the prosecutors in their closing trial arguments.

Shanmugaratnam's defence at trial was that he believed the letters were for innocent purposes, but the prosecution said this was "illogical, contradicted by the objective evidence, and should accordingly be rejected".

O'Sullivan's defence rests on the assertion that his Telegram and email accounts were hacked, but the prosecutors said the reason for this is "obvious".

"The documentary evidence in the form of emails and Telegrams is so overwhelming that Henry has to distance himself from them with the absurd claim that all the inculpatory messages and emails were sent by an unauthorised third party who had hacked into his accounts and impersonated him," said the prosecution.

Shanmugaratnam was represented by a team of lawyers from Tan Rajah & Cheah, led by Ms Megan Chia, while Mr Tito Shane Isaac led a team from Tito Isaac & Co to defend O'Sullivan.

The pair will return to court for mitigation and sentencing in November.

The penalty for falsifying documents and for abetment of such an offence is a maximum jail term of up to 10 years, a fine, or both.