Fraud

Gautam Adani’s crisis will hit India hard

2 Feb 2023

The Indian magnate’s sprawling empire has lost over $100 bln of market value after a short-seller made accusations of fraud. In this Viewsroom podcast, Breakingviews columnists explain why the situation will narrow Adani’s financing options, limiting his infrastructure ambitions.

BMW’s Chinese partner woes are a warning to rivals

8 Sep 2022

The German carmaker’s local counterpart said its indebted state-backed parent siphoned $1.6 bln in funds. Fortunately BMW just took control of the joint venture and looks insulated. For foreign peers mulling similar moves, the scandal sends a message: hurry up or hurry out.

Long arm of China law reaches today from Tomorrow

22 Aug 2022

Xiao Jianhua, the man behind the dismembered investment colossus, has been convicted of graft and illegal use of funds five years after he was snatched from Hong Kong. His fate is a timely reminder that Beijing is determined to show that no company or person is too big to fail.

Wirecard exposed finance’s scary credulity

17 Jun 2022

The payments group collapsed in 2020 after admitting $2 bln of its cash was fake. “Money Men”, a book by the FT journalist who uncovered the scandal, describes a chaotic and unsophisticated fraud. All the more shocking that analysts, advisers, auditors and regulators were fooled.

Allianz’s U.S. wound is not entirely staunched

17 May 2022

Europe’s largest insurer has effectively been kicked out of the U.S. market after admitting fraud and being forced to pay $6 bln in fines and compensation. CEO Oliver Baete will hope these body blows enable closure. But the fiasco raises questions about the rest of the business.

French investors are collateral damage in EY spat

24 May 2021

Paris-listed Solutions 30 published its 2020 annual report even though the audit firm didn’t sign off its accounts. Post Wirecard, it’s encouraging that auditors are taking a tougher stance. But with lenders potentially pulling credit, it leaves shareholders in a painful limbo.

Capital Calls: SXSW

19 Apr 2021

Concise views on global finance: Rolling Stone publisher Penske Media is taking a 50% stake in hipster arts festival South By Southwest.

Hong Kong SPAC deal reeks of desperation

11 Dec 2020

Marquee names from Joseph Perella to Shaquille O’Neal have lent some legitimacy to the recent spate of shell companies. One near its expiry date trying to buy parts of scandal-ridden financial outfit Convoy strips away the veneer. It’s a good reminder to be wary of such M&A.

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.