1 00:00:10,720 --> 00:00:14,000 Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast. 2 00:00:14,080 --> 00:00:17,360 Speaker 1: I'm Tracy Allaway and I'm Joe. Wisn't the Joe? What 3 00:00:17,440 --> 00:00:22,840 Speaker 1: do you think the most famous apocryphal quote about markets is? 4 00:00:23,239 --> 00:00:25,360 Speaker 1: I guess it would have to be the one about 5 00:00:25,480 --> 00:00:29,960 Speaker 1: markets staying solvent rather or markets staying irrational longer than 6 00:00:30,400 --> 00:00:32,680 Speaker 1: you could stay solvent, or something like that. Right, that's 7 00:00:32,680 --> 00:00:35,720 Speaker 1: gotta be it. I'm so glad you said that one, 8 00:00:35,800 --> 00:00:39,080 Speaker 1: because that was exactly what I had in mind. Uh, 9 00:00:39,520 --> 00:00:41,839 Speaker 1: did no one really actually say like, does no one 10 00:00:41,880 --> 00:00:44,199 Speaker 1: really know actually said that or what? I think? It 11 00:00:44,240 --> 00:00:47,520 Speaker 1: gets attributed to Cain's but there's some debate about whether 12 00:00:47,600 --> 00:00:49,640 Speaker 1: or not he actually said it. You'll also see different 13 00:00:49,720 --> 00:00:53,080 Speaker 1: versions of it. So the market can remain irrational longer 14 00:00:53,120 --> 00:00:55,200 Speaker 1: than you can remain solvent, or the market can stay 15 00:00:55,520 --> 00:00:59,920 Speaker 1: irrational whatever. But it's a situation I think that everyone 16 00:01:00,200 --> 00:01:02,680 Speaker 1: is kind of familiar with where you look at something 17 00:01:02,720 --> 00:01:08,080 Speaker 1: and you go, this is absolutely insane, and yet you know, 18 00:01:08,280 --> 00:01:11,880 Speaker 1: like it keeps rising in value or people keep pouring 19 00:01:11,920 --> 00:01:15,120 Speaker 1: money into it, and you feel like you're going crazy 20 00:01:15,200 --> 00:01:17,800 Speaker 1: because no one else seems to see the thing that 21 00:01:17,920 --> 00:01:21,680 Speaker 1: you see. Yeah, you see this phenomenal. In a lot, 22 00:01:21,720 --> 00:01:26,119 Speaker 1: someone either calls something right but their way before other people, 23 00:01:26,200 --> 00:01:28,679 Speaker 1: they don't make money on it. They if they're short, 24 00:01:28,800 --> 00:01:32,440 Speaker 1: they get stopped out of their trade long before the 25 00:01:33,120 --> 00:01:36,800 Speaker 1: market sort of repriced to normal. Uh. And it seems 26 00:01:36,800 --> 00:01:39,440 Speaker 1: really tough because you're like, you know, if you're if 27 00:01:39,440 --> 00:01:42,240 Speaker 1: you're in the investment side, you're losing money or you're 28 00:01:42,280 --> 00:01:45,520 Speaker 1: losing reputation or as you put it, you know, just 29 00:01:45,560 --> 00:01:49,320 Speaker 1: like starts to feel like you're the one who's going crazy. Yeah, 30 00:01:49,440 --> 00:01:51,800 Speaker 1: So today I am very very pleased to say that 31 00:01:51,840 --> 00:01:55,760 Speaker 1: we are going to be diving into maybe the ultimate 32 00:01:55,880 --> 00:01:59,320 Speaker 1: example of this phenomenon. But we're gonna be talking about 33 00:01:59,320 --> 00:02:01,960 Speaker 1: wire Card. Do you remember that company? Yeah? But I 34 00:02:02,040 --> 00:02:05,160 Speaker 1: never really understood what they did. And so for no 35 00:02:05,240 --> 00:02:09,239 Speaker 1: other reason because I'm going to finally understand what wire 36 00:02:09,320 --> 00:02:12,359 Speaker 1: Card did or didn't do maybe didn't do well. All 37 00:02:12,440 --> 00:02:14,120 Speaker 1: you need to know is that it was supposed to 38 00:02:14,120 --> 00:02:17,400 Speaker 1: be this this fancy fintech company. I think at some 39 00:02:17,480 --> 00:02:20,359 Speaker 1: point it had like a market valuation of almost thirty 40 00:02:20,360 --> 00:02:23,200 Speaker 1: billion dollars or something crazy like that, and it was 41 00:02:23,240 --> 00:02:27,200 Speaker 1: this big, like up and coming rising star in Europe 42 00:02:27,280 --> 00:02:31,679 Speaker 1: and particularly in Germany, and of course it turned out 43 00:02:31,760 --> 00:02:34,720 Speaker 1: to be a massive fraud. And now, you know, speaking 44 00:02:34,760 --> 00:02:39,280 Speaker 1: of going crazy, speaking of reputational damage. Uh, I'm gonna 45 00:02:39,320 --> 00:02:41,480 Speaker 1: go ahead and say this episode comes with with a 46 00:02:41,520 --> 00:02:43,640 Speaker 1: big disclaimer, which is there is going to be a 47 00:02:43,680 --> 00:02:49,079 Speaker 1: lot of media navel gazing ahead, because Yeah, I think 48 00:02:49,080 --> 00:02:51,799 Speaker 1: in this instance it works because we're gonna be talking 49 00:02:51,840 --> 00:02:56,840 Speaker 1: to the journalists who actually covered wire Card and you know, 50 00:02:57,240 --> 00:03:01,520 Speaker 1: doggedly investigated this company any and basically kept saying it's 51 00:03:01,560 --> 00:03:05,120 Speaker 1: a fraud, there's evidence of fraud, and no one listened, 52 00:03:05,280 --> 00:03:08,800 Speaker 1: almost no one listened. And meanwhile, it feels like all 53 00:03:08,880 --> 00:03:12,600 Speaker 1: of finance, from the accountants to the cell side to 54 00:03:13,160 --> 00:03:19,400 Speaker 1: the German regulators were really fighting against um the truth 55 00:03:19,440 --> 00:03:22,560 Speaker 1: about this company actually coming out. It's so it's wild 56 00:03:22,720 --> 00:03:24,600 Speaker 1: that like this it's even possible, Like do you think 57 00:03:24,600 --> 00:03:27,120 Speaker 1: the question is like does the company have the business 58 00:03:27,120 --> 00:03:29,600 Speaker 1: it claims to have? Does the company have the money 59 00:03:29,880 --> 00:03:33,160 Speaker 1: it claims to have? And yet even these things we 60 00:03:33,240 --> 00:03:36,920 Speaker 1: should be sort of like independently verifiably yes or no. 61 00:03:37,400 --> 00:03:39,160 Speaker 1: It could take a long time for the truth to 62 00:03:39,200 --> 00:03:42,200 Speaker 1: come out. Yeah, And I'm always personally interested in the 63 00:03:42,560 --> 00:03:45,960 Speaker 1: sort of what do you call like the inflection points 64 00:03:45,960 --> 00:03:49,400 Speaker 1: between everyone going Okay, this is fine, and then suddenly 65 00:03:49,440 --> 00:03:52,480 Speaker 1: everyone going, oh, actually there's billions of dollars or billions 66 00:03:52,480 --> 00:03:55,120 Speaker 1: of euros missing from this company. It's not so fine. 67 00:03:55,520 --> 00:03:58,080 Speaker 1: So alright, without further ado, I am very pleased to 68 00:03:58,080 --> 00:04:01,120 Speaker 1: say we're going to be speaking with Dan McCrum. He's 69 00:04:01,240 --> 00:04:05,400 Speaker 1: an investigations correspondent at the Financial Times and also the 70 00:04:05,480 --> 00:04:08,760 Speaker 1: author of a new book all about wire Card. It's 71 00:04:08,800 --> 00:04:11,680 Speaker 1: called money Men, A hot start up, a billion dollar fraud, 72 00:04:11,760 --> 00:04:13,920 Speaker 1: A fight for the truth. And we're also going to 73 00:04:13,960 --> 00:04:16,440 Speaker 1: be speaking with Paul Murphy. He is the f t 74 00:04:16,680 --> 00:04:20,640 Speaker 1: S head of Investigations, also my former boss at ft 75 00:04:20,720 --> 00:04:25,880 Speaker 1: Alphaville and veteran at at Lunching the right way, I 76 00:04:26,120 --> 00:04:28,680 Speaker 1: would put it that way. All right, Dan and Paul, 77 00:04:28,720 --> 00:04:31,360 Speaker 1: thank you so much for coming on our thoughts. Thanks 78 00:04:31,400 --> 00:04:36,159 Speaker 1: for having us. So maybe just to begin with, shall 79 00:04:36,240 --> 00:04:39,800 Speaker 1: we let's let's start at the beginning. So what exactly 80 00:04:39,920 --> 00:04:44,000 Speaker 1: piqued your interest in wire Card down. So this was 81 00:04:44,400 --> 00:04:47,280 Speaker 1: eight years ago and I was having a conversation with 82 00:04:47,680 --> 00:04:50,600 Speaker 1: quite a well known Australian heads fund manager, John Hampton, 83 00:04:51,400 --> 00:04:53,880 Speaker 1: and he just said to me, hey, Dan, would you 84 00:04:53,920 --> 00:04:59,000 Speaker 1: be interested in some German gangsters, and that was the start. 85 00:04:59,040 --> 00:05:01,680 Speaker 1: I just down the name, this funny little company called 86 00:05:01,680 --> 00:05:05,880 Speaker 1: wire Card, and the best description of it then was 87 00:05:05,920 --> 00:05:09,000 Speaker 1: sort of a European paper. It did something to do 88 00:05:09,080 --> 00:05:12,040 Speaker 1: with payments, and it was worth about four billion dollars, 89 00:05:12,200 --> 00:05:14,120 Speaker 1: And yeah, I didn't think much more of it then. 90 00:05:14,160 --> 00:05:16,160 Speaker 1: I mean I looked at its business. It didn't really 91 00:05:16,160 --> 00:05:18,919 Speaker 1: make much sense to me. And then this other short seller, 92 00:05:18,960 --> 00:05:22,560 Speaker 1: a guy called Leo Perry, got in touch and we 93 00:05:22,600 --> 00:05:24,640 Speaker 1: went and met for coffee, and he laid out in 94 00:05:24,680 --> 00:05:28,080 Speaker 1: front of me these sort of really close written sheets 95 00:05:28,839 --> 00:05:32,919 Speaker 1: of this theory that hang on a second, this wire 96 00:05:32,920 --> 00:05:37,000 Speaker 1: Card is a big accounting fraud. So what was the well, 97 00:05:37,080 --> 00:05:39,760 Speaker 1: what was the ostensible business before we get to sort 98 00:05:39,800 --> 00:05:42,640 Speaker 1: of the gap between what was going on in what uh, 99 00:05:43,320 --> 00:05:46,520 Speaker 1: what actually was going on? What was the ostensible business, 100 00:05:46,600 --> 00:05:48,919 Speaker 1: what did they claim to be doing, what was the product? 101 00:05:49,000 --> 00:05:52,000 Speaker 1: And did it have people actually using the surface. So 102 00:05:52,000 --> 00:05:54,880 Speaker 1: it had this real business and it's a pretty simple business. 103 00:05:55,640 --> 00:05:58,919 Speaker 1: It processes credit and debtor car payments. So as you 104 00:05:58,960 --> 00:06:03,039 Speaker 1: have like an online shop selling flip flops, then it 105 00:06:03,040 --> 00:06:05,080 Speaker 1: would help you get money from customers who wanted to 106 00:06:05,080 --> 00:06:08,280 Speaker 1: buy your flip flops. It's as simple as that. Lots 107 00:06:08,320 --> 00:06:11,440 Speaker 1: of businesses do this. But the thing about WORKUD was 108 00:06:11,560 --> 00:06:14,320 Speaker 1: it was growing way faster than everyone else and it 109 00:06:14,360 --> 00:06:21,560 Speaker 1: was also really profitable, quite unusually profitable. And that's the key, right, 110 00:06:22,080 --> 00:06:25,400 Speaker 1: You can't normally do both of those things. So one 111 00:06:25,400 --> 00:06:27,599 Speaker 1: of the things that you wrote about very early on 112 00:06:27,880 --> 00:06:30,600 Speaker 1: was wire cards, I mean basically a roll up strategy 113 00:06:30,760 --> 00:06:34,760 Speaker 1: wherewith they would buy all these smaller payment processors in 114 00:06:35,040 --> 00:06:38,080 Speaker 1: far flung places, and they would buy them in kind 115 00:06:38,120 --> 00:06:40,360 Speaker 1: of a weird way. Could you talk about that a 116 00:06:40,360 --> 00:06:43,480 Speaker 1: little bit, yes, So what worker had done was it 117 00:06:43,600 --> 00:06:47,560 Speaker 1: spent about five years buying up these little businesses all 118 00:06:47,600 --> 00:06:50,040 Speaker 1: over Asia, you know, sort of a few tens of 119 00:06:50,120 --> 00:06:53,600 Speaker 1: million here, a few tens of million there, and it 120 00:06:53,720 --> 00:06:56,039 Speaker 1: said this was part of its big growth strategy, and 121 00:06:56,080 --> 00:06:58,680 Speaker 1: every time it bought it, it was this big acceleration 122 00:06:58,720 --> 00:07:01,720 Speaker 1: in the business. But what happens when I went and 123 00:07:01,760 --> 00:07:05,720 Speaker 1: looked at those businesses is actually bought. You could see 124 00:07:05,760 --> 00:07:10,520 Speaker 1: in sort of local filings or local press releases that 125 00:07:11,440 --> 00:07:15,680 Speaker 1: the numbers didn't match what work I was claiming for them. 126 00:07:15,720 --> 00:07:17,120 Speaker 1: And then you had a closer look and you like, 127 00:07:17,160 --> 00:07:20,200 Speaker 1: actually these businesses and really bad shape. You know, the 128 00:07:20,200 --> 00:07:23,240 Speaker 1: audisers would say this, you know, there's a risk this 129 00:07:23,280 --> 00:07:26,000 Speaker 1: isn't a going concern. And what it added up to 130 00:07:26,240 --> 00:07:30,400 Speaker 1: was there was this mismatch between what the company was 131 00:07:30,440 --> 00:07:33,800 Speaker 1: claiming and what it was doing on the ground. And 132 00:07:33,880 --> 00:07:36,960 Speaker 1: you could see little transactions, you know, which seemed like 133 00:07:37,080 --> 00:07:40,760 Speaker 1: money was maybe going out the side door, and it 134 00:07:40,800 --> 00:07:43,040 Speaker 1: looked to me like there was accounting fraws. They were 135 00:07:43,080 --> 00:07:49,000 Speaker 1: just using these these acquisitions to play some tricks with 136 00:07:49,120 --> 00:07:52,480 Speaker 1: the accounting as they bought them. You know. It's funny 137 00:07:52,600 --> 00:07:55,520 Speaker 1: going back to you mentioned that the original catalyst for 138 00:07:55,560 --> 00:07:58,480 Speaker 1: this was a conversation with John Hampton, and we had 139 00:07:58,600 --> 00:08:02,520 Speaker 1: John on the podcast I think maybe last October, maybe 140 00:08:02,560 --> 00:08:04,840 Speaker 1: it was actually in the middle of last summer, and 141 00:08:04,880 --> 00:08:07,240 Speaker 1: I remember he made a point that was like, any 142 00:08:07,240 --> 00:08:11,640 Speaker 1: time you see a financial firm growing fast period, that's 143 00:08:11,680 --> 00:08:13,800 Speaker 1: like a good red flag to begin with it, Like 144 00:08:14,000 --> 00:08:17,880 Speaker 1: finance is kind of boring, and so if you see 145 00:08:17,920 --> 00:08:20,640 Speaker 1: any sort of company in finance making a lot of progress. 146 00:08:20,680 --> 00:08:22,880 Speaker 1: And of course what was that other company, green Cell 147 00:08:23,120 --> 00:08:25,600 Speaker 1: was the other one that he was h I think 148 00:08:25,640 --> 00:08:27,560 Speaker 1: that was actually what we're talking about on the podcast, 149 00:08:27,560 --> 00:08:30,240 Speaker 1: and of course that also it was a fast growing 150 00:08:30,440 --> 00:08:34,680 Speaker 1: finance company that that imploded. What did it look like though? 151 00:08:34,720 --> 00:08:37,679 Speaker 1: You know, when you say okay, there seemed to be 152 00:08:37,760 --> 00:08:41,800 Speaker 1: some gap between numbers here and numbers, They're like, can 153 00:08:41,840 --> 00:08:45,680 Speaker 1: you give give a little bit more detail onto what 154 00:08:45,800 --> 00:08:49,280 Speaker 1: these discrepancies looked like from your perspective? So why I 155 00:08:49,280 --> 00:08:51,600 Speaker 1: would do funny things like it would say, hey, we're 156 00:08:51,640 --> 00:08:56,880 Speaker 1: buying this company in December, and it would actually announce 157 00:08:56,960 --> 00:08:59,320 Speaker 1: the deal and agree it then, and then it would 158 00:08:59,360 --> 00:09:02,280 Speaker 1: make a big down payment, so we would say, hey, 159 00:09:02,320 --> 00:09:05,920 Speaker 1: we haven't actually signed the documents to take ownership of 160 00:09:05,960 --> 00:09:09,800 Speaker 1: the assets yet, but so because we're you know, we're 161 00:09:09,800 --> 00:09:12,080 Speaker 1: heading towards as takeover, will make a kind of a 162 00:09:12,080 --> 00:09:15,240 Speaker 1: deposit like a down payment, and they were claim to 163 00:09:15,280 --> 00:09:18,600 Speaker 1: send a bunch of cash out the door, so say 164 00:09:18,840 --> 00:09:21,920 Speaker 1: ten million euros out of a forty million euro deal, 165 00:09:22,440 --> 00:09:25,360 Speaker 1: which I would send out before the year end finished. 166 00:09:25,840 --> 00:09:29,440 Speaker 1: And what that looked like to me was the thing 167 00:09:29,440 --> 00:09:34,839 Speaker 1: about accounting fraud is your profit looks great, but when 168 00:09:34,880 --> 00:09:37,880 Speaker 1: the auditors walk in at the start of the year 169 00:09:37,960 --> 00:09:41,319 Speaker 1: to do the ordit, the first thing they're going to 170 00:09:41,400 --> 00:09:44,800 Speaker 1: say is can we see the bank balances and they're 171 00:09:44,800 --> 00:09:46,640 Speaker 1: going to be expect them to be full of cash 172 00:09:46,640 --> 00:09:49,400 Speaker 1: because you've just had this really profitable year. So what 173 00:09:49,480 --> 00:09:51,720 Speaker 1: it looked like was this trick to go, well, the 174 00:09:51,760 --> 00:09:54,160 Speaker 1: cash is going to be short, will pretend we've sent 175 00:09:54,200 --> 00:09:57,520 Speaker 1: it out to these guys, and that will hide the fraud. 176 00:09:58,040 --> 00:09:59,960 Speaker 1: And so every year the deal has got bigger, because 177 00:10:00,240 --> 00:10:02,679 Speaker 1: when you're do an accounting fraud, the numbers get bigger 178 00:10:02,679 --> 00:10:05,880 Speaker 1: every year. And one of them, you know, and the 179 00:10:05,920 --> 00:10:08,120 Speaker 1: mechanics of that were quite quite complex. But one of 180 00:10:08,160 --> 00:10:11,960 Speaker 1: the things you can look at with these companies is, yeah, 181 00:10:12,400 --> 00:10:15,120 Speaker 1: if they're growing really fast, maybe it's too good to 182 00:10:15,120 --> 00:10:18,560 Speaker 1: be true. And the funny thing about wire Card was 183 00:10:18,679 --> 00:10:21,760 Speaker 1: it was growing really fast and claimed to be really profitable, 184 00:10:22,200 --> 00:10:25,960 Speaker 1: but it kept raising money, kept going to shareholders, aren't 185 00:10:26,000 --> 00:10:29,120 Speaker 1: asking for them to inject some cash, or you know, 186 00:10:29,280 --> 00:10:31,480 Speaker 1: kept going to the banks and asking for more debt. 187 00:10:32,160 --> 00:10:35,320 Speaker 1: And that was a big red flag. Paul, Maybe this 188 00:10:35,480 --> 00:10:38,439 Speaker 1: is a good place to bring you in. But how 189 00:10:38,520 --> 00:10:41,760 Speaker 1: how did the rest of the world perceive wire Card 190 00:10:42,320 --> 00:10:46,760 Speaker 1: at that time, to be frank we didn't know much 191 00:10:46,800 --> 00:10:50,440 Speaker 1: about it at all. The kind of you know, it 192 00:10:50,559 --> 00:10:53,959 Speaker 1: was an unlikely subject that Dad had picked up. I 193 00:10:54,040 --> 00:10:57,840 Speaker 1: knew from my own experience that it's very difficult to 194 00:10:57,840 --> 00:11:01,160 Speaker 1: tell a story like this of accounty fraud, of balance 195 00:11:01,200 --> 00:11:05,559 Speaker 1: sheet manipulation, and so I was intrigued by it because 196 00:11:05,559 --> 00:11:07,560 Speaker 1: I knew he was on a kind of quite a 197 00:11:07,600 --> 00:11:14,240 Speaker 1: tough assignment. But you know, it's it. I'm sometimes asked that, 198 00:11:14,400 --> 00:11:17,880 Speaker 1: you know, how do we choose a subject to investigate 199 00:11:18,000 --> 00:11:21,720 Speaker 1: to throw kind of resources at the fact of the 200 00:11:21,760 --> 00:11:25,680 Speaker 1: matter is is that often, you know, the targets of 201 00:11:25,720 --> 00:11:30,079 Speaker 1: our kind of investigative work just present themselves to us. 202 00:11:30,880 --> 00:11:35,559 Speaker 1: And this was one of those. Because you know, Dan 203 00:11:35,679 --> 00:11:38,320 Speaker 1: started writing about it and that the reaction of the 204 00:11:38,400 --> 00:11:42,600 Speaker 1: company was odd, to say the least. You know, it 205 00:11:42,679 --> 00:11:45,679 Speaker 1: was out of kilter. And that's simply you know, I 206 00:11:45,720 --> 00:11:49,520 Speaker 1: could see it pete Dan's interest and he was going 207 00:11:49,600 --> 00:11:53,280 Speaker 1: deeper and deeper into this subject. But it also piqued 208 00:11:53,320 --> 00:11:56,400 Speaker 1: my interest as well. So this is one of the 209 00:11:56,880 --> 00:12:01,520 Speaker 1: crazier things about this entire story, which the reaction um 210 00:12:01,600 --> 00:12:05,200 Speaker 1: that Dad got as he was writing these things, and 211 00:12:05,320 --> 00:12:08,480 Speaker 1: suddenly it seemed like, I don't even know how to 212 00:12:08,520 --> 00:12:10,600 Speaker 1: describe it, but I know, you had people attacking you 213 00:12:10,640 --> 00:12:14,559 Speaker 1: on Twitter, you had the regulators in Germany who eventually 214 00:12:14,600 --> 00:12:18,640 Speaker 1: started a criminal investigation into you the reporters at the 215 00:12:18,720 --> 00:12:22,839 Speaker 1: Ft for writing negative things against wire Card, and then 216 00:12:22,840 --> 00:12:25,480 Speaker 1: you also had at one point people that seemed to 217 00:12:25,520 --> 00:12:29,360 Speaker 1: be spying on the Ft. So could you talk a 218 00:12:29,360 --> 00:12:32,920 Speaker 1: little bit more about that reaction because it seems surreal, 219 00:12:33,040 --> 00:12:35,640 Speaker 1: and reading the book, it actually does read like a 220 00:12:35,679 --> 00:12:39,760 Speaker 1: spy thriller in some respects because of the massive reaction 221 00:12:39,800 --> 00:12:43,280 Speaker 1: you got. Yeah, it was this kind of slow but 222 00:12:43,400 --> 00:12:46,959 Speaker 1: steady escalation of weirdness, like it almost had like a 223 00:12:47,040 --> 00:12:49,880 Speaker 1: cat and mouse quality where we would try and write 224 00:12:49,880 --> 00:12:52,040 Speaker 1: one thing about them, and then the reaction would be weird, 225 00:12:52,760 --> 00:12:54,840 Speaker 1: and the longer we went on, the weirder it got. 226 00:12:55,320 --> 00:13:00,400 Speaker 1: So it started with angry, angry legal letters, fairly standard approach. 227 00:13:01,080 --> 00:13:03,440 Speaker 1: But one of the first times I sent work questions, 228 00:13:03,440 --> 00:13:06,240 Speaker 1: they came back and around, hang on a second, are 229 00:13:06,240 --> 00:13:09,959 Speaker 1: you in league with short sellers? Like either corruptly or 230 00:13:10,000 --> 00:13:12,480 Speaker 1: you know, am I just naively being used by them 231 00:13:12,559 --> 00:13:16,360 Speaker 1: to attack this company? It's like, that's weird. We've fit 232 00:13:16,400 --> 00:13:19,280 Speaker 1: a nerve here, haven't we. And then we all started 233 00:13:19,280 --> 00:13:22,760 Speaker 1: getting these phishing emails from hackers who were very persistently 234 00:13:23,280 --> 00:13:26,600 Speaker 1: trying to get us to give away our passwords, and 235 00:13:26,679 --> 00:13:29,400 Speaker 1: not just a bunch of journalists at the FT, but 236 00:13:29,480 --> 00:13:32,320 Speaker 1: you know, other people who could be identified as critics 237 00:13:32,360 --> 00:13:37,360 Speaker 1: of wyre Card elsewhere. And then we realized private detectives 238 00:13:37,360 --> 00:13:41,520 Speaker 1: were involved. And then well and then this ampster. You didn't, Paul, 239 00:13:41,559 --> 00:13:48,880 Speaker 1: you got offered ten million dollars? Were you tempted? Paul? Well? Actually, 240 00:13:49,240 --> 00:13:53,480 Speaker 1: I mean I was so surprised by the approach. I 241 00:13:53,520 --> 00:13:56,960 Speaker 1: wandered back into the FT news room and the news 242 00:13:57,080 --> 00:13:59,880 Speaker 1: editor at that time as Peter Spiegel, who's who's now 243 00:14:00,040 --> 00:14:03,080 Speaker 1: in New York, and I said, you know, this has 244 00:14:03,120 --> 00:14:05,439 Speaker 1: just happened. Peter, what do you think? How should we react? 245 00:14:05,480 --> 00:14:07,840 Speaker 1: And he said, I want some You just assumed it 246 00:14:07,880 --> 00:14:11,000 Speaker 1: was a setup. We already knew this was a very 247 00:14:11,160 --> 00:14:14,600 Speaker 1: very strange company. You know, aside from all the kind 248 00:14:14,600 --> 00:14:17,800 Speaker 1: of you know, the phishing emails, the kind of the 249 00:14:17,920 --> 00:14:22,280 Speaker 1: kind of clown spying operation, we were also dealing with 250 00:14:22,840 --> 00:14:27,040 Speaker 1: an avalanche of online abuse. You know, Dan was taking 251 00:14:27,240 --> 00:14:30,000 Speaker 1: you know, was taking the front of it, but it 252 00:14:30,080 --> 00:14:34,760 Speaker 1: was also any other journalists, other journalists on Alphabel, myself, 253 00:14:35,720 --> 00:14:39,920 Speaker 1: the editor of course, everybody was accusing us of as 254 00:14:39,920 --> 00:14:43,880 Speaker 1: of being corrupt in some way, which in itself was 255 00:14:44,000 --> 00:14:48,440 Speaker 1: just kind of crazy. You know that it was you know, 256 00:14:48,520 --> 00:14:50,400 Speaker 1: this was you know, the time, this was kind of 257 00:14:50,520 --> 00:14:54,200 Speaker 1: pre Trump. It wasn't as though they were, you know, 258 00:14:54,320 --> 00:14:58,800 Speaker 1: just copying what was happening in America. It was this 259 00:14:58,920 --> 00:15:02,400 Speaker 1: was this we gradually came to understand this was the 260 00:15:02,840 --> 00:15:24,480 Speaker 1: wild called playbook. Let's go back to the very beginning, Dan, 261 00:15:24,560 --> 00:15:28,680 Speaker 1: because you mentioned that in your first conversation, and also 262 00:15:28,680 --> 00:15:31,960 Speaker 1: I want to talk to about working getting tips from 263 00:15:31,960 --> 00:15:34,640 Speaker 1: short sellers and allegations of being in league with them. 264 00:15:34,680 --> 00:15:37,240 Speaker 1: But before we get to that, you know, you mentioned 265 00:15:37,240 --> 00:15:40,080 Speaker 1: that the first thing that John Hempton said is like 266 00:15:40,480 --> 00:15:42,920 Speaker 1: something about gangsters. And we so we every wady we 267 00:15:43,000 --> 00:15:45,560 Speaker 1: talked about the accounting fraud. But who were the people 268 00:15:45,640 --> 00:15:48,080 Speaker 1: when he said, are you interested in gangsters? Here's this 269 00:15:48,120 --> 00:15:51,240 Speaker 1: German company. What are we actually talking about? And what 270 00:15:51,280 --> 00:15:54,320 Speaker 1: did he see in terms of the people that were 271 00:15:54,720 --> 00:15:58,040 Speaker 1: involved with this payments company? So there were two theories. 272 00:15:58,120 --> 00:16:01,360 Speaker 1: Like John looked at it and said, yeah, this looks 273 00:16:01,360 --> 00:16:04,360 Speaker 1: like in accounting fraud. There's also this other side to work, 274 00:16:04,560 --> 00:16:09,960 Speaker 1: because if you're processing international payments, well then there's an 275 00:16:10,000 --> 00:16:11,960 Speaker 1: awful lot of interesting things you could do with that 276 00:16:12,400 --> 00:16:16,479 Speaker 1: if you're not worried about the laws. So the suspicion 277 00:16:16,640 --> 00:16:20,320 Speaker 1: was that wire Card was basically processing payments for every 278 00:16:20,400 --> 00:16:23,560 Speaker 1: kind of nasty thing online that you might care to imagine. 279 00:16:24,800 --> 00:16:29,120 Speaker 1: And those two theories sort of we're going on for 280 00:16:29,240 --> 00:16:32,400 Speaker 1: quite a long time. And in terms of the gangsters, 281 00:16:32,560 --> 00:16:35,320 Speaker 1: I mean, I think he might have had in mind 282 00:16:36,160 --> 00:16:38,520 Speaker 1: the chief executive Marcus Brown, who is this sort of 283 00:16:38,600 --> 00:16:42,120 Speaker 1: his former KPMG management consultants who just sort of spoken 284 00:16:42,160 --> 00:16:45,440 Speaker 1: tech goobty book. But what we started to learn, as 285 00:16:45,560 --> 00:16:47,920 Speaker 1: you know, the more we got into it, that the 286 00:16:48,000 --> 00:16:52,200 Speaker 1: real weird sort of gangster slashed by behind it was 287 00:16:52,240 --> 00:16:56,800 Speaker 1: this bizarre character Yan Marcella. He's kind of like an 288 00:16:56,840 --> 00:17:00,520 Speaker 1: Austrian whiz kids, like, speaks multiple languages, dropped out of 289 00:17:00,600 --> 00:17:04,880 Speaker 1: high school to run a tech startup, and everyone goes 290 00:17:04,920 --> 00:17:08,879 Speaker 1: on about how elaquent and charming. I mean, you had 291 00:17:08,960 --> 00:17:13,760 Speaker 1: lunch with him, right, I mean, And and he's this 292 00:17:13,800 --> 00:17:16,560 Speaker 1: sort of charismatic guy who was the heart of you know, 293 00:17:16,720 --> 00:17:20,600 Speaker 1: everything work I was doing, But there's this weird other 294 00:17:20,640 --> 00:17:24,960 Speaker 1: side to him, and he comes across as someone who's 295 00:17:25,000 --> 00:17:29,080 Speaker 1: like the consummate improviser. He's constantly getting into these scrapes 296 00:17:29,119 --> 00:17:32,800 Speaker 1: and almost destroying the company. But then he's got this 297 00:17:32,880 --> 00:17:35,800 Speaker 1: other side to him where even now we're not really 298 00:17:35,840 --> 00:17:39,840 Speaker 1: sure whether was he a spy or did he have 299 00:17:40,000 --> 00:17:42,600 Speaker 1: just some sort of James Bond fixation where he's you know, 300 00:17:43,240 --> 00:17:46,159 Speaker 1: trying to hang out with Libyan militia groups or you know, 301 00:17:46,600 --> 00:17:48,800 Speaker 1: for his holidays, he likes to go for a stroll 302 00:17:48,840 --> 00:17:53,760 Speaker 1: around Syria with the Russian Army, as one does, right, Paul, 303 00:17:53,800 --> 00:17:58,800 Speaker 1: what was lunch like with him? Well, Um, the first 304 00:17:58,880 --> 00:18:01,480 Speaker 1: lunch I had was a kind of stilted affair. This 305 00:18:01,560 --> 00:18:04,119 Speaker 1: was the one where we thought there was a chance 306 00:18:04,160 --> 00:18:08,800 Speaker 1: that he'd offer me a bribe, and there are other 307 00:18:08,880 --> 00:18:10,960 Speaker 1: people around the lunch table, and it was it was 308 00:18:11,000 --> 00:18:13,840 Speaker 1: just a very kind of stiff affair because he was 309 00:18:14,880 --> 00:18:19,959 Speaker 1: obviously anxious about meeting me. You know, we were discussing, 310 00:18:20,520 --> 00:18:24,080 Speaker 1: you know the fact that I knew that his company 311 00:18:24,160 --> 00:18:27,080 Speaker 1: was running a kind of black operation against the ft 312 00:18:28,160 --> 00:18:34,000 Speaker 1: because he didn't offer a bribe at that On that occasion, 313 00:18:34,800 --> 00:18:38,640 Speaker 1: we organized a second lunch together which was just myself 314 00:18:38,640 --> 00:18:43,000 Speaker 1: and Master Lick, And if I'm prank, he was actually 315 00:18:43,080 --> 00:18:48,719 Speaker 1: it was a kind of fascinating conversation, mainly discussing telegram 316 00:18:48,920 --> 00:18:51,720 Speaker 1: the messaging gap, which at the time was planning a 317 00:18:51,840 --> 00:18:55,680 Speaker 1: huge token offering. I mean, the guy was interesting. Can 318 00:18:55,720 --> 00:18:58,320 Speaker 1: I ask a sort of big question and it maybe 319 00:18:58,320 --> 00:19:00,200 Speaker 1: a little more I don't know if it's philosophical goal 320 00:19:00,400 --> 00:19:04,440 Speaker 1: or just sort of but like, what's the deal with Germany? 321 00:19:04,480 --> 00:19:08,160 Speaker 1: They opened it a criminal investigation into people reporting um 322 00:19:08,440 --> 00:19:10,800 Speaker 1: on you. But also like there are all these other 323 00:19:10,840 --> 00:19:12,720 Speaker 1: things that go on with Germany, Like there was the 324 00:19:12,880 --> 00:19:16,840 Speaker 1: car company with the big diesel scandal, and they're always 325 00:19:16,840 --> 00:19:19,600 Speaker 1: having these trouble with the banks that seemed to lose 326 00:19:19,640 --> 00:19:22,160 Speaker 1: a lot of money all that time. Like is there 327 00:19:22,440 --> 00:19:25,120 Speaker 1: what's the Is there some issue with like German corporate 328 00:19:25,119 --> 00:19:29,080 Speaker 1: culture or the sort of connection between regulators in Germany 329 00:19:29,160 --> 00:19:32,439 Speaker 1: and companies such that there isn't checks and balances or 330 00:19:32,520 --> 00:19:35,960 Speaker 1: aren't auditing sort of domestic auditing, Like why does this 331 00:19:36,160 --> 00:19:39,120 Speaker 1: why do these big scandals seem to recur there? Well, 332 00:19:39,119 --> 00:19:41,960 Speaker 1: you do have the old scandal in the US. Joe, Yeah, 333 00:19:41,960 --> 00:19:44,440 Speaker 1: that's true. We've we've we we we've had a few 334 00:19:44,440 --> 00:19:48,840 Speaker 1: I guess yeah, no, Joe, it is something that fascinated us. Okay, 335 00:19:48,920 --> 00:19:53,480 Speaker 1: so you know, we couldn't. I personally could not understand 336 00:19:53,640 --> 00:19:59,600 Speaker 1: why the German elite, the German establishment collectively decided that 337 00:20:00,400 --> 00:20:05,520 Speaker 1: my colleague Dan McCrumb was was corrupt, that we were 338 00:20:05,600 --> 00:20:07,560 Speaker 1: just kind of we would the f team was just 339 00:20:07,600 --> 00:20:11,080 Speaker 1: allowing Dan to kind of roll out these kind of 340 00:20:11,960 --> 00:20:16,879 Speaker 1: you know, defamatory, kind of destructive articles about wire Card. 341 00:20:17,080 --> 00:20:20,119 Speaker 1: Why did they believe that? I think it's fair to 342 00:20:20,240 --> 00:20:24,320 Speaker 1: you know, it's obviously were generalizing here about German business 343 00:20:24,320 --> 00:20:29,120 Speaker 1: and political and financial society. But there has been over 344 00:20:29,160 --> 00:20:32,359 Speaker 1: the years a kind of you know, a tendency for 345 00:20:32,440 --> 00:20:36,120 Speaker 1: them to distrust what we would call kind of Anglo 346 00:20:36,160 --> 00:20:40,639 Speaker 1: Saxon capitalism. You know, there was the kind of hedge 347 00:20:40,640 --> 00:20:45,000 Speaker 1: funds and locusts, all those sort of examples. Also it 348 00:20:45,080 --> 00:20:48,760 Speaker 1: was the German bank that loaded up on all the garbage, 349 00:20:48,920 --> 00:20:53,000 Speaker 1: like prior to the Great Financials too, like the greensil 350 00:20:53,080 --> 00:20:55,840 Speaker 1: didn't they have opened up their own bank in Germany. 351 00:20:55,880 --> 00:20:58,000 Speaker 1: Like it feels like, you know, I always have this 352 00:20:58,080 --> 00:21:01,880 Speaker 1: sort of view of Germany is like this sort of uh, 353 00:21:02,080 --> 00:21:06,520 Speaker 1: small c conservative culture, and yet it seems like they're 354 00:21:06,640 --> 00:21:08,880 Speaker 1: they're always like running into trouble, particularly when it comes 355 00:21:08,880 --> 00:21:12,119 Speaker 1: to finding it well. I think there's an interesting point 356 00:21:12,160 --> 00:21:17,679 Speaker 1: here about how frauds does exploit trust. So Germany is 357 00:21:17,720 --> 00:21:22,000 Speaker 1: this very high functioning economy where most people aren't psychopaths, 358 00:21:22,960 --> 00:21:25,639 Speaker 1: and you get a lot done that way, and it's 359 00:21:25,720 --> 00:21:28,120 Speaker 1: very efficient if you go about your life and your 360 00:21:28,160 --> 00:21:30,760 Speaker 1: business assuming the person on the other side of the 361 00:21:30,800 --> 00:21:33,879 Speaker 1: table isn't trying to rip you off. And that's a 362 00:21:33,880 --> 00:21:35,800 Speaker 1: good thing. That saves us all a lot of time 363 00:21:35,840 --> 00:21:39,479 Speaker 1: and effort checking things that we don't have to. And 364 00:21:39,520 --> 00:21:42,919 Speaker 1: so there's an argument here that what work and what 365 00:21:42,960 --> 00:21:46,680 Speaker 1: these big, complex frauds exploit is that element of trust 366 00:21:46,800 --> 00:21:51,280 Speaker 1: because people literally don't see it coming because it is 367 00:21:51,320 --> 00:21:55,800 Speaker 1: so unusual. Now, that doesn't explain everything, because once you 368 00:21:55,840 --> 00:21:59,840 Speaker 1: start to go, hey, there's some serious evidence here, you know, 369 00:22:00,000 --> 00:22:02,240 Speaker 1: look at this we you know, we're printing documents that 370 00:22:02,240 --> 00:22:05,760 Speaker 1: show there's a fraud, and people are still going, yeah, 371 00:22:05,800 --> 00:22:09,120 Speaker 1: I think it'll be fine, or I think the ft 372 00:22:09,280 --> 00:22:11,560 Speaker 1: is corrupt. That's still weird, and you need a bit 373 00:22:11,560 --> 00:22:14,359 Speaker 1: more of an explanation for it. The thing that amazed 374 00:22:14,400 --> 00:22:18,439 Speaker 1: me at the time was also the German press really 375 00:22:18,520 --> 00:22:23,480 Speaker 1: seemed to automatically sort of arrange themselves against the FT, 376 00:22:23,760 --> 00:22:26,960 Speaker 1: and even I remember one of our former colleagues at 377 00:22:26,960 --> 00:22:29,600 Speaker 1: the FT who was then working at the handles Blat 378 00:22:29,720 --> 00:22:34,080 Speaker 1: was they published an article I can't remember what with 379 00:22:34,160 --> 00:22:37,400 Speaker 1: the exact headline was, but there was a picture of 380 00:22:37,480 --> 00:22:41,000 Speaker 1: like a credit card, and the caption underneath the credit 381 00:22:41,000 --> 00:22:44,120 Speaker 1: card was like, I'm an FT journalist, can I pay 382 00:22:44,160 --> 00:22:47,600 Speaker 1: for that bribe with credit card? Like basically insinuating, not 383 00:22:47,680 --> 00:22:51,040 Speaker 1: even insinuating, just stating out right that the FT was 384 00:22:51,080 --> 00:22:55,400 Speaker 1: accepting bribes in exchange for coverage, which it's just as 385 00:22:55,960 --> 00:22:59,000 Speaker 1: you know, as journalists and former colleagues, that just seems 386 00:22:59,040 --> 00:23:04,280 Speaker 1: such a weird position to automatically take yes, and we 387 00:23:04,280 --> 00:23:07,679 Speaker 1: were quite shocked. There was also the example of the 388 00:23:07,720 --> 00:23:11,640 Speaker 1: commerce bank analyst putting out a note, you know, an 389 00:23:11,680 --> 00:23:15,639 Speaker 1: actual you know, research note, saying, oh, Dan's just you know, 390 00:23:16,000 --> 00:23:19,440 Speaker 1: Dan's corrupt. We've known that for years, ignored when he's writing, 391 00:23:20,200 --> 00:23:25,760 Speaker 1: I mean, you know that. As a young journalist before 392 00:23:25,840 --> 00:23:32,000 Speaker 1: the Internet, I used to go to UM international press conferences, 393 00:23:32,080 --> 00:23:35,360 Speaker 1: some of which were held in Germany, and one thing 394 00:23:35,359 --> 00:23:37,960 Speaker 1: I remember is on the first occasion I went to 395 00:23:38,040 --> 00:23:41,400 Speaker 1: one was that the chief executive would do a presentation 396 00:23:42,320 --> 00:23:48,440 Speaker 1: and the assembled German press would all applaud the chief executive, 397 00:23:49,160 --> 00:23:51,560 Speaker 1: and all the kind of British press would be standing 398 00:23:51,600 --> 00:23:53,239 Speaker 1: there kind of shaking their head saying what the hell 399 00:23:53,320 --> 00:23:56,000 Speaker 1: is going on here? You know, were journalists as you know, 400 00:23:56,160 --> 00:23:58,720 Speaker 1: we're here to kick the tires, not to applaud the 401 00:23:58,800 --> 00:24:02,880 Speaker 1: chief executive. And I think it's fair to say that 402 00:24:02,920 --> 00:24:05,840 Speaker 1: there's there's you know, there's there is a different relationship 403 00:24:05,960 --> 00:24:10,280 Speaker 1: between you know, the German financial press and the corporate world. 404 00:24:10,680 --> 00:24:14,680 Speaker 1: It doesn't have, perhaps in areas, doesn't have the same 405 00:24:15,119 --> 00:24:19,880 Speaker 1: combative relationship that you would see in in New York 406 00:24:20,480 --> 00:24:24,080 Speaker 1: or London. There's a funny aspect of this is slightly 407 00:24:24,119 --> 00:24:26,560 Speaker 1: media and evil gazing, but there's a funny aspect of 408 00:24:27,520 --> 00:24:32,119 Speaker 1: German privacy law, which which means that sort of the 409 00:24:32,160 --> 00:24:35,520 Speaker 1: practice of quote approval where you have a conversation with 410 00:24:35,560 --> 00:24:40,040 Speaker 1: a journalist and then instead of them just writing a 411 00:24:40,080 --> 00:24:42,600 Speaker 1: point you said up in the story, they then go 412 00:24:42,760 --> 00:24:44,919 Speaker 1: back to you with here is everything you said. Are 413 00:24:44,960 --> 00:24:48,720 Speaker 1: you happy with it? And it's a small subtle thing, 414 00:24:49,040 --> 00:24:53,720 Speaker 1: but it's sort of completely routine in the German media, 415 00:24:54,040 --> 00:24:57,119 Speaker 1: partly for reasons of media law. You then sort of 416 00:24:57,160 --> 00:24:59,920 Speaker 1: have to have this very friendly relationship with your source, 417 00:25:00,119 --> 00:25:02,119 Speaker 1: you know, respectful. It's quite hard to know do a 418 00:25:02,119 --> 00:25:03,600 Speaker 1: got tree if you've then got to go back to 419 00:25:03,640 --> 00:25:06,159 Speaker 1: them and say, did he definitely say this? I mean, 420 00:25:06,160 --> 00:25:08,359 Speaker 1: I'm not saying all German press does this, and you 421 00:25:08,400 --> 00:25:13,120 Speaker 1: know some German outlets like Sue Dorgea's item properly did 422 00:25:13,440 --> 00:25:16,920 Speaker 1: go after work. But you've you've also got to credit 423 00:25:16,960 --> 00:25:19,960 Speaker 1: the company with some pretty effective tactics. What they did 424 00:25:20,560 --> 00:25:24,040 Speaker 1: is they turned it into a battle between the Financial 425 00:25:24,080 --> 00:25:29,119 Speaker 1: Times and why I can't you know? They cooked up 426 00:25:29,160 --> 00:25:32,120 Speaker 1: this witness statement from a guy in a nightclub saying 427 00:25:32,119 --> 00:25:35,199 Speaker 1: that he knew a story was coming, and then go 428 00:25:35,280 --> 00:25:38,160 Speaker 1: and give it to prosecutors and say, look, FT generalists 429 00:25:38,160 --> 00:25:40,720 Speaker 1: are corrupt. We've got the evidence. And that's sort of 430 00:25:40,760 --> 00:25:44,760 Speaker 1: allowed the German press to sort of sit back and go, well, 431 00:25:44,760 --> 00:25:48,359 Speaker 1: this is very complicated. There's a lot of allegations flying around, 432 00:25:48,400 --> 00:25:51,200 Speaker 1: and let's just munch some popcorn and watch this battle unfold. 433 00:25:52,359 --> 00:25:55,960 Speaker 1: It seks to worst noting just to to add to that, 434 00:25:56,960 --> 00:26:00,919 Speaker 1: it's worth noting that because the German press reacted in 435 00:26:00,960 --> 00:26:05,479 Speaker 1: that way, and because you know, Buffin decided to launch, 436 00:26:05,760 --> 00:26:10,240 Speaker 1: you know, kind of a criminal investigation into Dan himself 437 00:26:10,280 --> 00:26:14,600 Speaker 1: and also into our colleague Stefaniam. That meant that the 438 00:26:14,680 --> 00:26:18,520 Speaker 1: ft had to double down, you know, because you know, 439 00:26:18,680 --> 00:26:23,560 Speaker 1: the German establishment was questioning the integrity of the Financial Times, 440 00:26:24,080 --> 00:26:26,040 Speaker 1: and so we were going to stay on that story, 441 00:26:26,480 --> 00:26:28,520 Speaker 1: you know, we were not going to back away from it. 442 00:26:29,119 --> 00:26:31,280 Speaker 1: So their allegation is like, oh, you're corrupt, you're in 443 00:26:31,480 --> 00:26:35,040 Speaker 1: league with short sellers, and this happens in media like 444 00:26:35,119 --> 00:26:38,679 Speaker 1: anything you write any negative, anything negative about a company 445 00:26:38,720 --> 00:26:40,800 Speaker 1: at all, people talking about all you're in league with 446 00:26:40,880 --> 00:26:45,200 Speaker 1: the short sellers. But you were like initially tipped off 447 00:26:45,200 --> 00:26:48,159 Speaker 1: by two separate short sellers. So the idea that like 448 00:26:48,400 --> 00:26:51,280 Speaker 1: there it's not corruption. But you know, for a lot 449 00:26:51,320 --> 00:26:55,680 Speaker 1: of investigative journalists often that's sort of an initial tip 450 00:26:55,800 --> 00:26:58,880 Speaker 1: or something like that. Can you talk about like how 451 00:26:59,000 --> 00:27:01,800 Speaker 1: you think, I mean, obviously like you probably hear from 452 00:27:01,840 --> 00:27:05,040 Speaker 1: short sellers all the time, and these days short sellers 453 00:27:05,040 --> 00:27:07,480 Speaker 1: published their own reports and stuff, But can you talk 454 00:27:07,520 --> 00:27:10,720 Speaker 1: to just sort of vice philosophically or maybe in terms 455 00:27:10,720 --> 00:27:15,040 Speaker 1: of journalists best practices about how you think about your 456 00:27:15,080 --> 00:27:19,240 Speaker 1: responsibilities and reporting responsibility. When you get an initial tip 457 00:27:19,280 --> 00:27:22,600 Speaker 1: from a short seller who presumably has some interest in 458 00:27:22,800 --> 00:27:27,160 Speaker 1: seeing their company implode. Yes, So short sellers are fascinating 459 00:27:27,160 --> 00:27:30,440 Speaker 1: sources and great sources. And you know, I find the 460 00:27:30,520 --> 00:27:34,639 Speaker 1: fascinating characters as well, you know, I mean there's a 461 00:27:34,640 --> 00:27:37,280 Speaker 1: bunch of them in this story, some of whom are 462 00:27:38,320 --> 00:27:41,960 Speaker 1: really quite interesting in extraordinary. But whenever you deal with 463 00:27:42,040 --> 00:27:45,159 Speaker 1: any of these guys, you have to be aware of 464 00:27:45,200 --> 00:27:48,600 Speaker 1: their financial interests. And that's true of pretty much anyone 465 00:27:48,640 --> 00:27:51,800 Speaker 1: you talk to as a financial journalist. You know, the lawyers, 466 00:27:51,880 --> 00:27:56,320 Speaker 1: the bankers, the management have got stock options. Every single 467 00:27:56,400 --> 00:27:59,760 Speaker 1: person is either getting paid to talk to you or 468 00:28:00,200 --> 00:28:04,479 Speaker 1: talking their own book. So the idea that short sellers 469 00:28:04,480 --> 00:28:07,399 Speaker 1: are somehow different in that regard just because they're a 470 00:28:07,400 --> 00:28:10,320 Speaker 1: bit more cynical than the other ones, you know, it 471 00:28:10,359 --> 00:28:14,320 Speaker 1: doesn't really carry much weight. And and the reason why 472 00:28:14,359 --> 00:28:17,040 Speaker 1: I started talking to short sellers were simply just because 473 00:28:17,080 --> 00:28:19,879 Speaker 1: I found them interesting people Like I met Carson Blocks, 474 00:28:19,920 --> 00:28:23,679 Speaker 1: one of the most famous ones, and you know, I 475 00:28:23,680 --> 00:28:26,159 Speaker 1: went to meet him and he was like completely like 476 00:28:26,240 --> 00:28:29,080 Speaker 1: anyone else who had met him finance up until that point. 477 00:28:29,240 --> 00:28:31,560 Speaker 1: You know, I mean, he he comes across in this 478 00:28:31,800 --> 00:28:37,840 Speaker 1: you know, almost slightly californiaan bro manner whilst also completely 479 00:28:37,840 --> 00:28:43,160 Speaker 1: eviscerating fraudulent companies. And he had all these amazing stories 480 00:28:43,160 --> 00:28:45,760 Speaker 1: of you know, scuttle butts, you know, the rumors that 481 00:28:45,800 --> 00:28:50,360 Speaker 1: were floating around, who's the who's the CFO of a 482 00:28:50,520 --> 00:28:54,360 Speaker 1: tech company who's known to every maitre d in San 483 00:28:54,400 --> 00:28:58,280 Speaker 1: Francisco for splashing money around that sort of terrific little gossip, 484 00:28:59,400 --> 00:29:02,920 Speaker 1: and I kind of thought, well, this seems journalistically interesting. 485 00:29:02,960 --> 00:29:04,719 Speaker 1: And the thing is when the way I deal with 486 00:29:04,760 --> 00:29:10,040 Speaker 1: them is, you know, if someone comes to me and says, here, 487 00:29:10,040 --> 00:29:12,560 Speaker 1: I've done a bunch of work and there's something up 488 00:29:12,560 --> 00:29:15,440 Speaker 1: with this company, that I basically say, thank you very much, 489 00:29:16,000 --> 00:29:18,800 Speaker 1: take that away and see what I think of it, 490 00:29:18,920 --> 00:29:21,560 Speaker 1: and can I reproduce it? Is its solid? Can I 491 00:29:21,600 --> 00:29:25,040 Speaker 1: go and find the documents? Myself is the other evidence? 492 00:29:25,800 --> 00:29:28,120 Speaker 1: And there's nothing wrong with that. That's like lots of 493 00:29:28,120 --> 00:29:29,880 Speaker 1: sources come and tell your things and then you deal 494 00:29:29,920 --> 00:29:32,000 Speaker 1: with them, and then you just have to be careful about, 495 00:29:32,040 --> 00:29:34,680 Speaker 1: you know, not then going back to them and saying, 496 00:29:35,680 --> 00:29:37,440 Speaker 1: you know, you can't go thank you very much. That 497 00:29:37,520 --> 00:29:39,680 Speaker 1: was amazing. We're going to publish a story on Tuesday, 498 00:29:40,440 --> 00:29:43,360 Speaker 1: but we don't. You don't do that with other sources 499 00:29:43,400 --> 00:29:49,040 Speaker 1: where price sensitive stories. I'd added a couple of things 500 00:29:49,040 --> 00:29:53,960 Speaker 1: to that one. You know, yeah, it really is no 501 00:29:54,080 --> 00:29:59,600 Speaker 1: different than talking to say, bid gossips, people speculating or mergers. 502 00:30:00,160 --> 00:30:02,720 Speaker 1: What you have to be careful of is, you know, 503 00:30:03,240 --> 00:30:06,280 Speaker 1: the flow of information. If it becomes a two way flow, 504 00:30:06,480 --> 00:30:10,000 Speaker 1: it starts to look suspicious. The other thing I'd say 505 00:30:10,520 --> 00:30:15,320 Speaker 1: is that short sellers, certainly my experience, they tend to 506 00:30:15,360 --> 00:30:19,520 Speaker 1: do deep research and that is part at least partly 507 00:30:19,760 --> 00:30:25,640 Speaker 1: because the downside for them is infinity. You know, you 508 00:30:25,720 --> 00:30:28,400 Speaker 1: can buy a stock and the most you can lose 509 00:30:28,520 --> 00:30:30,440 Speaker 1: is the money you put on the table. But if 510 00:30:30,480 --> 00:30:33,600 Speaker 1: you're shorter stock, that stock could go to the moon. 511 00:30:34,440 --> 00:30:39,400 Speaker 1: And I actually sometimes wonder, you know, if if Dan 512 00:30:39,480 --> 00:30:43,280 Speaker 1: hadn't brought down wire Card at the point he did, 513 00:30:44,440 --> 00:30:47,320 Speaker 1: you know what would have happened if wire Card had 514 00:30:47,360 --> 00:30:50,920 Speaker 1: become one of the meme stocks. You know, what if 515 00:30:51,160 --> 00:30:53,600 Speaker 1: what if? You know, it was the most shorted stock 516 00:30:53,880 --> 00:30:57,640 Speaker 1: in Europe, major stock at the time, certainly in Germany. 517 00:30:58,120 --> 00:31:00,560 Speaker 1: You know, if that stock had been said to the moon, 518 00:31:00,920 --> 00:31:02,920 Speaker 1: it would still be there. I suspect they probably would 519 00:31:02,920 --> 00:31:06,880 Speaker 1: have bought a touch back. Yes, um, that's right, because 520 00:31:06,880 --> 00:31:08,880 Speaker 1: at one point their market value I think was higher 521 00:31:08,960 --> 00:31:12,520 Speaker 1: than Deutsche Bank, which again is absolutely crazy. Did any 522 00:31:12,560 --> 00:31:15,400 Speaker 1: of the short sellers make money on the stock that 523 00:31:15,480 --> 00:31:17,720 Speaker 1: you're aware of or did it just sort of drag 524 00:31:17,760 --> 00:31:21,160 Speaker 1: on for for too long? So, I mean you talked 525 00:31:21,160 --> 00:31:25,400 Speaker 1: about like how markets can be a rational much longer 526 00:31:26,240 --> 00:31:29,760 Speaker 1: I think you can be stay solvent right at the beginning, 527 00:31:29,800 --> 00:31:34,200 Speaker 1: and for some of these guys, they were losing money 528 00:31:34,200 --> 00:31:37,360 Speaker 1: for years. I mean I talked to them. This very 529 00:31:37,360 --> 00:31:40,720 Speaker 1: smart guy at wid and Marks who's kind of like 530 00:31:40,720 --> 00:31:45,320 Speaker 1: like Brazilian. He's like Central Casting's idea of a hedgephone manager, 531 00:31:45,400 --> 00:31:47,840 Speaker 1: you know, Brazilian. He lived in California for a long 532 00:31:47,920 --> 00:31:51,080 Speaker 1: time surfer. When we're doing this, he had long black hair, 533 00:31:51,160 --> 00:31:55,200 Speaker 1: and when we're sitting there talking he had literally plumbed 534 00:31:55,320 --> 00:31:58,720 Speaker 1: every avenue that he could to try and expose wire 535 00:31:58,800 --> 00:32:01,360 Speaker 1: can't and he's like, m you know, I think we're 536 00:32:01,360 --> 00:32:05,000 Speaker 1: going to have to catch the chief executive at some 537 00:32:05,080 --> 00:32:08,920 Speaker 1: sort of dodgy party with Harvey Weinstein before anybody is 538 00:32:08,960 --> 00:32:12,640 Speaker 1: even gonna care, because it was just so frustrating and 539 00:32:12,640 --> 00:32:15,240 Speaker 1: they were and they just kept losing money. But then 540 00:32:15,360 --> 00:32:21,880 Speaker 1: right at the end. So there's this moment in June 541 00:32:22,160 --> 00:32:26,920 Speaker 1: where work comes out and says, yeah, we the orders 542 00:32:26,960 --> 00:32:30,000 Speaker 1: aren't going to sign our accounts because one point nine 543 00:32:30,040 --> 00:32:34,960 Speaker 1: billion euros is missing, and everybody who's been following it 544 00:32:35,040 --> 00:32:39,720 Speaker 1: knew in that second it wasn't missing. It had never existed, 545 00:32:39,840 --> 00:32:45,920 Speaker 1: and this company was toast. But the weird thing was 546 00:32:46,720 --> 00:32:49,600 Speaker 1: its share price didn't go to zero straight away. It's 547 00:32:49,600 --> 00:32:52,600 Speaker 1: sort of, you know, it drops like fifty or sixty 548 00:32:53,720 --> 00:32:55,400 Speaker 1: and then sort of hovered there because there were all 549 00:32:55,480 --> 00:32:58,640 Speaker 1: these investors who begin so caught up in the idea 550 00:32:58,640 --> 00:33:01,640 Speaker 1: of work Card that they still thought maybe there was 551 00:33:01,680 --> 00:33:04,200 Speaker 1: a way back. And that was the moment that all 552 00:33:04,240 --> 00:33:07,760 Speaker 1: the short sellers took advantage of and sold every single 553 00:33:07,840 --> 00:33:10,280 Speaker 1: share and put an auction that they could get their 554 00:33:10,280 --> 00:33:13,200 Speaker 1: hands off. And so it was that single one or 555 00:33:13,240 --> 00:33:16,240 Speaker 1: two days after why a Card announced it was all over, 556 00:33:16,880 --> 00:33:19,120 Speaker 1: that they made back all the money and more and 557 00:33:19,160 --> 00:33:21,760 Speaker 1: actually made profits on this sort of year's long campaign. 558 00:33:22,160 --> 00:33:24,960 Speaker 1: So I was actually going to ask what was where 559 00:33:24,960 --> 00:33:28,160 Speaker 1: were the auditors? And when you started poking around and 560 00:33:28,240 --> 00:33:32,240 Speaker 1: asking these questions and looking at the you know, what 561 00:33:32,280 --> 00:33:35,680 Speaker 1: you saw is early evidence of accounting fraud. You know, 562 00:33:35,880 --> 00:33:38,400 Speaker 1: identifying like is the money in an account or not? 563 00:33:38,560 --> 00:33:40,520 Speaker 1: Does not seem like it should be that hard of 564 00:33:40,600 --> 00:33:45,160 Speaker 1: aum a thing for an auditor or any accountant to 565 00:33:45,160 --> 00:33:48,080 Speaker 1: track down. Where were they the whole time until they 566 00:33:48,120 --> 00:33:50,520 Speaker 1: finally came out and said, the money is not there, 567 00:33:50,600 --> 00:33:54,080 Speaker 1: we can't find it. Dad's best to talk on that. 568 00:33:54,160 --> 00:33:56,960 Speaker 1: But I just say, rule, you know, a kind of 569 00:33:57,000 --> 00:34:00,840 Speaker 1: a base rule of financial journalism. Is there ever ever 570 00:34:01,480 --> 00:34:04,880 Speaker 1: trust the orditor us? You know, just you know, namely 571 00:34:05,000 --> 00:34:08,840 Speaker 1: one major fraud that has been revealed by an auditor? 572 00:34:09,880 --> 00:34:12,600 Speaker 1: Maame what so? I think the best example of this 573 00:34:13,000 --> 00:34:16,439 Speaker 1: is kind of like the last almost year of wire 574 00:34:16,520 --> 00:34:21,040 Speaker 1: Card's life. We published this story in October saying this 575 00:34:21,080 --> 00:34:23,799 Speaker 1: is how they're committing fraud. Here are all the documents, 576 00:34:23,880 --> 00:34:26,879 Speaker 1: Here are all the names of the fake clients. This 577 00:34:26,920 --> 00:34:30,040 Speaker 1: isn't real. And so why Card launches this special audit 578 00:34:30,880 --> 00:34:33,879 Speaker 1: to look into all of these allegations. You know, it's 579 00:34:33,880 --> 00:34:38,400 Speaker 1: a company, it gets to investigate itself. So the auditors 580 00:34:38,440 --> 00:34:40,879 Speaker 1: for a decade e y, and they're bringing this new 581 00:34:40,960 --> 00:34:46,080 Speaker 1: lot from KPMG, And there are these sort of crazy 582 00:34:46,160 --> 00:34:51,240 Speaker 1: moments where like they all fly to Manila and wire 583 00:34:51,239 --> 00:34:56,480 Speaker 1: Card has told them yes, we do have lots of cash. 584 00:34:56,480 --> 00:34:59,040 Speaker 1: We've got this one point nine billion euros of cash. 585 00:34:59,160 --> 00:35:01,960 Speaker 1: But it's not an art bank accounts. It's in special 586 00:35:01,960 --> 00:35:06,680 Speaker 1: bank accounts in the Philippines managed by a lawyer. So 587 00:35:06,719 --> 00:35:10,480 Speaker 1: they all go to this lawyer's office and he walks 588 00:35:10,520 --> 00:35:15,880 Speaker 1: in and he's a divorce lawyer who gives advice on YouTube. 589 00:35:17,120 --> 00:35:20,080 Speaker 1: He's got he's got like one of those sort of 590 00:35:20,120 --> 00:35:22,240 Speaker 1: gold plaques on the wall saying he's got a hundred 591 00:35:22,239 --> 00:35:27,480 Speaker 1: thousand subscribers. And he walked and he walks in, and 592 00:35:27,640 --> 00:35:30,080 Speaker 1: there's this whole speech about how like he's the friends 593 00:35:30,080 --> 00:35:32,440 Speaker 1: of the president, and he went to the same fraternity 594 00:35:32,560 --> 00:35:35,680 Speaker 1: at him as university, and he's a very important and 595 00:35:35,800 --> 00:35:39,000 Speaker 1: powerful guy. And then they all go down into some 596 00:35:39,080 --> 00:35:41,879 Speaker 1: cars to go to the banks where these special accounts are, 597 00:35:42,120 --> 00:35:46,520 Speaker 1: and they've got some police motorcycle outriders, and there's sort 598 00:35:46,520 --> 00:35:50,840 Speaker 1: of this bizarre convoy sets off and they don't drive 599 00:35:50,920 --> 00:35:55,680 Speaker 1: to the headquarters of the bank's nearby. No, they drive 600 00:35:55,760 --> 00:36:01,000 Speaker 1: to forty minutes to with this little branch road where 601 00:36:01,000 --> 00:36:04,360 Speaker 1: this tiny outpost to the bank where they can barely 602 00:36:04,400 --> 00:36:07,799 Speaker 1: all fit in it. It's supposedly looking after more than 603 00:36:07,840 --> 00:36:12,160 Speaker 1: a billion dollars of wire cards money, and the you know, 604 00:36:12,200 --> 00:36:15,560 Speaker 1: the lawyer explains, he just does that because it's convenient 605 00:36:15,920 --> 00:36:19,040 Speaker 1: for where he lives. This is in the book, by 606 00:36:19,040 --> 00:36:24,239 Speaker 1: the way, and it's amazing the scene and yeah, I mean, 607 00:36:24,680 --> 00:36:27,040 Speaker 1: I'm just giving you, like the very potted version of 608 00:36:27,080 --> 00:36:31,480 Speaker 1: it here. And the thing that I think is really 609 00:36:31,520 --> 00:36:34,439 Speaker 1: striking is that the auditors at this point have been 610 00:36:34,560 --> 00:36:38,719 Speaker 1: sort of so desperate for information and so desperate to 611 00:36:38,840 --> 00:36:42,680 Speaker 1: like sign off on things, that they're almost relieved that 612 00:36:42,800 --> 00:36:48,200 Speaker 1: there's something there. It's not like there's nobody here. It's 613 00:36:48,239 --> 00:36:51,040 Speaker 1: all completely weird, and they seem to have convinced themselves 614 00:36:51,080 --> 00:36:54,839 Speaker 1: that yes, why a Card is this chaotic startup. It's 615 00:36:54,840 --> 00:36:59,440 Speaker 1: grown so quickly, it doesn't have proper processes in place, 616 00:37:00,280 --> 00:37:03,200 Speaker 1: and a sort of group think sets in because they 617 00:37:03,239 --> 00:37:06,239 Speaker 1: have been with it the whole way, and they've sort 618 00:37:06,280 --> 00:37:10,239 Speaker 1: of understood and they've signed off on everything, and they 619 00:37:10,360 --> 00:37:14,520 Speaker 1: sort of agreed to this weird, chaotic money making magic 620 00:37:14,680 --> 00:37:20,439 Speaker 1: that why Can generates its profits. They're kind of like, okay, right, 621 00:37:20,560 --> 00:37:22,960 Speaker 1: we get that this is a bit unusual, but you know, 622 00:37:23,000 --> 00:37:24,759 Speaker 1: there's something there. We can put a little tick in 623 00:37:24,760 --> 00:37:43,520 Speaker 1: our box. Was there ever a moment where, you know, 624 00:37:43,840 --> 00:37:46,879 Speaker 1: this had dragged on for quite some time, and I know, 625 00:37:47,160 --> 00:37:50,280 Speaker 1: um the f T as a newspaper, and Lionel Barber, 626 00:37:50,719 --> 00:37:54,319 Speaker 1: the former editor, was very supportive of you. But there 627 00:37:54,360 --> 00:37:59,279 Speaker 1: were times clearly where your career was probably strained by 628 00:37:59,360 --> 00:38:03,840 Speaker 1: all of this. You had criminal charges against you, You 629 00:38:03,960 --> 00:38:08,640 Speaker 1: had you know, sell side analysts, the accountants, the financial 630 00:38:08,680 --> 00:38:11,640 Speaker 1: regulators in Germany all saying that this company was fine. 631 00:38:12,239 --> 00:38:14,920 Speaker 1: Was there ever a moment where you worried that, you know, 632 00:38:15,040 --> 00:38:22,000 Speaker 1: the fraud would never come to light. So so there's 633 00:38:22,040 --> 00:38:27,839 Speaker 1: this moment where worker cooks up a conspiracy and it 634 00:38:27,880 --> 00:38:32,280 Speaker 1: looks so bad that the Financial Times finally announces that, okay, 635 00:38:32,440 --> 00:38:36,120 Speaker 1: we're going to conduct an internal investigation into me and 636 00:38:36,120 --> 00:38:39,280 Speaker 1: Paul to clear the air. And I very clearly remember 637 00:38:39,320 --> 00:38:41,759 Speaker 1: that phone call because Lionel called me up to tell 638 00:38:41,800 --> 00:38:46,080 Speaker 1: me about it, and he'd always said he completely trusted us, 639 00:38:46,080 --> 00:38:49,359 Speaker 1: he knew we weren't corrupt, and you know, he said, 640 00:38:50,040 --> 00:38:52,319 Speaker 1: it's obviously going to clear you. I'm not worried about that, 641 00:38:52,400 --> 00:38:54,319 Speaker 1: but you know, this is just a tactic we have 642 00:38:54,640 --> 00:38:58,000 Speaker 1: to do to get ahead of work card. Otherwise no 643 00:38:58,000 --> 00:39:00,640 Speaker 1: one will pay attention to the story which we knew 644 00:39:00,640 --> 00:39:03,279 Speaker 1: we had, which was going to kill them. And even 645 00:39:03,280 --> 00:39:05,960 Speaker 1: though I knew everything he's saying was right, it was 646 00:39:06,200 --> 00:39:08,279 Speaker 1: you know, when it was like I was hearing in 647 00:39:08,280 --> 00:39:10,960 Speaker 1: his voice at a distance and it was just sort 648 00:39:11,000 --> 00:39:14,040 Speaker 1: of this moment of like everything collapsing in and it's 649 00:39:14,120 --> 00:39:17,359 Speaker 1: like revery ship. I think they're going to get aware 650 00:39:17,360 --> 00:39:20,359 Speaker 1: of it. And it was also really worrying as well, 651 00:39:20,400 --> 00:39:23,239 Speaker 1: because at this point, you know, we knew there were 652 00:39:23,320 --> 00:39:28,919 Speaker 1: Russian spies maybe involved. There were some pretty nasty characters, 653 00:39:30,160 --> 00:39:34,480 Speaker 1: and I'd been like cycling home on my bike worrying about, well, 654 00:39:35,840 --> 00:39:37,920 Speaker 1: if I get knocked off by a bus or something here, 655 00:39:37,960 --> 00:39:40,400 Speaker 1: that's gonna be very convenient for everyone. You kind of 656 00:39:40,400 --> 00:39:44,000 Speaker 1: tell yourself as a journalist, you get a certain protection 657 00:39:44,080 --> 00:39:45,879 Speaker 1: because if that happens to you, that's quite a high 658 00:39:45,920 --> 00:39:48,520 Speaker 1: profile thing, and that's going to really attract the attention 659 00:39:48,560 --> 00:39:53,560 Speaker 1: of the authorities more than a easy, teric financial crime. 660 00:39:55,040 --> 00:39:57,480 Speaker 1: But in that moment when you're like, okay, so even 661 00:39:57,520 --> 00:40:01,399 Speaker 1: the fts investigating us, maybe we are for it's like, well, 662 00:40:01,480 --> 00:40:04,680 Speaker 1: I feel quite exposed and if this doesn't work out, 663 00:40:04,760 --> 00:40:08,960 Speaker 1: my career is finished. When did the tide turn, Like, 664 00:40:09,040 --> 00:40:11,360 Speaker 1: what was the thing that I mean you mentioned in 665 00:40:13,000 --> 00:40:16,360 Speaker 1: that letters came out and said, yeah, the money is missing, 666 00:40:16,800 --> 00:40:20,120 Speaker 1: But what was what finally turned the tides to get 667 00:40:20,360 --> 00:40:24,040 Speaker 1: this sort of rethink and suddenly you sort of realized 668 00:40:24,239 --> 00:40:27,319 Speaker 1: that people were started believing you. The turning of the 669 00:40:27,360 --> 00:40:30,359 Speaker 1: tide is related to the As Dan was just saying, 670 00:40:30,440 --> 00:40:34,120 Speaker 1: this point, when we were investigated internally to check whether 671 00:40:34,160 --> 00:40:36,920 Speaker 1: we were actually corrupt, we reached a point where we 672 00:40:36,920 --> 00:40:40,840 Speaker 1: were essentially at kind of hand to hand combat with 673 00:40:40,920 --> 00:40:47,000 Speaker 1: this company, and both Dad and I were so infuriated 674 00:40:47,080 --> 00:40:50,279 Speaker 1: that they've managed to kind of to sty me what 675 00:40:50,320 --> 00:40:53,120 Speaker 1: we were trying to do. You know, the fact that 676 00:40:53,160 --> 00:40:56,799 Speaker 1: we were investigated internally allowed wire Card to raise i 677 00:40:56,840 --> 00:41:00,759 Speaker 1: think one point four billion dollars in cash from we 678 00:41:00,800 --> 00:41:04,640 Speaker 1: didn't even talk about soft banks, and which is yeah, 679 00:41:04,680 --> 00:41:10,000 Speaker 1: which is like another just yeah, obviously soft throws up 680 00:41:10,000 --> 00:41:13,239 Speaker 1: and gives them a billion dollars soft in the head bank. 681 00:41:13,360 --> 00:41:17,239 Speaker 1: As I say, you know, kind of when we came 682 00:41:17,280 --> 00:41:20,360 Speaker 1: out of when we were cleared by the internal investigation, 683 00:41:21,239 --> 00:41:25,000 Speaker 1: you know, Dan came out of that, you know, the 684 00:41:25,160 --> 00:41:29,520 Speaker 1: fighting fit, and there was an absolute determination then that 685 00:41:29,600 --> 00:41:32,640 Speaker 1: we had to you know, put this matter to rest. 686 00:41:33,640 --> 00:41:36,560 Speaker 1: We discussed it in dept at the time and how 687 00:41:36,560 --> 00:41:40,840 Speaker 1: we would do that, and you know, the argument was 688 00:41:40,880 --> 00:41:43,480 Speaker 1: around we had We knew that we had to put 689 00:41:44,040 --> 00:41:49,120 Speaker 1: real tangible evidence in front of people, and the way 690 00:41:49,160 --> 00:41:52,360 Speaker 1: we did that was a decision to you know, do 691 00:41:52,520 --> 00:41:56,960 Speaker 1: a story explaining how the customers were fake and therefore 692 00:41:57,080 --> 00:42:00,440 Speaker 1: the cash was fake. But also we we made the 693 00:42:00,480 --> 00:42:03,879 Speaker 1: decision to actually publish the documents we had. A key 694 00:42:03,960 --> 00:42:08,719 Speaker 1: thing was an internal spreadsheet. I don't know down how 695 00:42:08,840 --> 00:42:11,000 Speaker 1: how many pages along, how many sheets long? Was That 696 00:42:11,040 --> 00:42:14,240 Speaker 1: spreadsheet was very substantial. It was a sort of document 697 00:42:14,280 --> 00:42:19,240 Speaker 1: that just couldn't be fabricated. And you also brought together 698 00:42:19,280 --> 00:42:22,880 Speaker 1: all the chats and emails around that actual document. It 699 00:42:22,960 --> 00:42:25,239 Speaker 1: was putting that kind of tangible evidence in front of 700 00:42:25,360 --> 00:42:28,040 Speaker 1: the reader that killed it. That was done in October 701 00:42:28,120 --> 00:42:31,080 Speaker 1: the fifteenth, I remember the day, two thousand nineteen. We 702 00:42:31,120 --> 00:42:33,160 Speaker 1: knew at that point that this business was dead. We 703 00:42:33,239 --> 00:42:35,960 Speaker 1: knew it was a fraud. In actual fact, it took 704 00:42:36,000 --> 00:42:39,480 Speaker 1: another kind of seven or eight months to disintegrate, just 705 00:42:39,600 --> 00:42:42,280 Speaker 1: to wrap the whole thing up. What what's your top 706 00:42:42,360 --> 00:42:46,880 Speaker 1: tip for spotting a potential fraud? What should people be 707 00:42:46,960 --> 00:42:51,560 Speaker 1: looking for. There's a famous American short sellet Forward Mark 708 00:42:51,600 --> 00:42:54,120 Speaker 1: co Holders. He has this phrase I love, which is, 709 00:42:55,000 --> 00:42:58,640 Speaker 1: there is never just one cockroach in the kitchen. So 710 00:42:58,680 --> 00:43:01,560 Speaker 1: if you find one, I you're going to find more 711 00:43:01,600 --> 00:43:03,719 Speaker 1: of them. Almost as simple as that. If you find 712 00:43:03,800 --> 00:43:06,440 Speaker 1: that a company that you can look for, you know, 713 00:43:06,640 --> 00:43:10,080 Speaker 1: financial indicators. Are they growing very quickly but also taking 714 00:43:10,080 --> 00:43:12,759 Speaker 1: on loads of debts? Are they growing really quickly and 715 00:43:12,800 --> 00:43:14,719 Speaker 1: really profitable in a way that's too good to be true? 716 00:43:14,960 --> 00:43:17,400 Speaker 1: You know, all those sorts of like financial things, you know, 717 00:43:17,400 --> 00:43:20,200 Speaker 1: have they got a big receivables balance which is growing 718 00:43:20,239 --> 00:43:23,239 Speaker 1: faster than their sales. But when it comes down to it, 719 00:43:24,239 --> 00:43:26,880 Speaker 1: are they lying about something? Because if they learn about anything, 720 00:43:26,960 --> 00:43:29,680 Speaker 1: then they'll probably lie about the lot els. That's a 721 00:43:29,680 --> 00:43:32,000 Speaker 1: good one, all right. Well, Dan and Paul, it was 722 00:43:32,080 --> 00:43:34,480 Speaker 1: so good to have you and do do a bit 723 00:43:34,560 --> 00:43:37,520 Speaker 1: of media navel gazing. So thank you so much and 724 00:43:37,600 --> 00:43:40,760 Speaker 1: congrats on you know, bringing down Wire Card and also 725 00:43:40,960 --> 00:43:45,120 Speaker 1: on the book. Yeah, oh, thank you so much. It's terrific. 726 00:43:45,239 --> 00:44:05,000 Speaker 1: That was really fun. Thank you so much. So Joe, obviously, 727 00:44:05,040 --> 00:44:10,000 Speaker 1: I found that conversation very enjoyable and I cannot imagine 728 00:44:10,040 --> 00:44:14,000 Speaker 1: what Dad actually went through at various points in that 729 00:44:14,400 --> 00:44:17,280 Speaker 1: entire odyssey. It just seems like, honestly, the entire world 730 00:44:17,800 --> 00:44:21,120 Speaker 1: was sort of arranged against him. Yeah, it's just so 731 00:44:21,320 --> 00:44:23,680 Speaker 1: wild to me, and I think it's really telling. But 732 00:44:23,719 --> 00:44:25,719 Speaker 1: it's so wild to me that you can have this 733 00:44:25,920 --> 00:44:29,640 Speaker 1: company in which it's all made up and it takes 734 00:44:29,719 --> 00:44:32,520 Speaker 1: so long for the truth to come out, even though 735 00:44:32,560 --> 00:44:35,640 Speaker 1: you think it's like, Okay, someone go check to see 736 00:44:35,719 --> 00:44:40,399 Speaker 1: if the money is there or if the customers are real. Yes, 737 00:44:40,480 --> 00:44:42,640 Speaker 1: the money is there, Okay, it's real, No, the customers 738 00:44:42,800 --> 00:44:44,799 Speaker 1: are whatever it is. You would think like some of 739 00:44:44,800 --> 00:44:47,400 Speaker 1: these things would be really binary, and yet despite the 740 00:44:47,440 --> 00:44:50,040 Speaker 1: binary nous, it could just like take forever for it 741 00:44:50,080 --> 00:44:54,120 Speaker 1: to actually, uh to actually come out. It blows my mind, 742 00:44:54,160 --> 00:44:55,640 Speaker 1: but I mean I get how it works. It just 743 00:44:56,160 --> 00:44:59,799 Speaker 1: you think these things would be faster. Well. I think 744 00:44:59,840 --> 00:45:02,920 Speaker 1: the other thing it shows is that the system. You know, 745 00:45:03,280 --> 00:45:06,560 Speaker 1: there are a lot of safeguards built into the system, 746 00:45:06,800 --> 00:45:11,360 Speaker 1: but those safeguards and the system itself only really works 747 00:45:12,000 --> 00:45:16,080 Speaker 1: when everyone is sort of a good faith actor. And 748 00:45:16,120 --> 00:45:20,000 Speaker 1: I think when when you have a really audacious fraud 749 00:45:20,280 --> 00:45:22,920 Speaker 1: like wire card, where you have a bunch of senior 750 00:45:22,920 --> 00:45:26,520 Speaker 1: executives who you know, are not only willing to go 751 00:45:26,600 --> 00:45:29,640 Speaker 1: on the offensive and say like, oh, these journalists are 752 00:45:29,640 --> 00:45:33,640 Speaker 1: in league with short sellers. You guys should be pursuing them, 753 00:45:33,719 --> 00:45:36,960 Speaker 1: not us. And they're also quite willing to hire hackers 754 00:45:37,040 --> 00:45:40,799 Speaker 1: and start their own, you know, criminal publicity campaign and 755 00:45:40,840 --> 00:45:44,520 Speaker 1: things like that. I think, like the system doesn't work 756 00:45:44,760 --> 00:45:48,400 Speaker 1: when you have those kinds of actors operating in it, 757 00:45:48,440 --> 00:45:51,279 Speaker 1: and I think that's part of why they were able 758 00:45:51,320 --> 00:45:53,080 Speaker 1: to get away with it for so long. Also, just 759 00:45:53,120 --> 00:45:56,040 Speaker 1: thinking back to the auditors, you know, what kind of 760 00:45:56,040 --> 00:45:58,640 Speaker 1: what kind of company like brings the auditors to the 761 00:45:58,640 --> 00:46:01,360 Speaker 1: Philippines and goes, we're going to show you the money, 762 00:46:01,400 --> 00:46:04,359 Speaker 1: and then they they take them to this random bank 763 00:46:04,440 --> 00:46:07,600 Speaker 1: and they're like, oh, see it's here, Like that is 764 00:46:07,640 --> 00:46:10,840 Speaker 1: just such a crazy thing to do. It feels like 765 00:46:11,600 --> 00:46:14,560 Speaker 1: there's no I mean, obviously the auditors should have been 766 00:46:14,600 --> 00:46:17,359 Speaker 1: more suspicious of it, But at the same time, if 767 00:46:17,400 --> 00:46:19,440 Speaker 1: you were an auditor, you'd probably be going like, well, 768 00:46:19,480 --> 00:46:22,839 Speaker 1: why would you know? This is so strange? It kind 769 00:46:22,920 --> 00:46:25,359 Speaker 1: of maybe it is true. Yeah, I think we're just 770 00:46:25,520 --> 00:46:31,520 Speaker 1: not used to people outright lying and we so yeah, 771 00:46:31,600 --> 00:46:33,400 Speaker 1: you know, you sort of have like a range of 772 00:46:33,480 --> 00:46:38,040 Speaker 1: like okay, maybe uh, you know, a range of expectations 773 00:46:38,120 --> 00:46:40,479 Speaker 1: for how people are going to behave And I thought 774 00:46:40,480 --> 00:46:43,880 Speaker 1: that was interesting. It's like, okay, by and large corporate 775 00:46:43,920 --> 00:46:48,560 Speaker 1: Germany is a fairly like high trust, well functioning system, 776 00:46:48,600 --> 00:46:52,440 Speaker 1: but then that creates the space for companies to just 777 00:46:52,480 --> 00:46:55,040 Speaker 1: like brazenly lie and you just like don't have your 778 00:46:55,040 --> 00:46:57,279 Speaker 1: antending you don't have your radar. I also think, you know, 779 00:46:57,360 --> 00:46:59,480 Speaker 1: Canada sort of seems the same way, where it's like 780 00:46:59,520 --> 00:47:03,759 Speaker 1: buying are just sort of like high functioning you know, 781 00:47:04,360 --> 00:47:08,040 Speaker 1: reasons sort of like market system, and then you occasionally, 782 00:47:08,239 --> 00:47:11,360 Speaker 1: you know, semi regularly get these like gigantic frauds. It 783 00:47:11,400 --> 00:47:13,520 Speaker 1: seems to go hand in hand where it's like in 784 00:47:13,560 --> 00:47:16,399 Speaker 1: the course of a day to day job, even if 785 00:47:16,400 --> 00:47:19,560 Speaker 1: your job is to like verify the truth on some level, 786 00:47:19,560 --> 00:47:22,320 Speaker 1: which is auditors, like you're sort of like not really 787 00:47:22,400 --> 00:47:27,040 Speaker 1: prepared for like pure lie. Yeah. I think that's right, 788 00:47:27,280 --> 00:47:29,879 Speaker 1: Like I think those kinds of systems only really work 789 00:47:29,920 --> 00:47:32,719 Speaker 1: when everyone's acting in good phase. My mind that it 790 00:47:32,760 --> 00:47:34,520 Speaker 1: could take so long, like it's not you know, it's 791 00:47:34,560 --> 00:47:38,359 Speaker 1: like some companies the business model is unsustainable and their 792 00:47:38,360 --> 00:47:41,440 Speaker 1: short sellers like this is an unsustainable business model, but 793 00:47:41,640 --> 00:47:45,440 Speaker 1: it takes a while for whatever to happen. But the 794 00:47:45,480 --> 00:47:47,560 Speaker 1: idea is still that, like you can just like make 795 00:47:47,640 --> 00:47:50,000 Speaker 1: up money or make up customers, and it takes so 796 00:47:50,040 --> 00:47:52,440 Speaker 1: long for the company it will be forced to admit. 797 00:47:52,480 --> 00:47:54,560 Speaker 1: It kind of blows my mind. And you can see 798 00:47:54,560 --> 00:47:59,200 Speaker 1: how they, like drive journalists crazy markets can stay a 799 00:47:59,360 --> 00:48:02,280 Speaker 1: rational ger than you can stay solvent. We've come full circle. 800 00:48:02,920 --> 00:48:06,839 Speaker 1: Uh quote. That's why that's why it's persisted despite it's 801 00:48:06,920 --> 00:48:11,960 Speaker 1: dubious prominence, because it's so true. Yeah. Alright, um, this 802 00:48:12,040 --> 00:48:14,640 Speaker 1: has been another episode of the All Thoughts podcast. I'm 803 00:48:14,640 --> 00:48:17,560 Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway, 804 00:48:17,640 --> 00:48:20,400 Speaker 1: and I'm Joe Wisenthal. You could follow me on Twitter 805 00:48:20,520 --> 00:48:24,280 Speaker 1: at The Stalwart. Follow our guests on Twitter. Dan McCrumb 806 00:48:24,480 --> 00:48:28,200 Speaker 1: He's at f D. Paul Murphy is on Twitter. He 807 00:48:28,239 --> 00:48:31,360 Speaker 1: doesn't really tweet what his handle is at Murphy p. 808 00:48:31,719 --> 00:48:35,360 Speaker 1: Follow our producer Kerman Rodriguez at Kerman Arman. Follow the 809 00:48:35,360 --> 00:48:39,839 Speaker 1: Bloomberg head of podcast, Francesco Leave at Francesca Today, and 810 00:48:39,920 --> 00:48:42,640 Speaker 1: check out all of our podcasts a Bloomberg under the 811 00:48:42,640 --> 00:49:07,640 Speaker 1: handle at podcasts for listening to year to