Embarrassing mystery

/ 04:06 AM July 06, 2020

The Philippines is once again thrust into an unpleasant situation in the global financial community. It cannot simply dismiss its role or play it down, just because the issue involves low-ranking employees of two local banks and the missing billions of dollars in the scandal that brought down German payments processing firm Wirecard AG apparently did not exist.

It was only in February 2016 when the Philippines figured prominently in an international cybercrime — the theft of $81 million from the account of the central bank of Bangladesh in New York that found its way to a branch of a Philippine bank. The money then moved to Philippine casino accounts where it became untraceable, no thanks to what many believed were inadequacies in the country’s anti-money laundering law.


Wirecard, on the other hand, got embroiled in accounting irregularities in its Asian operations after auditors could not locate some $2.1 billion that was supposed to be in two accounts in two of the Philippines’ biggest banks. The two banks that were reported to hold the money in escrow accounts declared that they had no dealings with Wirecard.

The Bank of the Philippine Islands noted that a document saying the company was a client was “spurious,” while BDO Unibank indicated that a document claiming the existence of a Wirecard account was falsified as it carried forged signatures of bank officers.


The Bangko Sentral ng Pilipinas, for its part, said none of the missing money entered the Philippine financial system. However, it wanted the two local banks to initiate legal action against local parties that took part in the fraud, aside from terminating the employees allegedly involved in trying to make it appear that the $2.1 billion was in the Philippines by issuing fake bank certifications in an attempt to appease Wirecard’s auditors.

Justice Secretary Menardo Guevarra has also ordered the National Bureau of Investigation and the Bureau of Immigration (BI) to identify local individuals involved in the Wirecard mess. He disclosed that prior to the breakout of the controversy, Wirecard chief operating officer Jan Marsalek had arrived in the Philippines on March 3 and left after two days. Marsalek oversaw the daily operations of the company in Southeast Asia, and has been removed from his position after being blamed for the mess.

The mystery only deepened when it was reported that Marsalek might have returned to the Philippines very recently, and could still be here. Last Saturday, Guevarra said the BI had determined that Marsalek wasn’t in the Philippines last month. But the investigation found something else: Certain BI personnel had made false entries in the immigration database to make it appear that Marsalek had arrived in Cebu on June 23 and departed the following day.

“The immigration officers who encoded these fictitious entries have been relieved and are now facing administrative charges,” said Guevarra.

What gives? At the bare minimum, while no money did enter the Philippines this time, the country’s reputation has again been tarnished. Why did Wirecard choose the Philippines? Perhaps because it believed regulations here are less stringent or even inadequate compared with those in Asian financial centers like Hong Kong and Singapore, places where the possibility of financial fraud is very slim?

While the head of the Bangko Sentral has stated that the international financial scandal would have no effect on the local banking system since the scheme used the names of two of the country’s biggest banks only in an attempt to cover the perpetrators’ tracks, this attempt at reassurance skims over serious concerns. The scandal involved rogue bank employees who were complicit in the fraud by issuing fake bank certifications. And this is exactly what regulators and the banks’ management should prevent moving forward.

The Bangko Sentral might need to review its regulations pertaining to how banks ensure the integrity of all of their employees and the security of their operations. It should also make management responsible for wayward employees, as it is the banks’ responsibility to regularly check their people for possible red flags. Bank safety and monitoring protocols should be effective and vigilant enough to prevent something as basic as forged signatures of bank officers from ever happening or getting through.


How was the Wirecard scheme hatched? How many times was Marsalek in the country, and who did he deal with? Why were immigration personnel tampering with travel data involving Marsalek? How extensive was this scam? The world is waiting for satisfactory answers, without which this scandal may well linger as another embarrassment for the country in the global financial community.

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