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Wirecard: a transparent opportunity for the Philippines

One of the stranger parts of the Wirecard scandal has been the involvement – or, apparently, lack of involvement – of the Philippines in dealing with a lot of the troubled fee processor’s disputed funds.

It’s tempting to suppose that that is damaging for the status of the Philippines and its monetary providers business. And it is likely to be. But it’s additionally doable it could show the nation’s techniques to be extra resilient than they’ve been given credit score for.

A short primer, for those that haven’t adopted the intricacies of Wirecard’s alleged deceit, as unearthed by the FT’s investigations team: Wirecard, the Germany-based funds processor, claimed to have held €1.9 billion of funds by way of two Philippine banks, BDO Unibank and Bank of the Philippine Islands.

It now seems that the cash by no means existed, and that Wirecard’s auditors, EY, had been deceived by fraudulent paperwork.

Clearly, the Philippines nonetheless has inquiries to reply … however as a response to a fast-moving and damaging scandal, it’s a must to say it has been each open and swift

The temptation right here is to consider a sure emerging-market (EM) grubbiness in all this: that, should you want to deceive auditors and provides the phantasm of getting funds you don’t have, you flip to rising Asia and set your rip-off there.

But let’s take a look at the response in the Philippines.

Almost instantly after information broke of the scandal, just about each related arm of the nation’s monetary providers sector went into motion and reported brazenly about what they believed had occurred, promising investigations at each degree.

Attorney Mel Georgie Racela, the head of the Anti-Money Laundering Council, instantly introduced a probe native associate companies of Wirecard in the Philippines and has given interviews to each native and worldwide press, together with Euromoney, on progress and course.

Bangko Sentral ng Pilipinas (BSP) was equally swift in figuring out, after which asserting, that none of the lacking cash had ever entered the Philippines.

BSP governor Benjamin Diokno held a name – a Viber, to be exact – with reporters after having established from BDO and BPI that neither financial institution had a relationship with Wirecard, and that paperwork claiming such a relationship had been fraudulent, with cast signatures of financial institution officers.

Both banks put out swift statements, performed inside investigations and suspended junior workers members by way of whom the cast paperwork seem to have handed.

The nation’s justice division has additionally managed to substantiate that immigration data had been falsified to point that Wirecard’s former second-in-command Jan Marsalek handed by way of the nation in June, drawing upon airline manifests and video footage to show that he was by no means there.

Clearly, the Philippines nonetheless has inquiries to reply, and a probe is simply of any use if it truly finds issues out and reviews them. It seems, at the very least, that there was some collusion at a junior degree with the scandal; two immigration workers have been suspended, for instance.

It will probably be vital to reply the query how these paperwork had been in a position to move muster with out being seen by different members of financial institution workers or their supervisor. It’s additionally truthful to notice that the FT raised questions on Wirecard’s associate companies in the Philippines final yr, apparently with out motion being taken.

But as a response to a fast-moving and damaging scandal, it’s a must to say the Philippines has been each open and swift.


This rigour isn’t as a lot a shock as you may suppose. BSP, an establishment that has weathered no finish of political and monetary crises since its 1993 formation, is considered one of the most strong central banks in all EMs.

When Amando Tetangco, the governor for 12 years to widespread acclaim, stepped down in 2017, he had in a position deputies to select from as his successor and went for one, Nestor Espenilla, who had a status as an assault canine who held a arduous line with the banks.

Espenilla was sadly misplaced to most cancers final yr and there have been considerations that his successor, Diokno, was too near president Rodrigo Duterte to be unbiased, however up to now he too has impressed with rigour and self-discipline.

It may be very a lot in the Philippines’ curiosity to entrance as much as this. Its standing with worldwide credit standing businesses has been enhancing for a number of years – Fitch upgraded its outlook for the nation in February – and, with a BBB+ score from S&P, it’s nearby of a coveted A score.

Covid clearly received’t assist with that, however in the long run the Philippines is effectively positioned by way of monetary resilience, and it’ll wish to preserve an impression of excellent governance as a part of that push for recognition.

The dealing with of those inquiries will probably be carefully watched. They symbolize an opportunity as a lot as a burden.

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