Fahmi Quadir: Wirecard's most dangerous opponent

The short-seller told the Bundestag's investigative committee why Wirecard's actions should have been easy to uncover - if only she'd been listened to.

Fahmi Quadir.
Fahmi Quadir.Berliner Zeitung/Paulus Ponizak

Berlin-At around 9:45 pm on Thursday, a sudden silence falls in the Europa Room of the Paul Löbe House in Berlin's government district, as MP Florian Toncar (FDP) asks witness Fahmi Quadir in a low voice: "If you don't mind, please tell us about the attack against you in New York." Quadir looks down at the ground for a moment. She has prepared well for her appearance before the Bundestag's Wirecard Investigation Committee.

Finally, the hedge fund manager, who travelled from New York to appear before the committee, says quickly and firmly, as if she had been waiting for the moment: "The day I was attacked, my co-worker Christine called and said the server crashed. Just our server. Everything else in the office building was working, except our server. That's when I knew it was going to be another one of those days. We had experienced being hacked many times before. Before I went into the office, I was walking my poodle. Suddenly, a man dressed all in black and wearing a mask - and this was before corona! - hit me in the head, probably with brass knuckles. And even though the police were on the scene within minutes, there were no leads, nothing. The FBI told me to watch out, and that's what we did from then on."

Quadir takes a breath. It's the first time she's spoken about the incident. She seems relieved. She has delivered her account without pathos. To this day, no one knows who was behind the attack. "It was professional. Someone wanted to tell me: this is a warning."

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Fahmi Quadir is certain the attack came from within Wirecard circles. At the time, Quadir was Wirecard's most dangerous opponent. She could never have guessed that a few years later, she would be in Berlin uncovering the causes of an unprecedented criminal case together with members of the German Bundestag - as a winner.

Fahmi Quadir in conversation with the Berliner Zeitung in Berlin.
Fahmi Quadir in conversation with the Berliner Zeitung in Berlin.Berliner Zeitung/Paulus Ponizak

Quadir has been involved with Wirecard since 2018. The daughter of parents who immigrated to New York from Bangladesh, she is a short-seller. Short-sellers bet on falling share prices of a company, or on the downfall of a state. Some launch targeted attacks to artificially drive prices down; others meticulously deal with companies and check that their businesses are sound. Wirecard committee chairman Kay Gottschalk (AfD) wants to know from Quadir why short-sellers have such a bad reputation, especially in Germany; some say short-sellers are considered the "devils" of the markets.

Quadir gives a straightforward answer: "There are devils among us. I can't speak for all short-sellers. I don't bet against states. I don't bet against ethically well-run companies. I bet exclusively against companies that exploit people or that commit crimes."

The 30-year-old American said in her opening statement: "Values are not just empty shells. They define my life." She talked about her experiences living in Bangladesh, working with sexually abused women who were struggling with the aftermath of violence. Quadir has a very sharp mind. As a child, she was good at maths and could write well, she tells the Berliner Zeitung. "I was also the youngest in our big family. I could always go against everything."

The spirit of dissent was also what drove her into finance. Looking at Bangladesh from New York, at the contrast of misery and Wall Street, led her to a fundamental realisation, as she summed it up before the committee: "I understood that capital is the ultimate currency." Her sister, eight years older, worked in the compliance department at Citigroup in New York. She learned early on that the financial industry is about more than money: it's about the big money to be made from crime. And so she discovered "short-selling as a revolutionary act .... Short-selling hurts criminals where they really feel it - in their wallets."

"Something like this only existed if money laundering was behind it"

She learned her first steps as a short-seller from a star of the scene, Mark Cohodes. She worked for his hedge fund, Krensavage Asset Management. At 25, she became famous for betting against the pharmaceutical company Valeant - and winning. She started her own company, Safkhet Capital. Her mentor Cohodes later described Quadir to US media as "ruthless, cold-blooded and dogged." Her success against Valeant was made into a film, making Quadir a Netflix star. She had found out that the company was driving up prices by buying up competitors. "That's fraud, because it meant people had to pay way too much for life-saving drugs," Quadir says today.

She quickly caught onto Wirecard's machinations: when the company took over part of Citi's business in North America, she simply drove to the US headquarters and started investigating what Wirecard was doing there. "I went into a building that was far too big and only had a few employees. I said I was an investor and wanted to look at the business. Fortunately, the salesman I met had no instructions from Germany yet - so he couldn't tell me any fairytales," she remembers.

"I asked him how Wirecard could make such high sales with individual pre-paid cards. That was highly unusual. The man had no idea and couldn't explain anything to me conclusively. I knew then that something like this only existed if money laundering was behind it. Later, I met the salesman again at an investors' day. He recognised me and said: "Today I'm going to be careful what I say to you."

In the Bundestag, Quadir explains why she was proved right in the Wirecard case: "Let's just take a look at what a normal person would think! That's how the market has to work. People don't lose money because of a short attack or critical media reports. They lose their money because a company commits crimes. And when it comes out that they are criminals, the price falls. If the price didn't fall, the market would be broken." In addition to Quadir, the Financial Times had also raised the alarm against Wirecard. But no one wanted to hear the bad news.

Officials were deaf to uncomfortable truths

Initially, Germany's governing parties were also not particularly happy when the Greens insisted on calling Quadir as a witness. A young banker at Germany's central bank, the Bundesbank, from within the ranks of the Greens had become aware of her arguments in New York. Above all, her criticism of Bafin, Germany's Federal Financial Supervisory Authority, made the government uneasy. In reality, many of them just didn't want to hear what Quadir had to say - because she had many uncomfortable truths in her luggage.

After coming to Wirecard's attention, she had offered to disclose all her concerns to Bafin so that supervisors could intervene. In the US, it was absolutely standard practice for investigators, officials and short-sellers to work together. But Bafin explicitly rejected Quadir's offer to shed light on the situation. She says today: "German institutions failed to protect their citizens."

That comment hurts, and you can see it on the faces of CDU/CSU and SPD representatives present. The CDU/CSU committee members hide behind trivial questions: "Who did you send the e-mails to? Who benefited from it, do you have any evidence?" SPD MP Jens Zimmermann asks how much profit Quadir made on the winning bet in Wirecard's case. Quadir says this is a trade secret. Zimmermann insinuates that the winnings would probably allow her to live in luxury in a castle. Quadir keeps her composure, even when Zimmermann follows up and smugly asks whether she is perhaps working "pro bono". Quadir says she is an entrepreneur and has personally not taken a cent - everything goes into her young company. She tells the SPD politician: "What I do is extremely expensive, everything I do I pay for out of my own pocket, in the hope that we get justice. It's a big risk."

Eventually, her calm, precise manner wins the MPs over - and she explains to them the nature of money laundering: "Sometimes money laundering is considered a victimless crime. I can't agree with that. Any crime is pointless if you can't use the profit from the crime." The Wirecard managers led by Jan Marsalek spotted this opportunity: "They took money from some of the most dangerous men in the world."

The trick was obvious: the key to Wirecard's growth lay in acquiring a banking license. If you want to launder money, you have to control a bank and all the links in the chain. That's how you can open accounts for assets that have grown out of crime, wars, drug trafficking and other illegal activities. Quadir regrets that Bafin did not accept its "offer to talk." Wirecard's crimes could have been solved much earlier.

"We urgently need a cultural change"

The committee listens carefully to the young New Yorker. They are visibly taken with her rigour and intellectual discipline. Danyal Bayaz (Greens) told this newspaper: "Fahmi Quadir was not only an important witness, but also an impressive one. She recognised early on that something was wrong at Wirecard. She gave a credible account to the committee of how seriously and committedly other supervisory authorities follow up on critical tips from market participants or whistleblowers. The fact that Bafin was not interested in what she had to say unfortunately does fit the picture."

However, it was "a good sign that State Secretary Kukies recently met Ms. Quadir for a talk," says Bayaz: "In the future, however, I would hope that this does not require the baby to have fallen into the well before that happens. For this, we urgently need a cultural change in our financial supervision."

Cansel Kiziltepe (SPD) paid tribute to the Quadir: "At 30, Ms. Quadir has already come an impressive way. She has made her way in the male-dominated world of finance and is willing to take on the darker side of the field. She identified money laundering at Wirecard very early on and bet against it. She identified criminal connections that numerous authorities only noticed after the bankruptcy."

Following her appearance before the committee, Fahmi Quadir stands in front of the small buffet table, which has now been emptied. There is still water, still and sparkling. Quadir is relieved that she has finally been heard in Germany after all.

But Jens Zimmermann's accusation is still troubling her. She says: "I don't understand where he got the idea that I could be living a life of luxury. Most of my colleagues - much older, white men - have retired or given up, while I'm still hanging on. I have no family estate, no inheritance. I don't own any assets or offshore bank accounts or real estate."

Fahmi Quadir heads down the Paul Löbe Haus's long, dark stairs. Quietly, she says to herself: "If he knew how much work my business is. If he knew how I really live." In the background, the door to the hall closes. The next witness has taken her seat in front of the committee. She works for Bafin. An empty pad of paper lies in front of her.