Wirecard's India deal started with 'fraud': London judges panel

Topics Companies | Hermes | Indian business

Minority holders of Hermes I-Tickets say they were duped into selling their stake to majority shareholders, only to see it sold on again at a vastly inflated price to Wirecard Photo: Reuters
A series of controversial deals that took place before Wirecard AG purchased an Indian business appeared to be an “evolving international fraud”, a panel of London judges has said.


The transactions in 2015 are being scrutinised in courts in London and Chennai, with the former minority holders of Hermes I-Tickets saying they were cheated of millions of dollars. They allege that they were duped into selling their stake in the business to the company’s majority shareholders only to see it sold on again at a vastly inflated price to Wirecard.


On Monday, UK appellate judges said that the minority shareholders were right to be suspicious of the “substantial” misrepresentations told by one of the purchasers as they overturned part of a lower court ruling.


“It was a continuing fraud because of the concerns and suspicions of the” minority shareholders, the judges said.


While much of the attention on Wirecard’s demise focuses on Germany, the UK court case has shed light on the complexity of the task facing investigators trying to decipher some of the company’s overseas transactions. Hermes was sold at a valuation of $40 million, before being acquired by Wirecard for more than $250 million.


Wirecard isn’t part of the suit, but former Chief Financial Officer Jan Marsalek — who is now a fugitive — played a key role negotiating the purchase of Hermes, said the judges.


The lower court ruling failed to properly take into account the “substantial” falsehoods told by brothers Ramu and Palaniyapan Ramasamy, the former majority shareholders of Hermes, the judges added.


A lawyer for the Ramasamys didn’t immediately respond to an email seeking comment.

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