Softbank Deal Details
About Credit Suisse notes over 1 billion euros
July 27, 2023
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Witness examination of Spencer Collins on July 27, 2023.
The testimony listed here does not guarantee an absolutely complete record of the statements made in court, they serve to provide a very detailed insight into the witness hearing of Spencer Collins, a lawyer co-responsible on the Softbank side for the 900 million investment in Wirecard in mid-2019, as well as motions for evidence from the day. Due to the complex and sometimes verbally rapid presentation of the court statements, minor errors may have occurred. Please contact us at news@sun24.news if you are seriously able to suggest improvements or important additions.
The judge asked Softbank lawyer Spencer Collins about due diligence in relation to the India deal and subsequent responses. Collins explained that the allegations stemmed from two phases involving an intermediary entity regarding the Hermes-India deal. Someone had acquired a business in India and then sold it to Wirecard, according to Collins. The judge wanted to know who the middleman was, Spencer Collins replied that this had allegedly never been discovered. The only reference to the middleman was a company named EMIF, a private equity firm from Mauritius. However, this information was not sufficient to identify the real middleman.
The judge went on to ask whether EMIF was connected to Wirecard. Spencer Collins confirmed that this was the case. EMIF acted not been independently, Wirecard had carried out due diligence but had not informed about EMIF properly. The judge wanted to know who the contact person in this regard had been. Spencer Collins mentioned several names, including Softbank's Max Orhstrand, Wirecard's Dr. Markus Braun, Ms. Goerres, von Erffa and Holten, all of whom were connected to the EMIF deal.
The judge also asked about the special audit by KPMG, here in particular how Softbank was part of the special audit and whether a special investigation was to be carried out within SOftbank. Spencer Collins explained that Softbank had recommended that Wirecard conduct a special investigation. This suggestion had been made after allegations were made in the press. However, the exact process and Softbank's role in this special investigation remained rather unclear to the witness.
The judge also asked about the special audit by KPMG, here in particular how Softbank was part of the special audit and whether a special investigation was to be carried out within SOftbank. Spencer Collins explained that Softbank had recommended that Wirecard conduct a special investigation. This suggestion had been made after allegations were made in the press. However, the exact process and Softbank's role in this special investigation remained rather unclear to the witness.
The judge asked Spencer Collins when exactly the discussion about a certain topic had taken place at Softbank. Collins replied that he could not remember exactly, but that it was discussed at the highest level at Softbank. The judge went on to ask whether this was before or after the contract was signed. Collins believed it had been post-contract, but he had not been directly involved.
The judge now asked about the details of the construction of the Softbank deal, Spencer Collins gave an amount of 900 million euros. The issuer having been a Luxembourg SRL and SSIP Waterloo in the Cayman Islands, holding the issued bond. When the judge asked for more details on the parent company of SSIP, Collins stated he would not know.
The judge now asked about the details of the construction of the Softbank deal, Spencer Collins gave an amount of 900 million euros. The issuer having been a Luxembourg SRL and SSIP Waterloo in the Cayman Islands, holding the issued bond. When the judge asked for more details on the parent company of SSIP, Collins stated he would not know.
The judge then asked about the hammer price, Collins quoted a share price of €150, which was reduced to €110 after negotiations. Collins also stated that one note was sold on to Credit Suisse, while the B note was retained by Softbank. A new note worth 900 million euros was issued with a lower interest rate, with the WDI rate at 1.9% and the A note at 0.5%. The judge asked about the agent who issued the convertible bonds, Collins explicitly named Credit Suisse here. Collins also stated that the A-note was sold as a premium and that the total proceeds amounted to 960 million euros.
The judge asked Spencer Collins who the contact persons at Credit Suisse were. Collins named a team of 5 to 6 people, headed by a certain Oliver Crossby and Peter Echser. The judge then asked about the source of the money that was used for the 900 million euros. Collins stated that it came directly from Credit Suisse. The judge went on asking if it was planned from the beginning to issue all at the same time, Collins replied that the plan had only evolved over time. In 2019, a contract was finalized, Collins himself advised that there should be a plan consisting of two components: the A note was sold at a premium, the B note differently, the profit totalling to €63 million. The judge asked about Credit Suisse's other transactions, Collins replied that the present value of the interest differential plus 63 million euros minus Credit Suisse's fees totaled to 70 to 80 million euros.
The judge then asked about the fate of the A-note, Collins stated that it was sold on a single issueing day, while Credit Suisse distributed the A-note over a period of time. The judge went on to ask about the Cayman convertible note, Collins stated it was complicated, but that it basically went from Cayman first, then to Agentum, then to Wirecard and finally to Credit Suisse. The judge then asked about Wirecard's payment history, Collins mentioned that Wirecard had never paid interest. Collins also stated that the intention was to hold the bond for 5 years. However, after the Wirecard collapse, the A and B notes were worthless. When asked about the buyers of the bonds, Collins answered these were hedge funds from Credit Suisse.
The public prosecutors now began questioning Spencer Collins, stating they had difficulty understanding the financial statements of certain companies. Spencer Collins was asked about the matter. According to Collins, some financial statements were difficult to understand because the business model was rather complex. Some reports were difficult to read and contained many different items that had to be brought together, according to Collins. It was therefore difficult to get a clear idea of how the company was performing. Collins found it rather difficult to understand the financial statements and went so far as to say that these could have been arranged in a more simple manner.
Mr. Holten and von Erffa also had problems interpreting certain figures in the reports, according to the witness. Collins thus explicitly confirmed that there were also hurdles when interpreting balance sheets and cash flow statements. According to Collins, the problem rooted in the company's complex business model, which combined technology, finance and business activities. The prosecution asked whether Collins had had discussions with von Erffa regarding this. Collins confirmed, stating that various conversations with von Erffa were to discuss issues and clarify why they had been inaccurately explained.
The prosecution asked about a specific allegation made by von Erffa. Collins stated that von Erffa had missed a detail and that the allegation was therefore false or erroneous. The prosecution asked if Collins could understand the allegation. Collins answered that he had left a relevant meeting early, because he was unsure whether he had understood the information correctly. It was difficult for one person to check all the details. The prosecution asked if there were any differences of opinion between Collins and von Erffa. Collins stated that he could not recall any major contradictions and that the former chief accountant was supportive in providing additional details.
The prosecution asked about the company's trust accounts. Collins said that he could not recall. The prosecution also asked if Collins had had any conversations with Dr. Braun about these trust accounts. Collins again stated that he could not recall.
From now on, Dr. Braun's defense attorney questioned the witness. During the interrogation by lawyer Dierlamm, he raised the issue of a Wirecard partner list, in which Marsalek and Braun are said to have been involved. Spencer Collins stated that he only vaguely remembered this list. When Dierlamm asked about other lists, Collins also denied knowledge of them. Dierlamm then asked about the allegations made against Wirecard by the FT and others at the time, and whether Dr. Braun had been involved. Collins replied that there had been several meetings in which all parties involved, including Dr. Braun, had rejected the allegations.
Dierlamm asked if Collins remembered more details from the meetings, Collins denied this. When Dierlamm asked about a certain trust company on the list, Collins asked back which allegations related to that listed company, he stated that he was not sure if it was important at all. Dierlamm then asked if Collins knew whether the partner list existed or not, to which Collins replied that the media had reported on it, Wirecard had denied it, while the Financial Times had published a spreadsheet, so "the list existed, didn't it ?". The questioning of Spencer Collins was then continued by von Erffa's defense counsel, who asked about a conversation with Ms. Steidl from September 24, 2019 regarding a potential business cooperation with the provider/owner of the messaging app Telegram (Durov). Collins stated that he had vague memories of this conversation, but he did not know whether the discussion here was about internal, or external sales figures. Von Erffa's lawyer then questioned Collins shortly before a court break about an email with Max Ohrstrand and issues with the Boon platform.
After the court break, attorney Dierlamm read out a motion for evidence regarding the statements of Andrea Görres (Compliance) from a few weeks ago. Görres testified that Dr. Braun had denied the existence of effective compliance to the outside world. Dierlamm stated in this regard that Braun himself had never denied the investigation, but to the contrary had repeatedly spoken of it himself, this was also explicitly mentioned in FT reportings.
Dierlamm also mentioned that Ms Stöckl had received a first email regarding the Financial Times' allegations on January 30, 2019, in which the FT's initial claims were officially raised. An initial response was sent by Ms. Görres herself on the same January 30, 2019 in the form of a revised draft. Dr. Braun was not involved in these initial compliance decisions at the end of January 2019, until then there were also no additional material news for Dr. Braun, Dierlamm stated.
Dierlamm also mentioned that Ms Stöckl had received a first email regarding the Financial Times' allegations on January 30, 2019, in which the FT's initial claims were officially raised. An initial response was sent by Ms. Görres herself on the same January 30, 2019 in the form of a revised draft. Dr. Braun was not involved in these initial compliance decisions at the end of January 2019, until then there were also no additional material news for Dr. Braun, Dierlamm stated.
Attorney Dierlamm further states that just one day later, on January 31, 2019, consideration was given as to whether Dan McCrum could be investigated for criminal offenses. Iris Stöckl had referred McCrum to Munich's public prosecutor's office on that same day, Dierlamm explained.
Furthermore, Dierlamm explained that Dr. Braun had not stated himself that "compliance is bullshit", but Ms. Görres had stated in her summons from June 7, 2023 to prosecutors that Dr. Braun had allegedly mentioned this. Dierlamm also stated that a McKinsey project to revise compliance was initiated in 2019, with Dr. Braun's consent in order to explicitly achieve improvements in compliance. As a summary, Munich's public prosecutors were busy preparing a false narrative as early as July 22, 2022, according to lawyer Dierlamm. The defence lawyer also stated that Ms. Görres herself mentioned that the collapse of Wirecard had, quote, "affected her deeply".
Furthermore, Dierlamm explained that Dr. Braun had not stated himself that "compliance is bullshit", but Ms. Görres had stated in her summons from June 7, 2023 to prosecutors that Dr. Braun had allegedly mentioned this. Dierlamm also stated that a McKinsey project to revise compliance was initiated in 2019, with Dr. Braun's consent in order to explicitly achieve improvements in compliance. As a summary, Munich's public prosecutors were busy preparing a false narrative as early as July 22, 2022, according to lawyer Dierlamm. The defence lawyer also stated that Ms. Görres herself mentioned that the collapse of Wirecard had, quote, "affected her deeply".
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