A short seller who was an early critic of Wirecard accused advisers to the collapsed firm of pursuing a prolonged campaign of surveillance and harassment against him in a bid to prevent the publication of damning reports into the German payments processor, according to a UK lawsuit.
(Bloomberg) — A short seller who was an early critic of Wirecard accused advisers to the collapsed firm of pursuing a prolonged campaign of surveillance and harassment against him in a bid to prevent the publication of damning reports into the German payments processor, according to a UK lawsuit.
Matthew Earl was harassed and followed by private investigators engaged by law firm Jones Day and Kroll in a covert operation that saw private investigators photograph him at home, tail him in a car and use information unearthed by hacking his emails to try to protect the reputation of Wirecard, according to a claim filed at the High Court in London.
Jones Day and Kroll, which were acting on the instructions of Wirecard, have yet to file a defense to the claim, but it provides an insight into how Wirecard allegedly sought to silence its critics ahead of its ultimate collapse, sparking one of the biggest corporate scandals in German history.
Earl is now a prominent short seller and the managing partner of the hedge fund Shadowfall Capital & Research LLP. In 2016, the former equities analyst was an anonymous author of a series of reports alleging criminal activities at Wirecard through a now-closed outfit called Zatarra. The reports linked Wirecard to money laundering and alleged that it was processing payments for gambling websites and fraudsters.
Wirecard’s shares fell after the 2016 report was published, sparking an investigation into the authors of the report by German authorities.
Kroll said in a statement it denies Earl’s claims “in full” and said it “acted entirely in accordance with all applicable laws and regulations.” Jones Day didn’t respond to requests for comment.
Earl’s identity was unearthed in December 2016, in an anonymous report published online titled “Zatarra RIP,” which included extracts of Skype conversations between “Zatarra and a Kroll source” and photographs of Earl’s home, according to the claim.
Jones Day and Kroll deployed a “twin strategy of making public serious, defamatory and untrue” allegations against him, in the Zatarra RIP report, lawyers for Earl said in the court filing. The actions of the firms “corroborates” the idea that this Zatarra RIP report was written by Wirecard or those instructed by the firm, they said.
Earl alleges that Kroll obtained information that could only have come from accessing emails, social media accounts and text messages. Holding this data reflected a “serious misuse of his private information.”
The lawsuit claims that the surveillance was part of a campaign calculated to cause him distress, and deter him from reporting on Wirecard.
Kroll said in its statement that its remit had included assessing the accuracy of statements made in the reports from Zatarra — investigating whether its publications were a “conspiracy to manipulate Wirecard’s share price.”
Kroll “was not — and of course never would be — involved in any way in hacking, intimidation or other illegal acts.” It said it plans to have all of Earl’s claims “dismissed.” The firm also said Kroll said that since concluding its work with Wirecard, it discovered that Wirecard engaged other private investigation companies both before, and during its engagement.
Administrators to Wirecard declined to comment.
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