For those who have been watching German jurisprudence unfold over a financial scandal called Wirecard and who are also following the Juicy Fields affair, there are some similarities between the two scandals that bear discussion, if not reveal some terrifying systematic gaps that criminals appear to know how to exploit, repeatedly.
- Systematic Fails by Gatekeepers
Wirecard: The accounting firm Ernst and Young, repeatedly audited, and certified Wirecard multiple times over a period of a decade before refusing to sign off on final results for 2019. This refusal in turn was the immediate reason for the company’s downfall, although the battle with the Financial Times and German regulators (namely the German regulator initially falsely filed criminal charges against the media organization) had raged for some time. As a result of the implosion however and the repeated positive certifications, EY was banned from auditing public companies in Germany for two years in the spring of 2023. According to FAZ, the German auditing regulator APAS wants to finalize some of its more explosive decisions as of next month. This is a good sign, if long in coming. That said, as the Juicy Fields affair proves, unfortunately, systematic fails in other large firms and entities that should have acted as gatekeepers, including the police and financial regulators, allowed an obvious fraud to exist for over two years.
Juicy Fields: There were several large institutional fails that allowed the fraud to continue as long as it did. The first were the fails by social media in allowing Juicy Fields to advertise for investors, but this, as case law so far has shown, is still virgin territory when it comes to holding such firms accountable. Beyond this, and more similar to Wirecard, is the failure of the hundreds of banks which allowed investors to send money to Juicy Fields. Not only is this a failure of the supposed safeguards to prevent this kind of thing by the international SWIFT banking system, but the SEPA system (the EU banking system which allows payment transfers to clear faster through the EU banking system) also failed.
In addition to this, however, there is a much more direct “fail” of a single firm that should be held accountable. Namely, Dentons law firm. Not only did the firm ignore Juicy Fields and even cosponsored cannabis conferences with them, but according to our case research, 44 of the banks on our list of such institutions from our clients (so far) which failed to stop payments to the fraud are also Dentons advisory clients. According to Anders, at least three of these allowed Juicy Fields to open corporate accounts in Berlin.
Beyond that, there are many questions about why the German Ministry of Health did not vet the sponsors of the ICBC before sending Karl Lauterbach to speak at the conference in Berlin in 2022. It is not like the cannabis industry in this country has so far been beyond reproach from authorities. This includes the ongoing battle at the Deutsche Börse over the entire conversation of public cannabis company listings.
- Systematic Fails by Media Organizations
Wirecard: German media did not uncover the problems at Wirecard. It took an investigation by the Financial Times (a non-German media organization) to take the story global.
Juicy Fields: So far, the German media has largely failed to cover the story correctly. In the case of Deutsche Welle, the company not only made multiple factual errors in reporting the story, but also unfathomably, and illegally, outed the identity of a key whistleblower in the case. This reference was subsequently removed after Lars Olofsson intervened personally. However, beyond DW, so far mainstream reporting has failed to mention the role of facilitators both inside Germany and without, and the role of the established cannabis industry.
- Systematic Fails Caused by “Paid for Reputations”
The reality is that both Wirecard and Juicy Fields had smart media strategies which allowed them to present a far different reality in public than existed behind the scenes. This was in part due to paid media and smart reputation protection strategy which also similarly relied on deep pockets to threaten anyone who questioned the firm publicly.
- Threats Against Journalists
Wirecard: The German government actually filed criminal charges against the Financial Times for reporting on the Wirecard scandal, and the individual reporters who filed the stories. These charges were later dropped. The reporter at the heart of the investigation was later awarded the highest journalism prize in Germany for pursuing the story.
Juicy Fields: Numerous journalists have been threatened and legal proceedings are underway against whistleblowers.
- Crossover in Employees
Our investigation to date has actually turned up one person who worked for Juicy Fields after leaving Wirecard. He was not a decisionmaker in either company, but it certainly is a strange coincidence.