Beginning on 27 March 2024, the Chief Financial Officer of Caritas began securing increasing amounts of bank loans on behalf of the organisation. Over the following months, the Caritas Foundation opened credit lines totaling more than €30 million. All of this money was ultimately embezzled, leaving the charity burdened with overwhelming debt. How could this have happened?
Listen to Episode 2 with English subtitles in the video below, or read the full transcript.
Léonardo Kahn Wednesday, 27 March 2024, 4:45 p.m. Caritas’ Chief Financial Officer (CFO) writes an e-mail to her contact at BGL BNP Paribas.
CFO Hello Madam, I'm getting back to you following our discussion about the possibility of overdrawing the current account of the Foundation. Can you confirm that I can already issue the transfer order from our bank account?
Léonardo Kahn The response from the bank comes through 45 minutes later.
BGL employee I apologize for the late reply. I confirm that you can send your payment instructions up to the €2 million overdraft. Thank you. Yours faithfully.
Léonardo Kahn Over the coming weeks, Caritas will keep lines of credit open to the tune of over €30 million, allowing fraudsters to make off with more money than the foundation ever actually had. Over half of the total of €61 million that was stolen is made up of debts. Debts which the Catholic charity is now saddled with. How was this allowed to happen?
Sven Clement The role the banks play in this whole affair is particularly concerning.
Taina Bofferding These are entities where every single control mechanism has failed.
Marc Baum We have pretty strict measures in place for private customers, even if they’re just transferring €5,000.
Luc Frieden That’s something for Caritas and the banks to sort out.
Léonardo Kahn My name is Léonardo Kahn and this is Scene Change, the 100.7 investigative podcast. Our second series of Scene Change is called The Caritas Affair. Join us as we chart the timeline of a scandal where everything that could go wrong, did.
Episode 2: The Banks.
Last time, we looked at the conduct of the CFO during the first two months of the fraud. Starting in February, she wires millions of euros to Spain. She claims to be acting on the instructions of Caritas’ CEO, Marc Crochet. How this was even possible, remains a mystery
Another question is how the banks ended up being a party to the whole affair, executing these transfers and granting Caritas one line of credit after another. Pia Oppel, Jean-Claude Franck, you’ve been digging into the case, are there any good explanations for the way the banks acted in this case?
Jean-Claude Franck Well, the short answer is that no official explanations have been offered so far. There have been a number of investigations into the conduct of the banks. In Luxembourg, the two banks concerned are Spuerkeess and BGL BNP Paribas. BBVA, the second-largest bank in Spain, is also involved – because it’s the first place the funds from Caritas are transferred to.
Pia Oppel There are a number of questions that need answering here: why were such large lines of credit approved and have the banks breached regulations? The European Central Bank is currently looking into the case, but has yet to make any sort of statement.
Jean-Claude Franck And then there are the 125 fraudulent transfers Caritas makes to Spain, which Luxembourg’s financial watchdog, the CSSF, is investigating. The CSSF is expected to make a decision imminently regarding whether mistakes have been made – namely, whether the banks should have flagged these transfers.
Pia Oppel The banks are also under investigation by law enforcement agencies, especially here in Luxembourg, for potential breaches of anti-money laundering laws. In Spain, as well, because a Spanish bank is also implicated.
Jean-Claude Franck All of these investigations are still on-going.
Léonardo Kahn So there’s no official verdict yet on the conduct of the banks. What are the banks themselves saying about the whole affair?
Jean-Claude Franck Spuerkeess, BGL and BBVA all declined to answer our questions regarding their conduct. Which is hardly surprising, given that none of the investigations have been finalised yet.
Léonardo Kahn OK, so the investigations into whether the banks might have made mistakes are still underway. But what were you two able to find out in your research in terms of exactly how this all unfolded?
Jean-Claude Franck Well, let’s start with the lines of credit. For a bit of context: Caritas is already in financial trouble by the end of March 2024, following two months of fraud, during which nearly €30 million were stolen. This is where the fraud enters a new phase. Now, it’s not just the money in Caritas’ accounts that’s being stolen. The CFO is racking up debts with the banks.
Pia Oppel At this point, the CFO goes to BGL to ask if Caritas can go overdrawn on one of its accounts by €2 million. And the bank e-mails back confirmation within forty-five minutes.
BGL employee I confirm that you can send your payment instructions up to the €2 million overdraft.
Pia Oppel Their condition is that the account has to be back in the black within one month. Which would be the end of April.
Jean-Claude Franck Only that doesn’t happen.
CFO I will need to go into overdraft up to €10 million.
Jean-Claude Franck This is an e-mail the CFO sends to BGL on 24 April 2024. So around one month after her first request to go overdrawn. The second time round, she asks for Caritas to be allowed to go further into its current account overdraft.
Pia Oppel By up to €10 million.
Léonardo Kahn But why is the CFO going and borrowing money in the first place? Was she told to do that?
Pia Oppel The CFO says yes, she was the victim of CEO fraud. So she believes that she’s assisting the CEO of Caritas on a confidential project.
Jean-Claude Franck She’s getting e-mails from a person or persons pretending to be Marc Crochet. Those e-mails are sent from marc.crochet55@gmail.com.
Pia Oppel A quick reminder, we’re referring to this person as MC55.
Jean-Claude Franck And MC55 writes to the CFO:
MC55 It's imperative that you manage the time it takes to avoid jeopardizing the entire project. If you need to request another line of credit from the bank, don't hesitate.
Jean-Claude Franck Not exactly precise instructions. But we also know that the CFO wasn’t only getting instructions via e-mail. She also had phone conversations with another person during the fraud. Someone who pretends to be a corporate lawyer in Paris whose identity was stolen for the purposes of the scam. And it seems like a lot of the instructions are coming from him.
Pia Oppel As we mentioned during in the previous episode, we don’t know what was said during these phone calls. But equally, we still don’t know whether the CFO really did fall for the scam.
Jean-Claude Franck The fact is, and that’s what this episode is about, whether it was CEO fraud or not, starting at the end of March, the CFO is borrowing more and more money from the banks in Caritas’ name. And helping that money get to Spain.
Léonardo Kahn But what justification is she giving the banks as to why Caritas needs so much cash?
Jean-Claude Franck The argument the CFO offers is one that she will use repeatedly over the coming weeks and months to justify Caritas’ financial troubles to the banks and also internally.
Pia Oppel That Caritas is still waiting on the bulk of its government funding.
CFO The payments to be received from various ministries for 2024 amount to approximately €40 million. We have received approximately €4 million so far.
Jean-Claude Franck The explanation the CFO gives is that because of the change of government the year before, the budget for 2024 wasn’t finalised until much later, leading to delays in payments from the government.
Pia Oppel But it’s not true that there were delays. Caritas got its money.
Gilles Roth As Minister of Finance, I can confirm that there were no delays in payments made by this government.
Léonardo Kahn So the CFO lied to the banks?
Pia Oppel That’s certainly what it looks like. We don’t know exactly what led to her telling the banks that the government funding hadn’t come through. Her lawyer declined to comment on that.
Léonardo Kahn We were talking before about the CFO’s e-mail to BGL asking if Caritas could go overdrawn on their account by €10 million. How does that play out?
Pia Oppel BGL approves the lines of credit without asking for a contract.
Jean-Claude Franck Which is what allows the fraud to continue at the start of May. Before that, there was a whole month, from the start of April, where zero fraudulent transfers were made to Spain.
Pia Oppel The reason there were no transfers for an entire month is that there wasn’t enough money. These lines of credit put funds back in the accounts. And the entire fraud machine shifts into overdrive once more.
Jean-Claude Franck The CFO makes 16 transfers to Spain in the space of just three days, under the pretext that they are all for ASAM, Caritas’ partner organisation in Turkey.
Pia Oppel Just to give you an idea of the magnitude here: starting on 7 May, nearly €8 million are sent to the fake ASAM in the space of three days. And that tempo pretty much continues over the following weeks.
Jean-Claude Franck BGL is completely in the dark, though. Because the money that Caritas is borrowing goes to a Caritas account with Spuerkeess first, and only then is it wired to Spain.
Pia Oppel At the speed these payments are being made to the fake ASAM, the accounts are cleaned out in no time. So BGL gets another e-mail from the CFO on 23 May.
CFO I hereby send you the request for obtaining an additional credit line of €6 million until the end of June 2024, thus increasing our overdraft authorization to €16 million. This request is quite urgent because the finalisation of contracts with the State is taking a long time.
Jean-Claude Franck Just to recap quickly: between the end of March and the end of May, so two months, Caritas goes further and further into the red on its BGL account. And now, the CFO wants to go overdrawn on the accounts by not just €10 million, but up to €16 million.
Léonardo Kahn And how does BGL react this time?
Pia Oppel The bank says OK. But now they do ask her to sign a contract – the first time they do so – for a €16 million line of credit.
Jean-Claude Franck The bank wants two signatures on the contract. It can’t just be the CFO signing.
Léonardo Kahn So now the question is: who does she ask to co-sign?
Jean-Claude Franck Exactly, and it’s an interesting moment, because the logical choice would have been the CEO, Marc Crochet.
As in, if you put yourself in her shoes and assume that at this point she has indeed fallen for the CEO scam, then she is under the impression that it’s Marc Crochet she’s been wiring all this money to Spain for. And that his secret project is the reason she now needs to borrow money from the banks.
Pia Oppel And if she did in fact believe that she needed to keep the project confidential, asking anyone other than Marc Crochet would be a risk.
Jean-Claude Franck But she doesn’t ask Marc Crochet. Instead, she asks the Chief Operating Officer (COO) to co-sign.
Léonardo Kahn That really doesn’t make sense. Do you know why she doesn’t ask Marc Crochet?
Pia Oppel No. What we do know is that the contract with BGL is dated 24 May, which was a Friday. Marc Crochet leaves the country the following Wednesday for about six weeks for a pilgrimage that had been in the works for a while.
Jean-Claude Franck But the CFO doesn’t use that time before Marc Crochet leaves to ask him for a signature. In fact, it takes her a week and a half to get the contract signed. Even though the CFO has told BGL on multiple occasions that this whole thing needs to be expedited.
Léonardo Kahn So despite the time pressure, she waits quite a long time to sign the contract. Why?
Pia Oppel We don’t know. What’s interesting, though, is that the CFO asks the COO to sign the BGL contract on 5 June. She does it right after he comes out of a meeting with the board of directors.
Jean-Claude Franck The board of directors is the body responsible for making major decisions and ensuring that the management team is doing its job properly. It’s also usually the board of directors that decides whether Caritas should take out loans.
Pia Oppel So by now, the CFO has had the BGL contract on her desk for quite a long time. But she doesn’t ask her colleague to sign until just after the board meeting finishes.
Léonardo Kahn So that she can keep the issue under wraps?
Pia Oppel Possibly, but we can’t say for certain.
Jean-Claude Franck Either way, it’s another six weeks until the next board meeting. Which, as it happens, is exactly how long the fraud continues for.
Léonardo Kahn So you’re saying that, even though money was extremely tight and the CFO was under immense pressure at the end of May 2024 to get those lines of credit from BGL for €16 million, she waits a week and a half to sign the contract. Potentially so that the board of directors doesn’t get wind of things at the start of June. She then asks the COO to co-sign for the line of credit as he is leaving the board meeting. Doesn’t he ask why they need a line of credit?
Pia Oppel No, he does, and he also checks in with the CEO who’s already on his pilgrimage. Marc Crochet confirmed the same in an interview with radio 100.7 in July, when the fraud came to light.
Marc Crochet I think I had a single phone call, because my colleagues respected the fact that I was on holiday. I was told we had a problem, most likely we weren’t going to be able to cover payroll and we needed to go and request a line of credit. So I said, make it happen.
Pia Oppel We’ll look at why that didn’t raise any eyebrows next episode, when we dive deeper into the question of why Caritas’ management team failed to spot the fraud for so long.
Léonardo Kahn Today, our focus is on the conduct of the banks. So what happens next with the lines of credit?
Jean-Claude Franck It’s the same pattern we’ve become familiar with: the CFO looks to get permission to go overdrawn on the accounts by millions more. She writes to her contact at BGL at the start of June, before the €16 million line of credit has even been signed off.
CFO I would like to review the contract and extend the credit line to €23 million until the end of August 2024 to cover current expenses.
Pia Oppel The CFO asks to amend the contract, so that Caritas is now borrowing €23 million, instead of €16 million.
Léonardo Kahn And the bank is OK with that?
Pia Oppel Sort of: BGL asks the CFO to get the contract for the €16 million signed first. So they’re not going to go and offer a replacement contract for a €23 million line of credit just like that.
Jean-Claude Franck The bank wants to draw up a separate contract for the additional seven million the CFO is asking for. They also want additional security in the form of a mortgage on Caritas properties.
Pia Oppel But for that, you need a notary. And it seems like the CFO manages to play for time here. She can keep on going into the red without having to get the second contract signed right away, as she tells MC55 at the end of June.
CFO Hello Marc, good news from BGL: the additional credit was approved yesterday. We now have an additional €7 million. I negotiated that we’ll talk again about the mortgage mandate in a few weeks (at the latest when I return from vacation at the end of July).
Jean-Claude Franck Ultimately, the CFO goes overdrawn on the BGL account by a full €21 million. For the final five million, no-one ever signs a contract.
Léonardo Kahn And we still haven’t even got to the line of credit taken out with Spuerkeess!
Jean-Claude Franck Right, the CFO put out feelers at the start of June 2024 about getting a €10 million line of credit from them. Her argument was a familiar one.
CFO Indeed, with the change of government, we are slow to receive the 2024 contracts and no longer have enough cash to cover this temporary situation to cover our current expenses.
Pia Oppel And this time, it works. Spuerkeess gives her the green light three weeks later, at the end of June. But I am stunned that the story of the money not coming through also works with Spuerkeess.
Léonardo Kahn Why’s that?
Pia Oppel Because Spuerkeess lets Caritas go into the red on the very same current account that has already been used to wire nearly €40 million to a variety of accounts in Spain. Those were the fraudulent transfers that appeared to be going to ASAM, one of Caritas’ partner organisations in Turkey.
Jean-Claude Franck It’s worth noting that Caritas has been with Spuerkeess for decades. And that the bank could have worked out that the reason Caritas needed this financing wasn’t that the government hadn’t given them enough money, it was that they’d been wiring insane amounts of cash overseas.
Pia Oppel Not to mention that the way the transfers were made was unusual for Caritas.
Léonardo Kahn What made them unusual?
Pia Oppel Normally, Caritas was making around €15 million per year in overseas transfers for its international projects. That money was then assigned to dozens of different projects.
Jean-Claude Franck A Caritas partner would generally get up to €3 million over the course of a single year. Exceptions were sometimes made for really big projects. But never had one partner been given €40 million in the space of just a few months.
Pia Oppel But that’s how much was wired to Spain from the Spuerkeess account between February and the end of June. And on top of that, the transfers were marked as going to ASAM, but their accounts are in Turkey.
Léonardo Kahn Speaking of transfers, did the banks ever question them?
Jean-Claude Franck We don’t have the full picture on that, we’ll have to wait for the various investigations we mentioned at the beginning of the episode to present their findings.
Pia Oppel What we have seen is that Spuerkeess queried 26 of the transfers made to the fake ASAM. There are e-mails asking: Can you confirm this transfer? Those e-mails went to the CFO. Who obviously confirms each time.
Léonardo Kahn Caritas made a total of 125 transfers to those accounts in Spain. None of the three banks implicated, two in Luxembourg and one in Spain, ever pulled the plug. But the banks could argue that it was Caritas’ responsibility to monitor its own transactions: what exactly was the situation within Caritas, is it really possible that nobody noticed all these transfers?
Pia Oppel Internally, Caritas operated a six-eyes principle. That same principle was applied to every one of these fraudulent transfers. Notably, other members of the management team co-signed the transfers. Which we’ll look at in more detail next episode.
Jean-Claude Franck Two members of the financial team were also implicated. They’re the ones who prepared the transfers. Multiple sources told us that afterwards, those two colleagues said they’d held back from speaking up because of the pressure they were being put under by the CFO.
Pia Oppel But there’s one more player who could have sounded the alarm. Only it seems like that didn’t go to plan either.
Léonardo Kahn Can you elaborate?
Pia Oppel So in the spring of 2024, an auditor comes to Caritas, like they do every year, to inspect the books for the previous year. But not just that. The auditor also takes a look at the payments that have been made in January and February 2024.
CFO Hello Marc, This is to inform you that we had to provide the trial balance through the end of February 24 to the auditors. They are now requesting supporting documents for the 11 payments made to Asam.
Jean-Claude Franck That’s from an e-mail the CFO sends MC55 in April. What you can conclude from this message is that the auditor seemingly hasn’t spotted the fraudulent transfers to Caritas Internationalis. But they have flagged the transfers to the fake ASAM. As in, the transfers that were made to look as if they were going from Caritas to a partner organisation in Turkey.
Pia Oppel For a while, here, things get really hairy. The auditor sends an e-mail with a breakdown of fraudulent transfers to ASAM which they have identified. Around €5 million in total. And someone from the finance department, who didn’t know anything about these transfers to Spain, is CC’ed in.
Jean-Claude Franck The CFO writes to MC55, saying she hopes her colleague doesn’t see the e-mail, adding:
CFO I asked that the auditor call me directly on my cell phone to explain what's going on with Asam. I don't think it's a good idea to give them the payment requests. I'll see if he calls me.
Léonardo Kahn And ... How does the saga end?
Jean-Claude Franck It looks as if the auditor essentially drops it after that. Or at least no-one follows up, as far as we can tell. We reached out to the audit firm for an explanation but we haven’t heard back.
Pia Oppel And clearly the person who was CC’ed into the e-mail chain didn’t notice anything either. It’s one of multiple occasions where the fraud really should have been uncovered, but wasn’t.
Léonardo Kahn Add it to the list of missteps. Months go by without anyone detecting the fraud. Not the banks, not the auditor, not the management team. Meaning it’s all smooth sailing for the scammers?
Pia Oppel Basically. On 21 June, MC55 says how happy he is with the excellent progress the CFO is making with the lines of credit.
MC55 Hello, This is indeed great news. Furthermore, Maître Buchet informed me that it was possible to acquire the entire purchase. Congratulations again for your promptness, enjoy your weekend.
Jean-Claude Franck The tone is almost euphoric:
CFO I don't usually congratulate myself, but I think the weekend is more than deserved!
Pia Oppel But then, at the start of July, the mood changes. Because someone on the management team at Caritas is starting to get suspicious.
CFO Accounts will quickly be overdrawn to the limit and questions about this will become more and more frequent.
Jean-Claude Franck The CFO warns MC55 that the COO wants to put the lines of credit on the agenda for the next board meeting.
CFO Good luck for the final stretch.
Jean-Claude Franck The CFO tells MC55 all of this in an e-mail on 2 July 2024. A Tuesday.
Pia Oppel The following Monday, the 8 July, the real Marc Crochet is back in the office after nearly six weeks on his pilgrimage.
Jean-Claude Franck There’s a €59 million hole in Caritas’ finances, yet still no-one has noticed that this money has been stolen. Or that money is still flowing to Spain and vanishing.
Pia Oppel It takes nine days for Marc Crochet to file a police report.
Léonardo Kahn How is it possible that it took the management at Caritas that long to notice the fraud?
Jean-Claude Franck Join us next time to find out.
Léonardo Kahn That will be episode of The Caritas Affair. Thank you, Pia, thank you, Jean-Claude.
Jean-Claude Franck Thank you.
Pia Oppel Thank you, until next time.
Léonardo Kahn You’ve been listening to Scene Change, the 100.7 documentary podcast. Scene Change is produced by Pia Oppel, Charlotte Bruneau, Tessy Troes and me, Léonardo Kahn.
With additional help by Jean-Claude Franck, Yves Stephany, Semir Demic, Chris Zeien, Ana Angel an Jo Diseviscourt.
Thank you to Marie Trussart, Charlotte Bruneau and Carole Schimmer for voicing the CFO, MC55 and the BGL employee.
Sound and mixing: Sam Erpelding and Ingo Dumlich.
To make sure you never miss an episode, subscribe to Scene Change wherever you get your podcasts. And if you have any questions or want to give us feedback, drop us an e-mail at doku@100komma7.lu.
Translation: Rob Myatt and Pia Oppel.
