Germany indicts Wirecard’s ex-boss Markus Braun for fraud

Braun, along with two others, is accused of market manipulation, embezzlement as well as gang fraud.

German prosecutors have charged Wirecard‘s former chief executive Markus Braun and two other high-ranking managers for the colossal commercial fraud that led to the collapse of the payment company.

The trio is accused of market manipulation, embezzlement and gang fraud on a commercial scale, prosecutors said on Monday, noting that the indictment itself runs to 474 pages.

The German fintech company, once touted as a shining star of innovative start-ups, crashed in June 2020 after admitting that a missing 1.9 billion euros ($2.1bn) from its balance sheets likely did not exist.

The time it took for prosecutors to file formal charges underlined the intricate and complex web of fraudulent transactions that investigators travelled across the world to unravel.

Among victims of the fraud were banks that had provided credits of 1.7 billion euros ($1.8bn) to Wirecard. Bonds worth 1.4 billion euros ($1.5bn) had also been issued, which are unlikely to be repaid.

‘Industrial fashion’

“All the accused group members were acting in an industrial fashion in these six cases of fraud, because that is how they secured their own salaries, including partially profit-related portions,” prosecutors said in a statement.

Braun, for instance, received at least 5.5 million euros ($6m) in dividends, they said.

Wirecard’s troubles began in January 2019 with a series of articles in the Financial Times (FT) newspaper alleging accounting irregularities in its Asian division, headed by chief operating officer Jan Marsalek.

But the financial technology company was able, at that time, to repeatedly fend off claims and the FT’s journalists themselves came under investigation over the reports.

Braun testifies before a German parliamentary committee in Berlin [File: Fabrizio Bensch/Pool/Reuters]

The huge scam unravelled in June 2020 when auditors Ernst & Young said they were unable to find 1.9 billion euros of cash in the company’s accounts.

The sum, which made up a quarter of the balance sheet, was supposedly held to cover risks in trading carried out by third parties on Wirecard’s behalf and was meant to be sitting in trustee accounts at two Philippine banks.

But the Philippines’ central bank said the cash never entered its monetary system and both Asian banks, BDO and BPI, denied having a relationship with Wirecard.

While key figures in the company have since been arrested, including Braun, former COO Marsalek, who is wanted by German prosecutors, remains at large.

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