Trial of former CEO and other managers begins in Germany, following spectacular collapse of Munich fintech Wirecard in 2020
The trail has begun of Wirecard’s former chief executive, along with two other managers, after the fintech’s spectacular collapse two years ago.
53-year-old former CEO Markus Braun was arrested in 2020, and two other managers of the defunct blue chip firm, all face charges including fraud and market manipulation, Reuters reported.
The trial is reportedly taking place in Munich’s largest and newest courtroom, a bomb-proof underground hall built in the Stadelheim prison complex. The accused could be jailed for up to 15 years if convicted.
The issue began two years ago, when Wirecard, which had been founded back in 1999, collapsed in late June 2020 after it filed for insolvency following a financing scandal.
That scandal saw Markus Braun arrested before he briefly posted bail set by a Munich court at 5 million euros ($5.65 million).
It is understood that prior to its collapse, Wirecard had been in emergency talks with its lenders, and owned almost $4 billion (£3bn).
The fintech was unable to release its annual results for 2019 because 1.9bn euros ($2.1bn) was missing from its accounts.
Markus Braun resigned after the massive discrepancy was discovered in its accounts, and rating agency Moody’s quickly withdrew the company’s credit rating.
Wirecard said at the time the funds it had declared on trustee accounts at two banks in the Philippines, had probably never existed.
That declaration came after it attempted to trace the funds and reached a dead-end in the Philippines.
At one stage Wirecard was worth $28 billion, and then Chancellor Angela Merkel, briefly considered bailing out the company, after it became the first-ever DAX member to file for insolvency.
Such was the impact of the collapse that the European Commission asked the bloc’s market regulator to assess the responsibilities of financial supervisors in the scandal that led to the collapse of Wirecard.
The head of German financial regulator BaFin resigned and the head of Germany’s accounting watchdog also stepped down.
Meanwhile Wirecard chief operating officer, Jan Marsalek, remains a fugitive from justice whom German authorities believe is hiding in Moscow.
Munich prosecutors and police searched Wirecard’s headquarters and four further properties.
Then in April 2022 an Israeli private detective pleaded guilty to involvement in a hacker-for-hire scheme that targeted journalists and critics of disgraced German payments company Wirecard.
Aviram Azari pleaded guilty in a New York court to charges of wire fraud, conspiracy to commit hacking and aggravated identity theft.
Not guilty plea
At the start of the trial, Braun denied embezzling money from Wirecard and accused others of running a shadow operation without his knowledge, Reuters reported.
A verdict is not expected before 2024 at the earliest.
The German prosecution asserts that Wirecard invented vast sums of phantom revenue to mislead investors and creditors.
At the start of the trial, public prosecutor Matthias Buehring accused its management of creating bogus business transactions with partner companies under their control in Dubai, the Philippines and Singapore, Reuters reported.
The fraud let Wirecard managers siphon money out of the company with no proper checks and balances.
“With this agreement, the gang members laid the foundation for the crimes of false representation, market manipulation, commercial gang fraud and breach of trust that were devised, planned and carried out in the years that followed, at least between the end of 2015 and mid-2020,” Buehring said.
Prosecutors will draw on evidence from Braun’s co-defendant Oliver Bellenhaus, the former head of Wirecard’s subsidiary in Dubai, who became a key witness after turning himself in to German authorities in 2020.
Another former executive, Stephan von Erffa, is also on trial. He has publicly expressed regret about the events at Wirecard but denied orchestrating them. His lawyer said von Erffa did not want to comment on the charges, Reuters reported.
A key suspect, Wirecard’s former chief operating officer Jan Marsalek, remains an international fugitive on Europe’s most wanted list.
The trial continues…