Former Wirecard executives will be put on trial on Thursday, two years after the collapse of the payments company that produced Germany’s biggest post-war fraud scandal and sent shockwaves through the country’s political and financial establishment.
Former Austrian CEO Markus Braun and two other senior executives at the defunct blue-chip company face a range of charges, including fraud and market manipulation, and could face up to 15 years in prison if convicted.
Braun denies wrongdoing and accuses others of running a shadow operation without his knowledge.
Prosecutors said Wirecard’s management invented huge sums of bogus revenue to fool investors and creditors.
A verdict from the Munich court is not expected until 2024 at the earliest.
Founded in 1999 and based in the Munich suburb of Aschheim, Wirecard has enjoyed a fairytale rise, becoming the showcase for a new breed of German tech company to rival the established titans of Europe’s largest economy.
Wirecard, which started processing payments for pornography and online gambling, rose to $28 billion, edging out Commerzbank in the blue-chip German DAX index.
Wirecard deflected suspicions of wrongdoing by some investors and journalists and successfully lobbied German authorities to investigate those who were scrutinizing its finances.
But in June 2020, Wirecard had to admit that 1.9 billion euros were missing from its balance sheet.
The government of then-Chancellor Angela Merkel, which previously backed Wirecard’s bid for a takeover in China, briefly considered bailouting the company.
But within days, Wirecard became the first DAX member ever to file for bankruptcy, owing creditors nearly $4 billion.
“The Wirecard scandal has caused lasting damage to the reputation of our financial center and our business location internationally,” said Baden-Württemberg’s Finance Minister Danyal Bayaz, who was previously in a parliamentary committee of inquiry against Wirecard.
“Politicians, financial regulators, banks, auditors, supervisory boards – almost everyone has made a fool of themselves with Wirecard, with high costs for investors,” he told Reuters.
“The Bundestag committee of inquiry has uncovered many errors and identified weaknesses that urgently need to be addressed.
The Munich public prosecutor’s office and a special police task force conducted investigations, conducted 450 interrogations, searched more than 40 properties in Germany alone and viewed 42 terabytes of data, resulting in a 474-page indictment.
Authorities in more than two dozen countries have participated, from Switzerland to Singapore, Austria, the Philippines, the UK and Russia.
Prosecutors will rely on evidence provided by Braun’s co-defendant Oliver Bellenhaus, the former head of Wirecard’s Dubai subsidiary who became a key witness after surrendering to German authorities in 2020.
Another former Wirecard manager, Stephan von Erffa, is also on trial. He has publicly expressed regret over what happened at Wirecard but denied orchestrating it. His lawyer said von Erffa did not want to comment on the allegations.
In the unrest after the departure of Wirecard, the head of the German financial regulator BaFin resigned and the head of the German balance sheet regulator also resigned.
Merkel and her then Finance Chancellor and now Chancellor Olaf Scholz have faced criticism for botching oversight of the company.
Merkel and Scholz said they were not to blame. Scholz strengthened BaFin’s powers and appointed new leadership in 2021. Scholz also criticized Wirecard’s auditor, EY, for not uncovering the fraud. EY has said it acted professionally.
By the end of next year, 100 court dates have been scheduled in the case.
https://www.independent.ie/business/world/wirecard-in-the-dock-as-germanys-biggest-fraud-trial-starts-42198233.html Wirecard in the dock, Germany’s biggest fraud case begins