Wirecard Fraud Trial: Ex-CEO Markus Braun to Face the Music in Munich

The former boss of disgraced German payments company Wirecard faces trial and charges in the most significant fraud case in German history. Markus Braun led the meteoric rise from humble beginnings to one of Germany’s banking greats. Financiers and politicians alike were dazzled by Wirecard’s success until an equally spectacular collapse in disgrace. The scene of the trial on Friday is a high-security room in the Stadelheim prison in Munich. Mr Braun, who was the CEO of Wirecard, is in custody. And denies any wrongdoing.

Oliver Bellenhaus, director of Wirecard’s Dubai subsidiary, while Stephan von Erffa was in charge of accounting, and two other former managers are also on trial. If convicted, they face several years in prison. They are designed for the problems of suspected terrorists or members of the mafia. , the courtroom is 5 m (16 ft) underground, with a bomb-proof ceiling. A dramatic scenario seems fitting for a case that has shaken Germany’s political and financial establishment to the core.

One man who won’t be in the hot seat is Wirecard’s former COO. When the extent of the scandal surrounding the payment giant became known in June 2020, Jan Marsalek was gone. As Markus Braun’s number two, he was soon considered Germany’s most wanted man. Mann is also on Europol’s Most Wanted List, suspected of gang fraud. He is said to have fled to an airport south of Vienna before flying to Belarus on a private plane. Recent reports are bringing him to Russia, although the Moscow government has denied allegations that he had close ties to their security services.

Rise and fall of Wirecard

The company processed credit card payments online, primarily for gambling and pornography sites, before expanding into banking and issuing credit and prepaid cards. In a world where cashless payments have become king, Wirecard was perfectly positioned to dominate. In 2005 it was listed on the Frankfurt Stock Exchange, and in 2018, it was included in the Dax 30 index of leading German companies, overtaking Commerzbank. It was considered a German success story, and the then Chancellor Angela Merkel even campaigned for Wirecard during a visit to China in 2019, where the company wanted to buy a company.

Things weren’t right behind the scenes. There have already been reports in the Financial Times that questioned Wirecard’s numbers. Then, in 2016, an unknown research firm made allegations linking Wirecard to money laundering and fraud. Wirecard fended off allegations from investors and journalists. , and the German tax authorities supported them. The company attacked FT journalist Dan McCrum for writing articles about it.

In early 2019, the company dismissed an FT report that bosses forged retrospective contracts as defamatory. Leaked documents soon revealed accounting problems at Wirecard’s Asian operations, but the company blamed speculators.

Instead of investigating Wirecard, Germany’s financial regulator BaFin chose to study journalists and ban investors from short selling, betting that its share price would fall by more than 40%. Then everything collapsed in 2020. Wirecard filed for bankruptcy after admitting that €1.9 billion missing from its accounts probably never existed. Two banks in the Philippines who thought they would keep the money said they were not Wirecard customers, and the company filed for bankruptcy protection from creditors.

According to the supervisory authority, the situation surrounding Germany’s tech darling had become a disaster and an embarrassment. Prosecutors accused Markus Braun of signing financial reports that he knew were inaccurate. They said Wirecard forged documents to prove he had money. Which, in fact, never was. A nine-month investigation by German lawmakers last year found a series of failures, including auditors Ernst and Young, in approving Wirecard’s accounts. The process is expected to last well into 2024.

Among those who will be watching closely will be many who lost large sums of money investing in the Munich company.