Germany is braced for a corporate trial of the century when ex-Wirecard chief executive Markus Braun appears in court on Thursday over the collapse of the electronic payments firm.
Austrian-born Mr Braun has been in custody for two years and now faces charges of commercial fraud, breach of trust, market manipulation and accounts manipulation in connection with a €1.9 billion hole in Wirecard’s accounts just before its collapse.
The 53-year-old has denied any knowledge of manipulated accounts and blames his former chief operating officer Jan Marsalek, who remains on the run from authorities, reportedly living under an assumed identity in Russia.
Also on trial are ex-accounting boss Stephan von Erffa and Oliver Bellenhaus, the former head of Wirecard’s Dubai subsidiary who has admitted wrongdoing and will be a key witness for the prosecution.
In 700 folders of files, prosecutors accuse Mr Braun of knowingly presenting fabricated financial results to make his firm appear more successful than it was, using phantom profits backed by counterfeit documents from partner companies in Singapore, the Philippines and Dubai.
With 100 trial dates fixed in Munich, a verdict is not expected before 2024.
Founded in 1999, Munich-based Wirecard became a darling of the German tech scene, transforming itself from a payment back-end for porn and gambling websites to a mainstream electronic payments provider with a DAX listing.
From 2019, the company pushed back against a series of critical Financial Times reports. Its accusations that the FT was involved in insider trading triggered an inquiry by the German regulator of FT reporters.
The FT claims proved largely true and a June 2020 audit revealed that €1.9 billion in Wirecard accounts – based on trustee accounts in the Philippines – did not appear to exist. Wirecard filed for insolvency soon after, the first DAX company to do so, and ceased trading.
The collapse proved embarrassing for Germany’s financial regulator BaFin, which ignored warning signs, and for leading politicians who backed the company despite questions over its business model.
Watching the trial particularly closely will be Wirecard creditors and EY, the company’s auditor. It denies claims that it ignored warning signals and contributed to the corporate cover-up, insisting its accountants were deceived by Mr Braun and his managers.
Also following proceedings closely are insurance companies underwriting Wirecard managers, which have refused to pay out on personal liability claims because of the allegations of widespread fraud.
German investor lobby group SDK fears the trial – by focusing only on the role of Mr Braun and his fellow executives – will be a missed opportunity and leave key questions unanswered.
“The role of Bafin ... the defrauding of shareholders, the failure of Munich’s public prosecutor office – all are not addressed here,” said Marc Liebscher, SDK head.