German prosecutors have charged Wirecard’s former chief executive, Markus Braun, and two other former senior executives with suspected market manipulation, fraud, breach of trust and accounting manipulation of the company’s financial accounts.
The prosecutors said they suspected that Mr. Braun signed off financial statements for the years 2015 to 2018 even though he knew them to be incorrect, according to a statement published Monday.
Wirecard was one of Germany’s FinTech success stories and at its peak in 2018 was worth €24 billion.
It fell into insolvency in June 2020 shortly after admitting that half of its operations and €1.9 billion in corporate cash did not exist.
Braun, who has been in police custody since July 2020, denies any wrongdoing and claims he is also a victim of the fraud. If found guilty on all charges, he faces up to 15 years in jail.
Two other former senior Wirecard managers have also been charged, the prosecutors. One is the group’s former deputy finance director and head of accounting Stephan von Erffa.
The other is a former Dubai-based manager in charge of a Wirecard subsidiary, who has turned chief witness and cannot be named for legal reasons.
Criminal investigation continues
Prosecutors allege that Braun and co-defendants had known since 2015 that Wirecard’s operations were lossmaking, and accuse them of fraudulently raising €3.1 billion in debt from banks and bond investors to cover the group’s ongoing costs.
They assert that the annual results for 2015 to 2018 were “deceitful” and “incorrectly reflected the group’s circumstances” because they reported revenue from outsourced operations in Asia and cash purportedly held on escrow accounts in Asia that did not exist.
Prosecutors allege Braun was aware that the figures relating to the outsourced operations and hence the annual report were false.
Braun has also been charged with 25 cases of organised professional market manipulation, including a potentially misleading ad hoc statement by Wirecard about a delay to an investigation by KPMG in April 2020.
Prosecutors assert that the statement, which was at odds with a written recommendation from the group’s supervisory board, “untruthfully [conveyed] the impression that Wirecard would be exonerated from all allegations of accounting manipulations”.