Former Wirecard CEO Dismisses ‘Absurd’ Allegations

Lawyers for Wirecard’s former CEO Markus Braun have on Monday begun his defence by hitting out at the charges laid against him.

Germany’s biggest post-war fraud trial actually began last week, with charges including market manipulation and fraud levelled against Wirecard’s former chief executive, along with two other managers, after the fintech’s spectacular collapse two years ago.

The trial is 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.

Braun defence

The lawyer on Monday for 53-year-old Braun dismissed allegations of wrongdoing at the defunct payments company as “absurd” and prejudiced, Reuters reported.

Last week as the trial got underway, prosecutors had accused Braun and others of being part of a gang that invented vast sums of phantom revenue through bogus transactions with partner companies to mislead creditors and investors.

They said the deception allowed Wirecard’s managers to siphon money out of the company for years.

However Braun’s lawyer, Alfred Dierlamm, sought to puncture those claims in court on Monday, Reuters reported.

He told the court that Braun had never sold his Wirecard shares and had actually taken the initiative to call in outside auditors from KPMG to investigate Wirecard’s finances.

“It’s an absolutely absurd and erroneous notion that a gang leader would act like this,” Dierlamm reportedly told the court.

He said Braun’s case had been prejudiced since Wirecard’s collapse and his client’s arrest in 2020, alleging that the prosecutors were biased and under pressure to find a culprit after another of Wirecard’s managers, Jan Marsalek, fled abroad.

Braun’s lawyer told the court that the prosecution’s key witness was the main perpetrator.

Dierlamm asked for the trial to be suspended to give the defence more time review documents, given the volume of “files that were dumped on our table.”

In court, Dierlamm also questioned the credibility of statements by Braun’s co-defendant Oliver Bellenhaus, the former head of Wirecard’s subsidiary in Dubai, who became a witness after turning himself in to German authorities in 2020.

Bellenhaus’s lawyer last week asked for a reduced sentence for his client in recognition of his co-operation.

“Bellenhaus is not a key witness,” Dierlamm was quoted by Reuters as saying. “Bellenhaus is the main perpetrator of a gang” whose sole aim was to divert and embezzle funds from the company.

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 has said von Erffa did not want to comment on the charges.

Wirecard collapse

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.

German financial regulators previously called the situation at Wirecard a “scandal” and a “disaster”.

The head of German financial regulator BaFin resigned and the head of Germany’s accounting watchdog also stepped down.

Hacker-for-hire

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.