Wirecard’s former chief executive Markus Braun sat through four hours of criminal charges in an underground courtroom on Thursday at the opening of a trial into the collapse of the once high-flying German payments group.
Prosecutors in Munich read out 89 pages of charges against Braun, Wirecard’s ex-head of accounting Stephan von Erffa and former Dubai-based manager Oliver Bellenhaus, accusing them of running a “criminal racket” at the top of one of Germany’s largest listed companies that committed fraud worth billions of euros.
Braun, wearing his signature black turtleneck, was charged with four counts of accounting manipulation, 26 of market manipulation and six apiece of fraud and embezzlement. Should he be found guilty on all charges he could face a jail term of up to 15 years.
Prosecutors are demanding repayment in cash of €91.3mn from Braun and his family office, €5.9mn from Bellenhaus and €3.2mn from von Erffa. The court also appointed two forensic psychiatrists who will be tasked with assessing von Erffa’s mental health.
Jan Marsalek, Wirecard’s former second-in-command, was not in the dock as he has been on the run since June 2020, with German law enforcement officials suspecting he is hiding in Russia.
The trial’s opening, on the premises of one of Germany’s largest prisons, was delayed by 45 minutes because of tight security arrangements, with long queues of visitors and journalists searched for weapons and explosives.
Prosecutors allege that the gang at the top of Wirecard operated for more than five years, forging documents and lying to auditors and investors to hide huge operational losses, inflate the group’s share price and fraudulently raise more than €3bn in debt. The defendants were also accused of siphoning off at least €255mn of corporate funds by granting loans to sham business partners.
The trial is expected to run well into 2024. Braun and von Erffa deny wrongdoing. Bellenhaus has turned chief witness and “intends to continue his co-operative behaviour”, according to a pre-trial statement by his lawyers who stressed he would “take responsibility” for his actions.
Both Braun and Bellenhaus are in police custody and during the trial will be held in Stadelheim prison adjacent to the courtroom because both are considered flight risks. Von Erffa was released on bail last year.
At the core of the case is Wirecard’s outsourced payments business in Asia, which on paper accounted for half the group’s revenue, the bulk of its operating profits and about €1.9bn in corporate cash purportedly held in escrow accounts in Asia.
Prosecutors assert that this so-called third-party acquiring business (TPA) never existed. They pointed out that contractual agreements with TPA partners were poorly documented, lacking dates and signatures and in some cases referenced referral agreements that did not exist.
Prosecutors described how Bellenhaus from 2016 onwards provided von Erffa with forged balance confirmations and financial reports about the TPA business, often double checking with him if the numbers he submitted were “correct” and in line with the guidance Braun had given to the financial market.
Braun’s lawyer Alfred Dierlamm previously argued that the TPA operations were real but that the proceeds were embezzled by criminal Wirecard employees without Braun’s knowledge and consent.
The trial continues next week.
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