Germany’s Tech Sector Scandal: Former Wirecard Boss Goes on Trial for Fraud

The Trial Begins

Munich - Markus Braun, the former head of German payment company Wirecard, has gone on trial accused of involvement in the biggest fraud case in Germany’s history. Braun, 53, was CEO of Wirecard from its modest beginnings to its meteoric rise as one of Germany’s big banking beasts before its spectacular collapse into ignominy.

The Background

The trial is being held at a high-security courtroom at Stadelheim prison in Munich, where Braun is being held in pre-trial custody and denies any wrongdoing. Two other ex-managers, Oliver Bellenhaus and Stephan von Erffa, are also on trial, facing several years in prison if convicted.

Wirecard’s Rise and Fall

Launched in 1999 in a suburb of Munich, Wirecard processed online credit card payments for pornography and gambling sites before expanding into banking. By 2005 it was listed on the Frankfurt Stock Exchange and by 2018 it joined the Dax 30 index, edging out Commerzbank in the process.

• Reports of accounting problems and allegations linking Wirecard to money-laundering and fraud had been circulating for years.
• In 2019, a report by the Financial Times questioned Wirecard’s figures, but the company deflected accusations and Germany’s financial authorities backed it up.
• German regulators chose to investigate journalists who wrote about Wirecard’s accounting problems rather than the company itself, and barred investors from short-selling its shares.

The Collapse

In 2020, Wirecard declared insolvency after admitting that €1.9bn missing from its accounts probably never existed. Prosecutors accuse Braun of signing off financial reports he knew were inaccurate, and say Wirecard faked documents to show it had money that in reality, it never did.

What’s Next

The trial is expected to last well into 2024, with many investors who lost big sums investing in the Munich-based company closely watching its progress. The outcome of the trial will have significant implications for Germany’s financial sector and could lead to changes in how regulators handle fraud cases.