Charges against ex-boss Markus Braun approved

Dusseldorf, Berlin The Munich I district court has approved the indictment in the accounting scandal surrounding the former Dax group Wirecard. The court confirmed the relevant information from the Handelsblatt on Wednesday afternoon. This clears the way for one of the most spectacular economic criminal cases in the history of the Federal Republic.

The payment service provider Wirecard collapsed on June 18, 2020, when allegedly billions in bank assets in Asian accounts turned out to be wishful thinking. On June 25, 2020, Wirecard filed for bankruptcy, leaving creditors with unpaid invoices totaling 12.4 billion euros.

The long-standing CEO Markus Braun, the former Deputy CFO Stephan von Erffa and Oliver Bellenhaus, once Wirecard’s deputy in Dubai, must therefore answer in court. The trio are charged with accounting fraud, market manipulation, particularly serious breaches of trust and gang fraud.

Braun and Bellenhaus have been in custody since July 2020. In March of this year, the Munich public prosecutor’s office brought charges.

In its press release, the court now wrote: With a decision dated September 21, 2022, the fourth criminal chamber of the Munich I Regional Court admitted the indictment “on suspicion of commercial gang fraud, among other things, unchanged to the main hearing. The chairman of the fourth criminal chamber will soon set dates for the main hearing.” Presiding judge in the proceedings is Markus Födisch. Those involved expect the trial to begin in early 2023.

Wirecard headquarters in Aschheim

The payment service provider based in Aschheim near Munich was considered a German technology prodigy for years and rose to the Dax.

(Photo: dpa)

A spokeswoman for Braun told the Handelsblatt: “The opening of the main proceedings will not eliminate the serious deficiencies in information and investigation. On the contrary, they are deepened – to the detriment of Wirecard AG, its shareholders, investors and lenders.”

The court apparently sees it differently. It reviewed the indictment for six months before allowing it. In practice, the admission creates no precedent. But the court makes it clear with the decision that it considers a conviction to be overwhelmingly likely.

If the allegations are true, the accused face ten years in prison. In the process, it should be particularly busy between Braun’s defense attorneys and the public prosecutor’s office.

Serious allegations in the indictment against Markus Braun

The indictment is 474 pages long and is available to the Handelsblatt. In it, the public prosecutor raises serious allegations against the accused.

Braun, von Erffa and Bellenhaus had been clear by the end of 2015 at the latest that Wirecard was only making losses with the actual business. The published numbers were significantly embellished, it is said.

The investigators accuse the three of having “worked for years” so that Wirecard “was perceived as a rapidly growing, extremely successful fintech company”. To this end, they “allegedly invented extremely lucrative businesses, especially in Asia.”

Wirecard is said to have generated billions in sales from transactions with so-called foreign third-party partners. Among other things, this was posted to trust accounts and included in the balance sheet. In fact, the third-party business, including the escrow accounts, never existed.

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With the incorrect balance sheet data, the alleged gang is said to have damaged the company’s lending banks by 3.1 billion euros. In June 2020, Wirecard had to admit that 1.9 billion euros from the balance sheet total were not available. It was the money that was said to come from the third party business and was said to be in escrow accounts in the Philippines.

Wirecard scandal: Key witness crucial for the process

The investigators base their allegations primarily on the statements of one man: Oliver Bellenhaus. The former Wirecard representative in Dubai has a dual role in the upcoming process. Not only is he a suspect, he is also a key witness.

Bellenhaus admitted to falsifying the balance sheet and put a heavy burden on his former boss Braun. He vehemently denies the allegations. His defense attorneys also accuse the key witness of having lied in all relevant places.

Those involved in the proceedings also report allegations that Bellenhaus deleted important emails and destroyed the entire stock of transaction data from Wirecard’s third-party partner business in order to remove the evidence from the proceedings. Bellenhaus rejects the accusation of lying and the targeted deletion of relevant data.

Rise and fall of Wirecard

The arguments of Bellenhaus and Braun completely diverge, particularly with regard to third-party business. While Bellenhaus claims that this did not happen in the years from 2016 onwards, Braun and his defense attorneys are convinced of its existence and believe they can prove it. A gang around Bellenhaus and ex-Asia board member Jan Marsalek, who has been on the run since June 2020, managed to get the money out of the group behind Braun’s back, according to their argument.

The defense attorneys hold the public prosecutor in the context of serious investigation errors. She dealt with important accounts far too late. To date, hardly anything has been done to clarify the whereabouts of the embezzled billions.

Read more about the Wirecard scandal and Markus Braun:

The public prosecutor’s office reacted coolly to the arguments of Braun and his lawyers. In the indictment, she explains how the investigators examined the cash flows presented, but could not see any evidence of a profitable or even existing third-party business.

The investigators found support from Wirecard’s insolvency administrator, Michael Jaffé. He also dealt intensively with Wirecard’s business relationships and cash flows. Jaffé also did not find any services that Wirecard provided to third-party partners and for which money could have flowed.

In their indictment, the investigators characterize Braun as the CEO who generally could not distinguish between desire and reality or willfully ignored reality. The indictment abounds with references in this direction. A witness reported appointments at Braun where the “numbers were massaged”.

Erffa’s former chief accountant described how Braun regularly informed him of business transactions that still had to be included in the annual financial statements. These alleged sales came from the realm of the Asia board member at the time, Jan Marsalek, and were unknown to the accounting department. They were booked at Braun’s request without any contractual documentation.

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