Munich judiciary groans under lawsuits

Markus Brown

After the Wirecard scandal, the former CEO has to answer in court.

(Photo: AFP/Getty Images)

Cologne On June 25, 2020, Wirecard AG filed for insolvency – shortly afterwards the first lawsuits from aggrieved shareholders were filed with the Munich I District Court. The court has now drawn up an interim balance: by the end of 2022, a total of 2,251 cases had been received there.

Many investors are demanding damages from the auditing company EY, which had signed the Wirecard balance sheets for years. 1,173 lawsuits are explicitly directed against EY.

The plaintiffs accuse the company of having overlooked serious errors in the payment service provider’s figures. In particular, it is about an alleged trust fund of 1.9 billion euros, which was recorded in the balance sheet but actually did not exist.

A large proportion of the lawsuits against EY are now covered by proceedings under the Capital Investor Model Proceedings Act (KapMuG), which the Munich I Regional Court initiated in March 2022. The proceedings are being conducted under file number 101 KAP 1/22 before the Bavarian Supreme Court. For EY, the KapMuG procedure poses a major financial threat.

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The district court settled a small proportion of the lawsuits, some cases are still pending and being processed there. In May 2022, the 5th chamber for commercial matters at the district court declared the annual financial statements for the years 2017 and 2018, which were audited by EY, to be void.

Shareholders sue insolvency administrators

A lawsuit brought by the fund company Union Investment against the insolvency administrator of Wirecard AG, Michael Jaffé, caused a stir. The investor demanded damages of 243 million euros for intentional immoral damage. Wirecard fooled the shareholders into a success story until the very end and withheld important information about the abuses in the group from them.

The special feature: the plaintiffs wanted to register their claims for the insolvency table. The insolvency administrator rejected this – rightly so, the court ruled. Now the next instance deals with the case.

With the judgment, Jaffé could also dismiss a large part of the claims against the insolvent payment processor. Around 22,000 shareholders are demanding seven billion euros after the then Dax group had to file for bankruptcy in the summer of 2020 as a result of a multi-billion dollar fraud scandal. Banks, social security funds and other Wirecard creditors have filed claims of over 3.3 billion euros.

Some lawsuits are directed against former Wirecard board members, first and foremost against former CEO Markus Braun. Arrest proceedings were also held against him. In June 2022, the court ruled that Markus Braun’s assets of 140 million euros can be arrested.

The criminal proceedings against Braun, the former Wirecard governor in Dubai, Oliver Bellenhaus and ex-chief accountant Stephan von Erffa are currently underway in the criminal chamber of the district court. The trio are charged with accounting fraud, market manipulation, particularly serious breaches of trust and gang fraud. The court has scheduled the main hearing until 2024.

More: It was a super cool life – that’s the key witness in the Wirecard scandal

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