The Strategist

German prosecutors arrest former Wirecard CEO


06/24/2020 - 04:54



On Monday, German prosecutors arrested Markus Braun, the former CEO of Wirecard fintech company. Mr. Braun’s arrest followed a scandal surrounding Wirecard that erupted after the company discovered a shortage of € 1.9 billion in the company's accounts and a possible overstatement of sales by its employees.



Sofia Rocha via flickr
Sofia Rocha via flickr
The scandal surrounding one of the largest German fintech companies Wirecard, which began last week, continues to develop. German prosecutors arrested the company's former CEO Markus Braun. This was announced on Tuesday by the prosecutor's office in Munich, where Wirecard’s headquarters is located.

Mr. Braun is suspected of involvement in manipulating data on the balance of funds in the company's accounts and its sales. It is assumed that Wirecard employees involved in this overstated the numbers to “make the company more financially sustainable and more attractive to investors and customers.” 

Not only the former CEO, but also other top managers of the company are suspected of involvement in such frauds. In addition, it is assumed that the company hired third parties to create fake documents. At the same time, the prosecutor’s office did not mention names of other employees who could be charged, and did not say whether an investigation was being conducted against them.

Although Wirecard’s audit problems began last year, the real scandal around the company only broke out last week. On Thursday, the audit company EY, which conducted Wirecard’s audit, announced a shortage of € 1.9 billion in the company’s accounts. This is almost a quarter of all funds claimed on its accounts.

EY stated that the Wirecard account manager was trying to “trick the auditor” and could present “fake cash balances.” Wirecard shares have fallen 90% in recent days, and its capitalization on Tuesday reached € 2.3 billion. Last year, the Financial Times reported about manipulations with its financial statements and other company data. Then the company's shares also fell, but within a few months after that, Mr. Braun has been repeatedly rejecting any allegations against the company. After the publication of the EY statement, he admitted that "it cannot be ruled out that Wirecard was the victim of a serious case of fraud."

On Friday, Mr. Braun resigned as CEO. This happened after two Filipino banks, BDO Unibank and Bank of the Philippine Islands, in which, according to Wirecard, it kept the money, said that confirmations about the storage of company funds in them were fake and they did not receive any money from the company. 

source: ft.com