German authorities arrested former Wirecard CEO Markus Braun days after he left the payment company amid a $ 2.1 billion accounting scandal.
Munich prosecutors accused Braun of using bogus proceeds from “third-party acquirers” transactions to inflate Wirecard’s assets and sales volume and make it more attractive to investors. Braun turned himself in Monday night and will appear before a judge Tuesday who will decide whether to keep him in custody, according to a translated statement from the prosecutor’s office.
Braun’s arrest came after Wirecard revealed € 1.9 billion was missing from his accounts that probably never existed. The company’s auditor declined to sign his accounts for 2019 because he was unable to confirm the existence of the money.
Prosecutors said Braun, who resigned on Friday, may have committed his alleged crimes “in cooperation with other perpetrators,” adding that his investigation takes only a few days. Prosecutors may also issue an arrest warrant against former chief operating officer Jan Marsalek, whom Wirecard fired on Monday, sources familiar with the matter told Reuters.
Wirecard did not immediately respond to a request for comment Tuesday.
The scandal has sparked a massive investment of fortune for Wirecard, a 21-year-old financial technology company that was once loved by investors. The company’s share price has fallen more than 80 percent since it recognized the money lost last week.
Wirecard has been haunted by Financial Times reports of accounting fraud allegations in the company’s third-party acquisition business, which allegedly involves handling merchant payments. The newspaper published documents last year indicating “a concerted effort to fraudulently inflate sales and profits” at Wirecard companies abroad.