(Bloomberg) – Former Wirecard AG chief executive Markus Braun and two other former officials were arrested when prosecutors said the company knew of massive losses as early as 2015.
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Markus Braun, CEO of Wirecard AG, pauses during an interview by Bloomberg Television at the Noah Technology Conference in Berlin, Germany on Thursday June 13, 2019. The annual technology conference will be held from June 13 to 14 and brings together future executives. and investors.
The trio conspired to raise some 3.2 billion euros ($ 3.7 billion) in fraudulent loans, prosecutors in Munich said on Wednesday. Company officials allegedly decided to inflate the books with fake assets to make the company appear more attractive to investors, customers, and lenders.
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“The suspects knew at least in late 2015 that the Wirecard Group was losing money,” prosecutors said. Fooled by fake accounts, banks in Germany and Japan, as well as other investors, awarded funds of about € 3.2 billion, which are now likely to be lost. ”
Wirecard filed for bankruptcy after acknowledging that probably € 1.9 billion of assets probably did not exist, deepening its accounting problems. The company admitted that the above descriptions of its third-party business, which processed transactions on behalf of Wirecard, “were not correct” after obtaining its financial results for 2019 and the first quarter of 2020.
Germany wonders how Wirecard could lose $ 2 billion
Wirecard declined to comment before the prosecutors’ announcement. Braun’s lawyer, Alfred Dierlamm, did not immediately respond to an email and calls for comment.
The other two suspects arrested Wednesday are the former chief financial officer and the former chief accounting officer, whose full names were not disclosed. They are being investigated for fraud, breach of trust, forgery, and market manipulation.
The company’s shares, which were worth more than Deutsche Bank AG just a few months ago, fell as much as 5.2% before recovering.
Wednesday’s arrests were not the first in the case and likely will not be the last. Prosecutors openly lobbied at a press conference for witnesses to come forward, noting that cooperating suspects are eligible for “considerable leniency.”
“But it is also true that the value of any information continues to decline as our investigations proceed,” prosecutor Anne Leiding told reporters.
The aggressive approach is in stark contrast to the way prosecutors treated Wirecard before it was responsible for its accounting problems. In previous years, prosecutors said they would investigate short sellers and even the media on negative reports about the company’s finances.
“In our interrogation we learned that there was a strict hierarchical system, characterized by esprit de corps and pledges of loyalty to the then CEO,” said Leiding.
Braun had already been arrested in June, but was released on bail the day after. Earlier this month, investigators arrested Oliver Bellenhaus, the former managing director of a Dubai-based Wirecard unit, which is cooperating with the case. Prosecutors said Wednesday that their new findings and arrests were based in part on information provided by a “crown witness.”
Former COO Jan Marsalek, who was fired in June after Wirecard revealed that about four-fifths of his net cash was missing from his balance sheet, is still on the loose.
Marsalek apparently fled to Belarus last month and is presumably still there or in Russia, German media reported.
(Add probe details at all times.)
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