Three ex-Wirecard bosses could face ten years in prison after prosecutors issue indictments, while one former executive is still on the run.
In June 2020, German fintech Wirecard was forced to admit that there was a 1.9 billion euros ($2.2 billion) hole in its balance sheet, leading to bankruptcy proceedings. Now, three former heads of the firm have been indicted, according to a story in Germany's «Handelsblatt» (Behind paywall, in German).
Prosecutors in Munich accuse former Wirecard CEO Markus Braun of professional fraud, misappropriation of company assets, balance sheet falsification and manipulation of the company's stock price, according to the 480-page indictment obtained by the German newspaper.
Witness
Oliver Bellenhaus, who managed Wirecard's Dubai office, and Stephan von Erffa, responsible for accounting, were charged along with Braun, and could face up to ten years in prison. Bellenhaus, alleged to have embezzled millions, has confessed and is the key witness for the prosecution. Testimony he provided so far has led to the imprisonment of Braun and von Erffa.
Left out of the indictment is Jan Marsalek, the former Wirecard COO, who is a wanted fugitive, and could currently be in Russia, the paper said.
Trial
Investigators say that Braun and his co-defendents were cooking Wirecards books as early as 2015, with fake bookings and revenues with partner companies. As a result, it is very likely the former managers will have to stand trial, Handelslatt said. They are presumed innocent.
Who Audits the Auditors?
Wirecards auditors, EY, have been dragged into the proceedings, with insolvency administrator Michael Jaffé exploring claims for damages against the auditor. If it can be established that EY made intentional errors when auditing Wirecard's books, they would be subject to unlimited liability.
A report last year from Germany's Institute of Public Auditors known as the «Wambach Report,» didn't paint a very flattering picture of EY's auditing of Wirecards books, another «Handelsblatt» report (in German) said.
