FRANKFURT AM MAIN – Markus Braun, the former chief executive of disgraced payments giant Wirecard, will today face a public grilling by German lawmakers over the massive accounting fraud that brought down his firm.
Wirecard collapsed in June after it was forced to admit €1.9 billion (RM9.2 billion) missing from its accounts did not exist, and MPs have opened a full parliamentary inquiry into possible regulatory failings that allowed the cheating to go unnoticed for years.
The Austria-born Braun, who is in pretrial detention in the Bavarian city of Augsburg on suspicion of organised commercial fraud and market manipulation, will appear in person at the Bundestag in Berlin to give his testimony, with media also allowed to attend.
Missing from the action will be fellow prime suspect and Austrian Jan Marsalek, Wirecard’s mysterious former chief operating officer who has been on the run since the scandal broke and features on Interpol’s most wanted list.
“Apart from Jan Marsalek, Markus Braun is probably the main person responsible for the Wirecard fraud who can shed light on what happened,” said lawmaker Frank Schaeffler from the pro-business FDP party, a member of the parliamentary finance committee running the inquiry.
The Wirecard implosion, which has drawn comparisons with the Enron accounting scandal in the US in the early 2000s, has been described as “unparalleled” in Germany by Finance Minister Olaf Scholz.
The fallout has prompted Scholz to announce plans to overhaul finance watchdog Bafin, accused of lax oversight of Wirecard, and introduce stricter rules for auditing firms.
But, the minister has himself faced scrutiny from MPs eager to know when exactly government officials learnt of the Wirecard suspicions, and whether authorities failed to act on early warning signs.
Even Chancellor Angela Merkel has been embarrassed by the scandal, after it emerged that she promoted Wirecard on a trip to China in September last year, when the firm was eyeing a foray into the Chinese market – and when journalists were already raising questions about its books.
Founded in 1999, Bavarian start-up Wirecard rose from a company piping cash to porn and gambling sites, to a respectable electronic payments provider that edged traditional lender Commerzbank out of the blue-chip DAX 30 index in 2018.
A rising star in the fintech sector, Wirecard boasted a market valuation of more than €23 billion at one point – outweighing giant Deutsche Bank.
The fraud revelations later sent Wirecard’s share price tanking by 99% and it was booted off the DAX last August.
Clouds started to gather in early 2019 with a series of Financial Times articles alleging accounting irregularities in its Asian division, headed by COO Marsalek.
In a much-criticised move, Bafin responded by announcing a probe into FT journalists.
The Wirecard scam unravelled in June when long-time auditor Ernst & Young said it was unable to find €1.9 billion in cash meant to be sitting in trustee accounts at two Philippine banks, forcing Wirecard to admit the money did not exist.
The company filed for insolvency, and Braun resigned.
He was arrested days later and initially released on a €5 million bail.
But, he was rearrested in July after Munich prosecutors widened their investigation into him and other top Wirecard executives.
They stand accused of inflating revenues and profits to hide years of losses, and conning investors into providing funds of up to €3.2 billion to Wirecard, money that is likely lost forever.
According to Munich prosecutors, the trickery started as far back as 2015. – AFP, November 19, 2020
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