Ex-Wirecard CEO Arrested For Missing Billions Scandal

Ex-Wirecard CEO Arrested For Missing Billions Scandal


The former CEO of German financial technology company Wirecard has been arrested on suspicion of misrepresenting the company’s finances in an accounting scandal around a missing $ 1.9 billion ($ 2.1 billion), prosecutors in Munich said Tuesday.

Markus Braun resigned on Friday after the company said that accountants could not find accounts with the money. On Monday, Wirecard said it had come to the conclusion that the money probably doesn’t exist.

A court issued an arrest warrant shortly after, and Braun, who had been in Vienna, reported Monday evening.

The arrest exacerbates a scandal that engulfs Wirecard AG, providing companies with the technologies and platforms for cashless payments. Once considered a star of the growing financial technology sector, it attracted international investors and was listed on Germany’s blue-chip stock index. But fortunes started to turn after the company became the subject of Financial Times reports of accounting irregularities in its Asian operations last year. Wirecard contested the reports, saying he was a victim of speculators.

Braun is accused of having boosted the company’s financial position with false returns from other companies, “possibly in partnership with other perpetrators,” to “portray the company as financially stronger and more attractive to investors and customers,” prosecutors said. a statement. .

Braun, an Austrian who has led Wirecard since 2002, was arrested on suspicion of incorrect data statements and market manipulation.

Prosecutor Anne Leiding said it remains to be seen whether the case could be extended to other crimes, and investigators have yet to determine how often the incorrect financial statements were used to obtain bank loans.

After Braun turned himself in, he pledged to cooperate in an initial meeting with investigators, Leiding told reporters.

Later on Tuesday, he was brought before a judge, who ordered him to be released on condition that he post a $ 5 million ($ 5.7 million) bail and report it to the police every week, prosecutors said. They said it was not considered necessary to keep him in custody to secure the procedure at this time as he had declared himself.

On Monday, Wirecard fired his chief operating officer, Jan Marsalek, who was suspended from the board last week. The German news agency dpa reported that Marsalek was in charge of the day-to-day operations, including in Southeast Asia, where potential fraud occurred.

Two Philippine banks that were said to have the missing money in the escrow accounts said they had no business with Wirecard in recent days, and the country’s central bank chief said none of the missing funds system entered the Philippines.

Wirecard said in the early hours of Monday that the board of directors “judges on closer examination that it is probable that there are no bank account balances of $ 1.9 billion.”

Wirecard said it is in “constructive discussions” with banks about revolving credit lines, “assessing options for a sustainable finance strategy for the company.” It said it is investigating other possible measures to keep the company going, including corporate restructuring and divestiture.

After massive declines last week and on Monday, Wirecard shares rose slightly on Tuesday. In Frankfurt they increased by 22.6% to 17.70 euros.

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