All about Wirecard: perhaps Germany's largest business scandal

Wirecard was a payment provider based in Aschheim near Munich, Germany. The company grew from a service provider in the gaming industry to an essential part of the Dax index that has also made a name for itself internationally.

The scandal came when 1.9 billion euros (more than 2 billion USD) went unaccounted for. And a whole lot has happened since then. Above all, the scandal revolves around two main characters, Markus Braun (pictured) and Jan Marsalek. Braun is currently n trial, whereas Marsalek is still wanted.

Markus Braun was the CEO of the Wirecard company. Many of his former employees and colleagues describe the Austrian as a very hard-working person, as scary, but also as a constant mystery. Nobody knew what was going on inside his brain, and he rarely talked about himself.

The Munich public prosecutor's office accuses Braun of commercial fraud, market manipulation, and breach of trust, should the further investigations not prove otherwise. There are currently more than 1,000 lawsuits against Wirecard, just in the Munich area.

Jan Marsalek was the Asia market officer. He worked at Wirecard since he was 19. He became the head of the IT department, later becoming Markus Braun's confidant and the second most powerful in the company. Former colleagues describe him as restless, mysterious, and a lover of luxury. Some even think he has ties to the secret service.

Before the company became Wirecard, there was a predecessor, Wire-Card. Jan Marsalek was then the head of the IT department, and from reports, it is clear that he made vital mistakes in a critical project, which later led to considerable losses. According to sources in the Süddeutsche Zeitung, for the Podcast: ' Wirecard 1.9 billion lies ', this situation could also have led to the closure of Wire-Card and the opening of Wirecard.

After the problems with the missing receipts for 1.9 billion at Wirecard were announced, he fled to Belarus with the help of his former secretary and his colleague Braun. Where he went after that and where he is now remains a mystery. While Braun was taken into custody shortly after the arrest warrant was issued for both of them, Marsalek remained missing the entire time.

According to sources in the Bild newspaper, in January 2022, Masalek was said to have been in a closed-off area of the Russian secret service on Russian soil. Now that the court dates are just around the corner, he is wanted not only by the German authorities but also by Interpol, but he remains missing.

The auditing company responsible for Wirecard, EY, short for Ernst & Young, has kept Wirecard's books for more than ten years. For the year 2019, however, there were suddenly 1.9 billion euros unaccounted for, a quarter of the turnover for a whole year. According to EY, these documents could not be found in 2020 and were not verifiable. Allegations are currently being leveled against EY, as they allegedly neglected their work and thus made the 'disappearance' of the funds possible in the first place.

Wirecard management then said the money was in Philippine escrow accounts, but EY contacted the banks, and the receipts are said to be fake and insufficient. Shortly after that, after more detailed investigations and a long back and forth by e-mail, the receipts were found. This seemed like a diversionary tactic by Marsalek, who meanwhile fled.

Since the first suspicion that something was wrong at Wirecard, journalists from many important newspapers have tried to obtain interviews and detailed background information to provide clarity, especially for smaller investors, who have been significantly affected. But from the beginning, the journalists were treated negatively and aggressively. For many, that was the first sign that something was amiss.

Wirecard sees itself as a victim and has filed complaints against unknown persons. The group's management said at the beginning that they assumed that they might have been cheated out of those missing 1.9 billion euros. They themselves announced that they would initiate investigations to track down the problem.

At the pandemic's beginning, the company announced that they were working online and were therefore only benefiting from the global health crisis. They wanted to reassure investors and convey that they would continue to make big profits.

Wirecard was the first company to go bankrupt while it was listed on the German Dax 30, the main stock market index of the German stock exchange. Shares in the company were in an absolute debacle a week after the fraud was uncovered and subsequently plummeted 71.28% to €3.533 per share.

The council made up of five members had the task to control the board, more precisely Jan Masalek and the CEO Markus Braun. Many of them have not yet commented on the scandal and are being confronted with accusations from investors. They allegedly initiated various procedures when they found out about the incident and immediately confronted the board of directors.

Photo source: Pixabay from Pexels.com

The only member who spoke out at the time was Anastasia Lauterbach, who told Der Spiegel: "One thing is certain for me: I would not go back to a supervisory board in which the majority of the members have been there for ten years or more are. That endangers independence.”

Photo source: Anastasia Lauterbach's Twitter account @DrALauterbach

A first court date has now been set: May 5th. The newspaper Beck-Aktuell quoted the responsible insolvency administrator. It summarized the seriousness of the lawsuit as follows: " Insolvency administrator Michael Jaffé wants to have Wirecard's annual financial statements for 2017 and 2018, together with the associated general meeting resolutions, declared null and void. In his lawsuit, Jaffé quantified the overvaluation of the Wirecard -Balance sheet in 2017 to 743.6 million and in 2018 to 972.6 million euros. "

Since the fraud came to light, there have been more than 1,000 investor lawsuits in Munich. According to Beck-Aktuell, according to the investor lawyer Daniela Bergdolt, if the insolvency administrator wins, the chances of success of the many shareholder lawsuits against the auditing company EY would also increase.