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Wirecard's trial.

 

From Thursday, two-and-a-half years after one of Europe's most spectacular accounting scandals unravelled, a criminal court in Munich will start dissecting the collapse of Wirecard.

Three former senior managers of the disgraced German payments company, including chief executive Markus Braun, will be facing charges of fraud, embezzlement, and accounting and market manipulation in a trial that is expected to continue into at least 2024.

Once worth €24bn and hailed as one of Europe's most successful technology start-ups, Wirecard collapsed in June 2020 after disclosing that half of its €2bn in annual revenue and €1.9bn in corporate cash were a sham. The implosion sent shockwaves through Germany's financial and political establishment.

In the dock alongside Braun will be Stephan von Erffa, head of accounting, and Oliver Bellenhaus, boss of a Dubai-based subsidiary at the core of Wirecard's outsourced Asian operations.

«I expect that the defendants will face the full force of the law,» Matthias Hauer, an MP for the Conservative CDU who sat on the parliamentary inquiry committee, said, pointing to the «massive social and economic damage» that white-collar crime was causing. «Confidence in Germany as a financial hub has been shattered. Rebuilding it will require a full legal reckoning».

The trial will occur in the precincts of one of Germany's largest prisons, opened in 1894, in a high-security courtroom five metres underground and protected by a bombproof ceiling; built for trials of terrorists and mobsters in 2016, it is connected to the cells by a network of tunnels and is a 20-minute drive from Wirecard's former headquarters.

In the US and other jurisdictions, judges could focus on key documents and facts, but in Germany, «every email and every potentially relevant document needs to be introduced into the hearing. This procedural approach worked well for the straightforward cases of the 19th century but struggled to cope with hugely complex cases of our times». The relevant legal rules date from 1879.

Like all criminal court proceedings in Germany, the Wirecard case will not involve a jury. Instead, it will be decided by a panel of three professional judges and two «lay» judges — public members deputised for the trial's duration. In addition, the trial will start with a reserve bench of two professional and two «lay» judges who will attend every hearing and can take over should one of the original judges become unable to continue.

The panel is headed by presiding judge Markus Födisch, who started his career with Bavarian law enforcement in 2001 and, from 2012 to 2019, held a senior position at the Munich public prosecution office.

During their 21-month-long investigation, prosecutors held 450 interviews with witnesses and suspects, sifted through 42 terabytes of data, raided 40 properties, and sent out 90 requests for cooperation to foreign colleagues. At the core of the investigation was Wirecard's outsourced payments processing operations in Asia — the so-called third-party acquiring business known as TPA. On paper, Wirecard cooperated with three firms in Dubai, Singapore and Manila, which generated €1bn in annual revenue and all of the group's profit.

The prosecution office declined to comment.

Prosecutors face several obstacles in bringing a conviction.

The inner circle at Wirecard relied heavily on the Telegram messaging app, and most of their conversations have been lost. In official emails, there is little trace of the fraud, and no smoking gun shows that Braun knew the TPA business was a sham.

Moreover, several vital suspects will not be present in Munich, the most prominent being Marsalek. He was directly in charge of the TPA operations and has been on the run since June 2020, with German law enforcement assuming he is hiding in Russia.

An ex-Wirecard employee in charge of the potentially fraudulent Manila-based outsourcing partner was reported dead in the Philippines shortly after the company imploded.

The case against Braun may hinge on testimony by Bellenhaus. A sports-car enthusiast who ran a Wirecard unit at the heart of the company's fraud from his flat in Dubai's Burj Khalifa skyscraper, he voluntarily travelled from the emirate to Munich, via Switzerland, after the insolvency.

www.sba.tax

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Comments

  1. Eliza4 December 2022 at 11:54

    Introducing everything into the hearing will take years. This won't work for this case because there are way too many things to introduce. We are in for a 3-4 year trial, at least.

    ReplyDelete
    Replies
    1. Tom4 December 2022 at 12:06

      I honestly expect this to go on for at least 8 or 10 years. I don’t see them having enough evidence to convict most of the people involved. There are things that need to be checked on and this takes time, a lot of it.

      Delete
  2. Neil4 December 2022 at 18:16

    The more I read about this case the more I think we won't get something worthwhile out of this trial. By worthwhile I mean serious convictions. We may get a few years for some of them but I don't know how you can expect to get more without serious evidence of their crimes.

    ReplyDelete

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