First verdict: Wirecard balance sheets were wrong

Created: 05/05/2022, 11:45 am

The former CEO of Wirecard, Markus Braun, in autumn 2020 before the Wirecard investigative committee of the Bundestag.

© Fabrizio Bensch/Reuters Images Europe/Pool/dpa

The first verdict on the accounting of the Wirecard scandal group is in a civil case: the balance sheets were wrong.

This is of great importance - not least to the accused ex-CEO Braun.

Munich – The district court of Munich has declared the balance sheets of the Wirecard scandal group for the years 2017 and 2018 to be void in a civil proceeding.

On Thursday, the chamber upheld a lawsuit filed by the insolvency administrator Michael Jaffé.

The dividend resolutions for the two years are therefore also void.

The lawsuit was based on the alleged bogus bookings with which Wirecard managers are said to have inflated the balance sheets by invented billions.

Should the judgment become final, the insolvency administrator could reclaim the dividends paid by Wirecard for the two years in the tens of millions from the shareholders, as well as taxes paid by Wirecard.

The judgment also provides ammunition for the almost 1,000 lawsuits by outraged shareholders against the auditing company EY, which had checked and certified the Wirecard balance sheets.

The group collapsed in 2020 after admitting bogus bookings of 1.9 billion euros, the former CEO Markus Braun has been in custody for almost two years.

In 2017 and 2018, Wirecard reported high profits totaling more than 600 million euros and paid out dividends in the double-digit millions.

Were the missing 1.9 billion euros just made up?

The Munich public prosecutor's office assumes that the missing 1.9 billion euros to date were fictitious.

The former CEO Braun, who has been in custody for almost two years, defends himself by arguing that the 1.9 billion is there, but that the money was booked elsewhere.

Whether the missing billions exist or not was of no importance for the verdict, as the presiding judge Helmut Krenek explained.

In order to declare the balance sheets void, it was sufficient to establish that the money could not be found where Wirecard said it was booked: in escrow accounts in Singapore.

"If the funds had existed, they would have had to be found there, too," Krenek said.

"If 1.9 billion euros are missing in two years, then there can be no doubt as to the materiality of the error." And because Wirecard's balance sheets were wrong, the dividend resolutions of the 2018 and 2019 general meetings were also void as a "compelling consequence", as the chairman further explained.

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The shareholders' association DSW sees the verdict as increasing the chances of success for the almost 1000 lawsuits against EY.

According to ex-Wirecard boss Braun, the money is "somewhere completely different," said DSW Vice President Daniela Bergdolt after the verdict was announced.

"But even then, Wirecard's bookkeeping was grossly wrong.

They" - the EY examiners - "should have noticed that too."

In his lawsuit, Jaffè put the overvaluation of the Wirecard balance sheet at 743.6 million euros in 2017 and 972.6 million euros in 2018.

The insolvency administrator sued Wirecard AG.

The company now only exists as a legal shell that does not conduct any business and has neither a board of directors nor a supervisory board.

Otherwise, the group, which at times had a three-digit billion value on the Frankfurt Stock Exchange, is broken up.

The key figure is still in hiding to this day

The Munich public prosecutor's office assumes that Braun and his accomplices swindled billions with the help of false balance sheets from banks and investors.

Braun, on the other hand, sees himself as a victim of fraudsters in the company.

A key figure in the scandal is former sales director Jan Marsalek, who resigned in the summer of 2020 and has remained in hiding to this day.

The annual reports were signed by both the board members and the auditors, who thus vouched for the correctness of the figures.

The missing 1.9 billion euros in the two years were reportedly booked at the bank OCBC in Singapore.

According to the law firm commissioned by Jaffé, this had officially confirmed that the money did not exist there.

CEO Braun has been in custody since July 2020, and the next detention review is scheduled for June.

In the criminal proceedings, the Munich Regional Court is currently examining the charges against Braun.

If the charges are approved, the criminal trial could begin as early as this year.

dpa