• Wednesday, May 22, 2024
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Ex-Wirecard chief Markus Braun arrested

Wirecard

Wirecard’s former chief executive Markus Braun has been arrested on suspicion of false accounting and market manipulation, Munich prosecutors said on Tuesday morning.

The prosecutors are accusing Mr Braun of artificially inflating Wirecard’s balance sheet and the company’s revenue in an attempt to make the company look more attractive for investors and clients.

The prosecutors suspect Mr Braun did this in conjunction with others. A spokeswoman for the Munich prosecutors’ office told the Financial Times that the company’s former management board was under investigation.

An Austrian citizen, Mr Braun reported himself to Munich prosecutors on Monday evening, travelling to the German city from his home city of Vienna after a judge issued an arrest warrant for the 50-year-old.

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A Munich judge on Tuesday afternoon released Mr Braun from custody on a €5m bail. The former CEO will have to report to police on a weekly basis.
A lawyer for Mr Braun did not respond to a request for comment.

The arrest comes after Wirecard on Monday warned that €1.9bn of cash on its balance sheet probably does “not exist” and disclosed that it had previously mischaracterised its biggest source of profits.

The company added yesterday it was trying to work out “whether, in which manner and to what extent such business has actually been conducted for the benefit of the company”. It withdrew its most recent financial results and said other years’ accounts may be inaccurate.

Shortly before his resignation last Friday, Mr Braun told investors that Wirecard might have become the victim of a case of “fraud of considerable proportions”.
Shares in Wirecard have plummeted more than 80 per cent since the company postponed the publication of its annual results last Thursday.

Until Mr Braun resigned, he was the longest-serving chief executive of a Dax company, and one of its richest, thanks to a 7 per cent stake in the group he ran from 2002. At its peak in the summer of 2018, Wirecard was worth more than €24bn on the stock market.

The former KPMG consultant turned Wirecard into one of Europe’s hottest investments. When Wirecard replaced Commerzbank in the Dax 30 index in 2018 Mr Braun was, on paper, a billionaire and was regarded by many within Germany as a visionary technologist.

Mr Braun promised Wirecard would be at the forefront of a world where notes and coins were obsolete. He adopted the black turtleneck uniform favoured by Steve Jobs at Apple and Elizabeth Holmes at Theranos, the disgraced blood-testing company.

Much of what Mr Braun said is now in question. In 2017, for example, he told investors that Wirecard was using the latest artificial intelligence technology to analyse data. But according to documents seen by the FT, staff were instead cobbling together spreadsheets of customer information.