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– by Jrn Poltz and Holger Hansen and Patricia Uhlig and Arno Schuetze
Munich / Berlin / Frankfurt (Reuters) – The billion dollar scandal at Wirecard has reached a new high.
Ex-boss Markus Braun was arrested on Tuesday by investigators in Munich on suspicion of balance sheet manipulation and market manipulation. Against payment of a deposit of five million euros, he is again allowed to go free. The Austrian resident in Vienna turned himself in, the public prosecutor said. 1.9 billion euros can no longer be found in the balance of the payment processor. Negotiations with banks to save the group are still in full swing. Vice-Chancellor Olaf Scholz made mistakes in overseeing Wirecard.
The investigators accuse Braun of having inflated the balance sheet total and the turnover through pretended income alone or with other parents. The public prosecutor said that the company should be made financially stronger and more attractive for investors and customers. The responsible investigating judge suspended the arrest warrant against conditions such as payment of a deposit and a weekly report to the police. However, this does not mean that he is not in good hands. Braun’s lawyer was initially unavailable for comment. Wirecard declined to comment.
At the beginning of the week, the payment service provider, which had grown rapidly in recent years, conceded that, in all likelihood, assets in the balance sheet of EUR 1.9 billion did not exist at all in Asia. Braun resigned, Jan Marsalek, the board member responsible for Asia, was dismissed without notice. There were always reports and speculations that Wirecard’s balance sheets had been manipulated. So far, however, the prosecutors have not found any concrete evidence of crime. A turning point was reached, according to the parties, when Wirecard, under the new boss James Freis, informed the public prosecutor and the public about the missing billions at the weekend.
Time for credit line renewal is urgent
According to insiders, Glubiger banks are currently trying to get an overview of Wirecard’s financial situation. At the end of the month, the fees would have to be paid for the approximately 5500 employees of the group and an attempt would be made as quickly as possible, said an insider. An extension, if at all, will only take place under very tough conditions, said another person familiar with the matter. Wirecard had announced on Monday that it was in constructive talks with the Glubiger banks.
Federal Finance Minister Olaf Scholz (SPD) made possible omissions in the supervision of Wirecard. “The Wirecard case is extremely worrying,” he told Reuters. “Critical questions also arise for the supervision of the company, particularly with regard to accounting and balance sheet control.” Auditors and regulators did not seem to have been effective enough here. The head of financial supervision BaFin, Felix Hufeld, admitted mistakes on Monday. What happens to Wirecard is a “disaster”.
Scholz held out stricter rules. “We need to quickly clarify how we need to change our regulatory requirements in order to be able to monitor complex corporate networks nationwide, promptly and quickly,” said Scholz. Economics Minister Peter Altmaier (CDU) warned of a loss of image of Germany as a business location. It had to be determined how billions of dollars could apparently evaporate, he said in an interview with the internet service “t-online.de”. “And it has to be found out whether the existing legal provisions have been complied with or whether someone has to be held legally accountable for it.” Such a case should not be repeated with a view to the confidence of the German financial center.
WIRECARD EXPRESSED COMMERZBANK FROM THE DAX
Braun headed the group for almost two decades, which he expanded from a payment provider on gaming and porn websites to a global financial services group. In 2018, the former startup pushed Commerzbank out of the Dax and Braun was celebrated as a visionary who would teach banks to frighten. Wirecard processes payments between retailers and customers and also issues credit cards.
After the sharp price drops of the past few days, the shares skyrocketed by a good 30 percent – but traders blamed short sellers for this, who now have to stock up on the papers.