The Financial Times reports that a Munich court has found Markus Braun, the former CEO of Wirecard, along with Alexander von Knoop, former CFO, and Susanne Steidl, former chief product officer, personally liable for €140 million in damages. This decision comes after a long-running civil suit filed by Michael Jaffé, the administrator of Wirecard, over the executives’ roles in issuing unsecured loans to allegedly fraudulent business partners in Asia.
Short Narrative
Once valued at over €24 billion and considered a leading fintech company in Germany, Wirecard collapsed in June 2020 after admitting that half of its reported revenue and €1.9 billion in cash were non-existent. The lawsuit focuses on the decisions by the executives that resulted in substantial financial losses, including the issuance of €100 million in unsecured loans just months before the company’s collapse.
The court ruled that these actions violated their professional duties, noting that the management decisions were “untenable and at odds with the duty of care of a prudent businessman.” The judgment also highlighted that the executives ignored internal advice and failed to conduct proper due diligence on the securitized bonds purchased from the same Asian business partners, which later proved worthless.
Key Points
- The Case: Wirecard insolvency administrator against former Wirecard executives
- Court Decision: The Munich court ordered Braun, von Knoop, and Steidl to pay €140 million plus 5% annual interest for failing to perform due diligence and issuing unsecured loans to questionable partners in Asia. The judgment is not yet legally binding and can still be appealed.
- Fraudulent Loans: The lawsuit centers on potentially fraudulent loans that were a significant part of Wirecard’s alleged misconduct, with €100 million issued just before the company’s collapse, depleting much of its liquidity.
- Personal Liability: The court found that the executives are personally liable for the financial damage caused by these transactions, with compounded interest adding up to more than €30 million since Wirecard’s insolvency over four years ago.
- Asset Seizures: Braun, who once had shares worth over €1 billion and owned luxury properties, has had his assets seized by prosecutors. His financial situation is so dire that his former lawyer resigned due to unpaid legal fees after his insurance funds ran out.
Read our Wirecard reports here.
Actionable Insight
The Wirecard case continues to unfold as one of the most significant financial frauds in Germany’s history. With a focus on the lack of oversight and fraudulent practices, the case underlines the importance of rigorous due diligence and internal controls in corporate governance. The revelations surrounding Jan Marsalek‘s alleged espionage activities for Russia add another layer of intrigue and complexity to the ongoing investigations. Companies must ensure strong internal compliance measures to prevent similar lapses in corporate governance.
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