The Wirecard trial in Munich is expected to extend beyond the initially planned 100 days of court hearings. The court is contemplating the extension of evidence collection until February. As the trial progresses into its first extended break after 58 days, no substantial evidence has been found against the former CEO, Markus Braun, in the alleged billion-dollar fraud case of the DAX-listed company that collapsed in 2020.
No Hard Evidence In The Wirecard Trial
The defense team of Markus Braun, An Austrian national, is awaiting the court’s decision on over 400 evidence motions in the Wirecard trial, the largest accounting scandal in Germany since 1945. These motions are aimed at proving Braun’s innocence.
Despite the commencement of the Wirecard trial on December 8, 2022, the initial situation remains unchanged. Braun continues to plead not guilty, and his defense accuses co-defendant and key witness Oliver Bellenhaus of dishonesty. The former chief accountant of Wirecard, Stephan von Erffa, the third defendant, remains silent. The German newspaper Sueddeutsche Zeitung opinions that no hard evidence against Braun has surfaced to support the prosecutors.
The Wirecard trial has painted a picture of a CEO seemingly indifferent to the daily operations, leaving them largely to Jan Marsalek, the Chief Sales Officer, who has been hiding for three years. Marsalek recently caused a stir with a letter to the court. In this letter, he portrays Bellenhaus as a liar and confirms that the third-party deal was indeed in place. Conversely, the prosecution claims (and is supported by Bellenhaus) that the so-called 3rd Party Acquisition (TPA) business was non-existent.
The Irish Question
A key problem with the indictment is that it only deals with events from 2016 onward. Completely disregarded are the events in the ten years before that when Wirecard metamorphosed from a German payment service provider into a global fintech. That was also the period when, alongside Markus Braun, Ruediger Trautmann was on the board of directors driving international development.
The foundations were laid in Ireland in 2006 when Wirecard acquired the Gateway Group from Dietmar Knoechelmann and John Carbone. The Gateway Group companies (Gateway Payment Solutions Holdings Ltd and G two Pay Limited) were high-risk payment processors focused on the gaming sector. According to a 2015 report by J Capital Research, the Gateway Group may also have been involved in illegal gambling.
Gateway had a heritage in online gaming, and so did its promoters. Gateway’s sister company BingoWorkz was a Cyprus-based online gaming company … The vendors of Gateway were principally John Carbone and Dietmar
Knoechelmann. Knoechelmann subsequently served as a director of the Wirecard subsidiaries from acquisition until March 25, 2009. Gateway Financial Services Limited (GFSL) appears to have been acquired by Trustpay/Wirecard. GFSL was accused of managing “illegal gaming transactions” by its clearinghouse in a 2005 lawsuit.Failing to make it to AIM, the Irish company got into a nasty internecine battle when Carbone and Knoechelmann allegedly forced out their joint venture partners, apparently preparatory to bundling up the company to sell to Wirecard.
J Capital Research published in 2015 (link)
The Gateway companies in Ireland were renamed Wirecard. These companies were the starting point for the German fintech’s international expansion into the company that later moved to Asia via Dubai. The period from 2016 considered by Munich prosecutors resulted from the Irish activities. Not considering these Irish developments in the indictment would be like leaving out the take-off phase in the forensic analysis of a plane crash. Inevitably, an analysis can never come to a meaningful conclusion.
Chaotic Or Fraudulent?
The central question that has not yet been answered is whether Wirecard was just a chaotic company (for sure) or a fraudulent one. The Wirecard trial has also highlighted that the company had been facing allegations of impropriety for over a decade before its insolvency. Witness statements depict a company where chaos was the norm, and the Management Board showed little interest in legal compliance.
As the Wirecard trial continues, the insolvency administrator Michael Jaffé‘s testimony could become a key moment in the trial. However, the trial will now go into a three-week summer recess.
The Wirecard trial is a significant event in the financial world, shedding light on one of the biggest accounting scandals in recent history.
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