Former Wirecard CEO Markus Braun arrested in accounting scandal

Jill PetzingerJill Petzinger, Germany Correspondent, Yahoo Finance UK
Yahoo Finance UK
Markus Braun, former CEO of Wirecard, stands accused of market manipulation. (Peter Kneffel/picture alliance via Getty Images)
Markus Braun, former CEO of Wirecard, stands accused of market manipulation. (Peter Kneffel/picture alliance via Getty Images)

Markus Braun, who resigned as chief executive of Wirecard (WDI.DE) last week, has been detained in Bavaria in connection with the balance-sheet scandal at the troubled German payments company.

The prosecutor's office in Munich said Braun turned himself in on Monday evening and would appear before a judge today, who will decide on whether or not to keep him in custody.

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Braun, an Austrian, is being accused of inflating Wirecard's total assets and sales volume “through feigned income from business” in order to make the company more attractive to investors and customers.

Wirecard was plunged into crisis last week after auditors EY refused to sign off on the company’s 2019 accounts, saying they could not verify the existence of €1.9bn (£1.7bn, $2.1bn) Wirecard claimed to hold in trust accounts overseas.

Braun said on Friday that he couldn’t rule out the company being the victim of “fraud of considerable proportions.” 

“There is a prevailing likelihood that the bank trust account balances in the amount of €1.9bn do not exist,” the German tech company then said in a statement on Monday.

READ MORE: Wirecard falls another 40% as it says missing €1.9bn doesn't exist

Wirecard had claimed the €1.9bn was held in a trust account in the Philippines. However, over the weekend, banks in the Philippines said documents produced by Wirecard appeared to be false, and the Philippines central bank also said the money had never entered its financial system.

Wirecard’s Chief operating officer Jan Marsalek was temporarily suspended last week.

James Freis, who was meant to start as head of Wirecard’s new Integrity, Legal, and Compliance department in July, will now take over as interims boss of the company.

The Wirecard scandal has rocked Germany’s finance world. “We’re looking at a complete disaster, ” Felix Hufeld, head of German financial regulator BaFin, said on Monday. “It’s a shame that something like that happened.”

The company, which joined the German blue-chip DAX index in 2018, has seen its value all but vanish since news of the missing money broke last week.

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