Former Wirecard CEO Markus Braun’s legal troubles are reportedly worsening.
A judge ordered Braun and two other executives from the defunct German payments company to pay $155 million in damages related to loans to a company in Singapore that were never repaid, Reuters reported Thursday (Sept. 5).
The ruling upheld claims by insolvency administrator Michael Jaffe that the executives failed in their duties in deciding to provide the loans to the company, per the report.
The ruling, which is not final, is the latest chapter in one of the worst corporate scandals to ever hit Germany, the report said. It is also unrelated to the ongoing trial of Braun and other executives over Wirecard’s collapse.
Wirecard’s demise began in early 2019 following a report that the company forged documents connected to its Asian business to mislead regulators. That year also brought news that results at the company’s subsidiaries were inflated.
The company fell apart in June 2020 upon the discovery of a $2.1 billion hole in its books. At that point, Wirecard’s shares dropped by more than 90% and the company saw close to $12 billion in market value wiped out.
Braun, Deputy Chief Financial Officer Stephan von Erffa and Wirecard’s Asia representative, Oliver Bellenhaus, are now on trial in Munich on charges of fraud and falsifying financial statements, the report said. Braun has maintained his innocence.
Meanwhile, German authorities continue to bring charges against other executives. Last month, former finance chief, Alexander von Knoop, and former board member for product development, Susanne Steidl, were charged with several counts of embezzlement. Von Koop was also charged with aiding and abetting embezzlement.
Prosecutors alleged they approved loans and other payments that were behind on interest and were not certain to be repaid.
The scandal’s impact extends beyond Wirecard. For example, global accounting firm Ernst & Young (EY) faced a backlash in September 2020 following reports that an EY auditor alleged the firm was warned as early as 2016 that senior officials at Wirecard may have committed fraud and one had attempted to bribe an auditor.
The scandal also helped Germany’s financial watchdog, BaFin, gain stronger investigative and oversight powers.
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