The former head of disgraced German payment company Wirecard has gone on trial accused of involvement in the biggest fraud case in German history.

Markus Braun, 53, presided over its meteoric rise from modest beginnings to one of Germany's big banking beasts.

Financiers and politicians were dazzled by Wirecard's success until its equally spectacular collapse into ignominy.

The setting for Thursday's trial is a high-security courtroom at Stadelheim prison in Munich.

Mr Braun, who was Wirecard's chief executive, is being held at the jail in pre-trial custody and denies any wrongdoing.

Two other ex-managers are also on trial. Oliver Bellenhaus was head of Wirecard's Dubai subsidiary while Stephan von Erffa was in charge of accounting. They face several years in prison if convicted.

Designed for the trials of suspected terrorists or mafia members, the courtroom lies 5m (16ft) underground, with a bomb-proof ceiling. A dramatic setting that is arguably fitting for a case that shook Germany's financial and political establishment to its core.

One man who is not in the dock is Wirecard's former chief operating officer. When the extent of the scandal surrounding the payments giant emerged in June 2020, Jan Marsalek had gone.

Considered Markus Braun's number two, he soon became Germany's wanted man and is on Europol's most wanted list too, suspected of having committed commercial gang fraud.

He is believed to have fled to an airport south of Vienna before flying to Belarus by private jet. Latest reports place him in Russia although the government in Moscow has rejected allegations that he formed close ties with its security services.

Rise and fall of Wirecard

Wirecard was launched in 1999 in a suburb of Munich.

The company processed online credit card payments, mainly for pornography and gambling sites, before it expanded into banking, issuing credit and pre-payment cards. In a world where cashless payments were becoming king, Wirecard was perfectly placed to dominate.

By 2005 it was listed on the Frankfurt Stock Exchange and in 2018 it joined the Dax 30 index of Germany's leading blue-chip companies, edging out Commerzbank in the process. Its shares soared to €140 (£120) and its value reached €24bn.

It was regarded as a German success story and Angela Merkel, who was chancellor at the time, even lobbied on behalf of Wirecard during a 2019 visit to China, where the company wanted to buy a firm.

Behind the scenes all was not well. There had already been reports in the Financial Times questioning Wirecard's figures. Then in 2016, an unknown research firm made allegations linking Wirecard to money-laundering and fraud.

Wirecard deflected accusations by investors and journalists, and the German financial authorities backed them up. FT journalist Dan McCrum was targeted by the company for writing pieces about it.

In early 2019 the company rejected as defamatory an FT report that bosses had forged and backdated contracts. Leaked documents soon revealed accounting problems in Wirecard's Asian operations, but the company blamed speculators.

Instead of investigating Wirecard, Germany's BaFin financial regulator chose to investigate the journalists and barred investors from short-selling - betting on the share price falling as it dropped more than 40%.

Then it all fell apart in 2020.

Wirecard declared insolvency after it was forced to admit that €1.9bn missing from its accounts probably never existed.

Two banks in the Philippines thought to hold the money said they had not been Wirecard clients and the company then filed for insolvency protection from creditors.

The situation surrounding Germany's tech sector darling had become a disaster and a disgrace, in the words of the regulator.

Prosecutors accused Markus Braun of signing off financial reports he knew were inaccurate. They said Wirecard had faked documents to show it had money that in reality, it never did.

A nine-month inquiry by German lawmakers last year found a succession of failings, including by auditors Ernst and Young for signing off Wirecard's accounts.

The trial is expected to last well into 2024. Among those closely watching it will be the many who lost big sums investing in the Munich-based company.

Source:
courtesy of BBC NEWS

by Jenny Hill in Berlin & Paul Kirby in London

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