The criminal trial of Markus Braun, the former chief executive of Wirecard AG, opened today at the Munich Regional Court in Stadelheim. Braun, who has been in custody since June 2020, faces charges of commercial gang fraud, breach of trust, market manipulation, and accounting fraud in connection with what prosecutors call a systematic scheme to fabricate revenues totalling €1.9 billion.
Two co-defendants are also on trial: Oliver Bellenhaus, the former head of Wirecard’s Dubai-based subsidiary who has turned cooperating witness, and Stephan von Erffa, the former head of accounting. A fourth key figure — Jan Marsalek, the former chief operating officer and the alleged architect of the fraud — remains a fugitive. Marsalek is believed to have fled to Russia, and reporting by multiple European media outlets has linked him to Russian intelligence services.
Wirecard’s collapse in June 2020 was one of the most dramatic corporate failures in German history. The company, a payment processor that had joined the DAX 30 index in 2018, revealed that €1.9 billion in cash balances — purportedly held in escrow accounts at two Philippine banks — did not exist. The banks confirmed they had no record of the accounts. Wirecard filed for insolvency within days, and its share price, which had peaked at over €190, fell to near zero. Investors lost approximately €24 billion in market capitalisation.
The prosecution’s case rests on the allegation that Wirecard’s revenues from its Third Party Acquiring business — a segment that supposedly processed payments through partner companies in Southeast Asia and the Middle East — were largely or entirely fabricated. According to the indictment, the TPA partners either did not exist or did not process the volumes attributed to them. The €1.9 billion in balances was fictitious, created through forged bank confirmations and falsified audit documents.
Braun has denied knowledge of the fraud, maintaining that he was deceived by Marsalek and other subordinates. Bellenhaus, who managed the TPA partnerships from Dubai, has contradicted this account and told investigators that Braun was aware of and complicit in the fabrication.
The trial is expected to run for at least a year, with over 100 witnesses scheduled and thousands of pages of evidence. The Munich court has reserved hearing days through 2024.
Germany’s audit and regulatory failure
The Wirecard case is, at its core, a fraud case. But it is also — and perhaps more importantly — a failure of the entire ecosystem of checks that is supposed to prevent exactly this kind of corporate deception.
From an investigator’s perspective, the most troubling aspect of Wirecard is not the fraud itself, which was ultimately quite simple: make up revenue, forge bank statements, and hope nobody checks. The troubling part is that people did check — and the fraud survived anyway.
Ernst & Young audited Wirecard for over a decade and signed off on financial statements that included the phantom €1.9 billion. EY has said it was the victim of an elaborate deception, including forged bank confirmations. This may be true, but it raises serious questions about the rigour of the audit process. In any audit of a company with billions in reported cash, direct confirmation with custodian banks is a fundamental procedure. How those confirmations were forged, who provided them, and whether EY’s verification procedures were adequate will be central questions in the civil litigation that is already underway.
The German financial regulator BaFin also failed. When the Financial Times published a series of investigative articles in 2019 raising detailed questions about Wirecard’s accounting — based in part on internal documents suggesting fabricated revenue — BaFin’s response was to file a criminal complaint against the FT journalists for market manipulation, and to impose a temporary ban on short-selling of Wirecard shares. Rather than investigating the company, the regulator investigated the journalists who exposed it. This remains one of the most extraordinary regulatory failures in modern European financial history.
The Marsalek dimension adds a layer of geopolitical intrigue that is unusual in corporate fraud cases. If the reporting linking Marsalek to Russian intelligence is accurate, it raises questions about whether state intelligence operatives were embedded in — or operating through — a publicly listed European financial company. This is a question that extends well beyond securities law.
For the financial crime community, Wirecard should prompt a fundamental reassessment of how we think about corporate fraud detection. The traditional model relies on a chain of trust: companies report honestly, auditors verify independently, regulators supervise, and markets price in the residual uncertainty. At Wirecard, every link in that chain failed. If the defences can be defeated this comprehensively at a DAX 30 company, they can be defeated anywhere.