German authorities arrest three former executives of financial firm Wirecard

Wirecard logo
The logo of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions, is pictured at its headquarters in Aschheim, near Munich, Germany.

German prosecutors arrested three former top executives at Wirecard on Wednesday, saying they now suspected them of an organised criminal enterprise to bilk creditors of billions of euros based on faked accounts.

Former Chief Executive Markus Braun, who is already a suspect, was re-arrested along with Wirecard’s former chief financial officer and chief accounting officer on testimony from a cooperating witness, the prosecutor’s office said.

The three ex-executives are suspected of having conspired with others to inflate revenues by faking business with third-party acquiring partners, Anne Leiding, spokeswoman for the Munich State Prosecutor’s Office, said.

This created a false impression of financial strength that enabled Wirecard subsequently to borrow 3.2 billion euros (an equivalent of $3.70 billion).

“In reality it was clear, at the latest by the end of 2015, that Wirecard’s real business was losing money,” Leiding told reporters in Munich.

Prosecutors are now investigating Braun and his suspected accomplices – who were not named – for organised commercial criminal fraud, breach of trust, false accounting and market manipulation.

Wirecard filed for insolvency last month after disclosing a 1.9 billion euro hole in its accounts that auditor EY said was the result of a sophisticated global fraud.

Once worth $28 billion, the company now has a stock market value of 220 million euros. The billions borrowed are now “in all probability lost” due to Wirecard’s insolvency, Leiding said.

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