Jack Kelly, 23 July 2020
On Monday, I reported that Markus Braun, the billionaire CEO of online payments company Wirecard, faced serious allegations over the company’s rapid growth and questionable business practices. Specifically, regulators and investors were concerned over claims that the FinTech company purported to have $2 billion dollars in a couple of Philippine banks. Investigations conducted by an outside auditor revealed that the money wasn’t there and possibly never existed.
In my coverage of Wirecard, I wrote, “Braun made out very well at Wirecard, earning about $3 million a year. He plowed millions of his own money into the tech company and heavily borrowed $150 million from Deutsche Bank, a company that’s been the subject of numerous regulatory infractions, to invest into the company. As the stock price rose, Braun, who owned 7%, became a billionaire on paper.” Despite allegations raised by the Financial Times and sophisticated investors, Braun continued to vehemently deny having knowledge of any improprieties. I raised the issue, “In light of his substantial holdings, lush compensation, coupled with reporting by the Financial Times and other publications and vocal short sellers, it makes one wonder.” Was he financially engineering the profits?
On Monday night, Braun, the architect of Wirecard’s push to make it one of Germany’s largest tech companies, was arrested on suspicion of presenting false information, inflating the digital payment company’s balance sheet and sales through fake transactions, suspicion of false accounting and market manipulation. He was accused of doing this to make the company look more attractive to investors and customers. These actions would also serve to pump up his net worth that was tied up in Wirecard stock. Munich prosecutors claimed that Braun may have acted in cooperation with other perpetrators. A spokeswoman for the Munich prosecutor’s office told the Financial Times that there are other people who are also under investigation.