Prosecutors read charges against Braun & Co.

The mammoth trial starts about 45 minutes late. The rush of media representatives is too big, but above all of visitors, who all have to be checked individually at a single security checkpoint. Markus Födisch, presiding judge at the Munich Regional Court, was only able to open the trial against Markus Braun, the former boss and major shareholder of the financial service provider Wirecard, which collapsed in 2020, and two co-defendants around 10 a.m.

In a turtleneck sweater

Braun appears outwardly as you know him from his days as an admired stock market star: in a dark jacket and dark turtleneck sweater. A good year ago in Berlin, he also appeared before the Wirecard investigative committee of the German Bundestag. Today Braun is flanked by his defenders Alfred Dierlamm and Nico Werning.

Behind Braun is Oliver Bellenhaus, former managing director of CardSystems Middle East, a Dubai-based subsidiary of Wirecard AG, who is also accompanied by his team of lawyers. He is a co-defendant, but at the same time a de facto opponent of Braun. Because as a key witness, he testified in detail and not only heavily incriminated himself, but apparently also Braun. The theses of the public prosecutor’s office are based not least on his statements.

The third accused is Stephan von Erffa, the group’s former chief accountant. He is the only one of the three men who has been free since he was released from custody in 2021.

Legal betting

In the wood-panelled underground high-security room, Födisch first checks the suspect’s personal details. Then public prosecutor Matthias Bühring gets the word. He begins to read the so-called indictment at high speed. This is the part of the 474-page indictment that, under German law, must be presented orally – even if it has long been available in writing to all those involved.

Bühring finds clear words. “At a point in time before 2015 that cannot be precisely determined,” Braun, those persecuted by Erffa, Bellenhaus and others “formed a gang,” he says in the introduction. “Their goal was to inflate the balance sheet total and the sales volume of Wirecard AG at group level by feigning income and profits from transactions with so-called third-party acquirers (hereinafter: TPA) in order to present the company as more financially strong and more attractive for investors and customers .»

This manipulation of the group’s balance sheet served to pretend to the lenders when applying for and taking out loans that the group “acted successfully, had ongoing income and profits and assets and was therefore solvent and creditworthy,” continues the prosecutor. According to the public prosecutor’s office, this should in particular hide the fact that Wirecard’s actual, real business was in deficit “and the loans requested were necessary to prevent the company from collapsing”. In addition, the manipulations would have promoted the share price.

Again and again TPA

The third party or TPA business is at the center of what is believed to be the largest economic scandal in post-war German history. This was a model in which payment services were partially outsourced to third parties and Wirecard merely acted as an intermediary. This is said to have happened primarily where Wirecard did not have the necessary licenses. Alleged main TPA partners were three companies in Dubai, in the Philippines and in Singapore. However, according to the public prosecutor’s office, this TPA business never existed in the period under investigation, which means that the associated income and credit would have been simply invented.

As a result, Bühring guides us monotonously and meticulously through a labyrinth of subsidiaries and sub-subsidiaries, of partner companies and “others being persecuted”, from annual financial statements to annual financial statements, from bank loans to bonds. After the lunch break, he is replaced by a colleague and later by a third public prosecutor. In total, the reading lasts until 4:30 p.m., because the indictment that has to be read out has almost ninety pages. Specifically, the indictment accuses the accused of commercial gang fraud, market manipulation, breach of trust and incorrect presentation (in the consolidated financial statements from 2015 to 2018) or aiding and abetting; the allegations are not identical for all three

Judges as shareholders?

The first day of the trial concludes with some skirmishes between the defense attorneys and the court, as well as among the defense attorneys. Among other things, Werning, one of Braun’s lawyers, requests that all participating judges, lay judges and their substitutes should make an official statement about any share ownership: They should explain whether they or their relatives hold shares or other securities in Wirecard would have held. If so, they should also explain whether they suffered any casualties as a result. He justifies this with concern for possible bias. How the court will deal with the claim remains open for the time being.

In terms of content, the lawyers will only have their say in their opening statements next week. It is expected that Braun’s defense will present a completely different version than the public prosecutor’s office on Monday: Braun is not the perpetrator, but the victim of fraud. There was indeed a TPA deal, but the majority of the income from it was misappropriated via shadow structures created by third parties and shifted to letterbox companies abroad.

The defense may have Jan Marsalek in mind as the presumed head of this third party. Marsalek was responsible for the TPA business as a board member until the collapse of Wirecard. Since then he has been on the run and could not be tracked down despite an international search. According to the public prosecutor’s office, he also belongs to the alleged gang mentioned above.

Two psychiatric experts, who should take turns, are also following the process on behalf of the court. According to reports, they should observe von Erffa: His defense may want to raise the question of culpability.

The Munich Regional Court has initially scheduled 100 days of negotiations. They will run through the whole of 2023 and may not be enough. A mammoth process is also to be expected in terms of time.

You can contact the Berlin business correspondent René Höltschi Twitter follow.