German Prosecutors Charge 2 Former Wirecard Executives With Embezzlement

Four years after the collapse of online payments company Wirecard, German prosecutors have reportedly charged two more of the firm’s former executives.

Wirecard’s former finance chief, Alexander von Knoop, and its former board member for product development, Susanne Steidl, have been charged with several counts of embezzlement, while von Knoop also faces charges of aiding and abetting embezzlement, Reuters reported Tuesday (Aug. 6).

Prosecutors said the former executives approved loans and other payments that were behind on interest and were not certain to be repaid, according to the report.

Three other former Wirecard executives are currently on trial on charges of fraud and falsifying financial statements, including CEO Markus Braun, deputy finance chief Stephan von Erffa and Asia representative Oliver Bellenhaus, per the report.

Wirecard filed for insolvency in June 2020, less than a week after auditors disclosed that $2.1 billion of supposed deposits were missing from two Philippine banks.

At that point, Wirecard’s shares had fallen by more than 90% and the company had lost nearly $12 billion of market value.

Wirecard became one of the biggest financial frauds in years, PYMNTS reported at the time.

The company had seen its shares rise from the low single-digit euros a decade earlier to as high as 200 euros in 2018 and had promised to transform its industry with offerings like a mobile app payment system called Boon.

Things began to unravel when the Financial Times reported in early 2019 that Wirecard had forged documents connected to its Asian business in a bid to mislead regulators. Later that year, it was reported that results at the company’s subsidiaries had been inflated.

The scandal had effects beyond Wirecard itself.

Global accounting firm Ernst & Young (EY) faced a backlash in September 2020 when it was reported that an EY auditor alleged the firm was warned as far back as 2016 that senior managers at Wirecard may have committed fraud and one had tried to bribe an auditor.

In October 2020, it was reported that Germany’s financial watchdog, BaFin, would be granted stronger investigative and oversight powers in the wake of the Wirecard scandal.