The Munich I Regional Court considers the Wirecard Group’s financial statements from 2017 and 2018 to be incorrect. The court declared the annual accounts as well as the dividend resolutions from the two years null and void on Thursday. The chamber of the regional court in Munich thus upheld a lawsuit brought by the insolvency administrator Michael Jaffé, who had contested the financial statements for the two years.
The verdict is not particularly surprising for observers of the case, but could have far-reaching consequences for the group’s shareholders at the time. With the court also annulling the dividend resolutions, Jaffé could now reclaim €47 million in distributions to shareholders. So anyone who has received money from Wirecard in the form of profit distributions in the two years may have to worry about it.
The lawsuit was based on the alleged bogus bookings with which Wirecard managers are said to have inflated the balance sheets by invented billions. The group collapsed in 2020 because 1.9 billion euros were missing from foreign accounts. The share price then collapsed and the group from Aschheim near Munich finally slipped into insolvency. The rise of a new German business star turned out to be one of the biggest business scandals of the past decades.
Former CEO Markus Braun has been in custody for almost two years. The Munich public prosecutor’s office brought charges against him and other managers in March. She accuses the ex-boss of Wirecard of infidelity, fraud and accounting fraud, among other things. Braun rejects the allegations and sees himself as a victim. The main hearing is scheduled to begin later this year. Ex-CEO Jan Marsalek has not yet been charged. He has been on the run since the company collapsed and is now believed to be in Russia.
In 2018, Wirecard was even promoted to the Dax
Wirecard had grown strongly as a group in the years before the collapse, at least on paper, and was considered a favorite of shareholders thanks to its strong performance on the stock exchange. As a result, Wirecard rose to the S-Dax, and in September 2018 even to the Dax, where the group supplanted Commerzbank and stood alongside established large companies. In 2017 and 2018, the payment service provider reported high profits totaling more than 600 million euros and paid out dividends in the double-digit millions.
According to the investigations of the Munich public prosecutor’s office, these profits actually did not exist. Markus Braun, on the other hand, claims that the money existed but flowed out of the group via shadow structures. For the verdict, the question of the existence of the funds was irrelevant, said the presiding judge Helmut Krenek. In any case, Wirecard violated the principles of proper accounting. “If the funds are there, they should have been found in the accounts.”
EY’s auditors had audited the financial statements for the two years and found no abnormalities. However, a report later commissioned by the Wirecard investigative committee, the so-called “Wambach” report, found numerous shortcomings on the part of the auditors.