Wirecard CEO arrested after $ 3.1 billion accounting scandal

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Former CEO of German financial technology firm Wirecard was arrested on suspicion of distorting the company’s finances in an accounting scandal that focuses on the missing 1.9 billion euros (A3, $ 1 billion), prosecutors in Munich announced on Tuesday.

Markus Braun resigned Friday after the company said that listeners could not find accounts containing the money.

Wirecard said on Monday it concluded that the money probably did not exist.

A court issued an arrest warrant soon after, and Braun, who was in Vienna, surrendered on Monday evening.

The arrest further aggravates a scandal engulfing Wirecard AG, which provides businesses with technologies and platforms for cashless payments.

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She was once considered a star in the growing financial technology sector, attracting international investors and listed on the German stock index.

But his fortune started to spin after the company became the subject of last year’s Financial times reports accounting irregularities in its operations in Asia.

Wirecard disputed this information and stated that it had been the victim of speculators.

Braun is accused of inflating the company’s financial position by using dummy income from other companies, “perhaps in collaboration with other authors”, in order to “present the company as financially stronger and more attractive for investors and clients, “prosecutors said in a statement. .

Braun, an Austrian who has run Wirecard since 2002, has been arrested on suspicion of incorrect data claims and market manipulation.

Prosecutor Anne Leiding said it remains to be seen whether the case could extend to other offenses, and investigators have not yet determined how often incorrect financial statements were used to obtain bank loans .

After Braun surrendered, he promised his cooperation in an initial meeting with investigators, Leiding told reporters.

Later that day, he was brought before a judge, who ordered his release on condition of paying bail of 5 million euros (8.2 million Australian dollars) and reporting to the police each week, prosecutors said.

They said it was not considered necessary to keep him in detention to secure the proceedings at present, since he had surrendered.

Wirecard fired its chief operating officer, Jan Marsalek, who was suspended from the board last week on Monday.

German news agency DPA reported that Marsalek had been tasked with overseeing daily operations, including in Southeast Asia, where potential fraud occurred.

Two Filipino banks holding the missing money in escrow accounts have said in recent days that they have no connection with Wirecard, and the head of the country’s central bank said none of the missing funds had entered the financial system of the Philippines.

In the early hours of Monday, Wirecard said that its board of directors “assesses, on the basis of further examination, that there is a current probability that bank trust account balances in the amount of 1 , 9 billion euros don’t exist. “

Wirecard said she is in “constructive discussions” with the banks on pursuing the lines of credit and that she is “assessing the options for a sustainable financing strategy for the business.”

He said he is considering other possible measures to keep the business going, including restructuring and divestment of business units.

After huge declines last week and Monday, Wirecard stocks rallied somewhat on Tuesday. They were up 22.6% in Frankfurt, trading at 17.70 euros (A $ 28.87).

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