* Ex-CEO Braun turned himself in to prosecutors in Munich
* Accused of misrepresenting accounts, market manipulation
* Wirecard has disclosed $2.1 billion financial hole
* Creditors seek recovery; doubts over viability -sources
(Adds financial regulator's fresh complaint against Wirecard,
action to shore up its banking unit)
By Jörn Poltz, Patricia Uhlig and Arno Schuetze
MUNICH/FRANKFURT, June 23 (Reuters) - Wirecard's WDIG.DE
former boss has been arrested on suspicion of falsifying its
accounts, after the German payments firm disclosed a $2.1
billion financial hole and questioned whether trustees had
actually held money on its behalf.
Markus Braun turned himself in on Monday night after Munich
prosecutors issued a warrant for his arrest. A judge ruled on
Tuesday that the 50-year-old Austrian could be released as soon
as he posts 5 million euros ($5.7 million) in bail. Germany's financial regulator also filed a fresh complaint
against Wirecard with the prosecutor, saying the company's
belated admission that billions were missing showed it had
mis-stated its financial position between 2016 and 2018.
"This also strengthens the suspicion that the information
contained in its financial reports sent false signals for
Wirecard's share price and in so doing violated a ban on market
manipulation," regulator Bafin said in a statement. In his 18 years in charge, Braun transformed an offshoot of
the dot.com boom, known for handling payments for online
gambling and adult entertainment sites, into a $20 billion-plus
'fintech' that won a place in Germany's blue-chip DAX index.
The former consultant traded in a suit for a black roll-neck
and portrayed himself as a tech visionary, telling New York
investors last autumn that Wirecard would increase revenues by
six times by 2025 as digital payments boom. Wirecard's meteoric rise was, however, accompanied by
repeated allegations from whistleblowers, journalists and
speculators that its revenue and profits had been pumped up
through fake transactions with obscure partners.
Braun, who will have to report to police once a week, said
last week in a video statement that Wirecard may have been the
victim of fraud, without giving details. He now stands accused of misrepresenting Wirecard's accounts
and of market manipulation by falsifying income from
transactions with so-called third-party acquirers, the Munich
prosecutor's office said earlier.
Two people familiar with the matter said state prosecutors
were also considering issuing an arrest warrant for Jan
Marsalek, a board member fired on Monday.
Lawyers for Braun and Marsalek were not available for
comment. Wirecard could not immediately be reached for comment.
Wirecard's implosion was described on Monday as a "total
disaster" by Bafin, which has come under fire for pursuing its
critics and not the company. Finance Minister Olaf Scholz told Reuters on Tuesday that
lawmakers should decide quickly how to tighten regulation
following the Wirecard scandal, which had exposed lapses by both
auditors and regulators. Bafin's investigation into Wirecard's financial reporting is
now complete, said a source familiar with the matter. The
regulator, meanwhile, is also acting to shield Wirecard's
banking subsidiary from the debt crisis.
Bafin is seeking to prevent money held at Wirecard Bank from
being tapped to bail out Wirecard AG, sources said. According to
the most recent figures, the bank held 1.4 billion euros in
deposits.
URGENT BANK TALKS
An external audit by KPMG in April could not verify cash
balances, questioned Wirecard's acquisition accounting and was
unable to trace millions in reported cash advances to merchants.
Braun, who said at the time that the allegations were not
confirmed "in every point", quit on Friday after in-house
auditor EY refused to sign off on Wirecard's 2019 accounts.
Wirecard's shares have since shed more than 80% and its only
listed bond is trading at 26 cents on the euro, indicating that
investors expect to lose most of their money. DE205218076=
New CEO James Freis, a former financial investigator at the
U.S. Treasury and compliance chief at the Frankfurt Stock
Exchange, has opened urgent talks with some 15 banks that have
lent 1.75 billion euros to Wirecard.
With Wirecard having failed to file audited financials, the
banking consortium led by Germany's Commerzbank CBKG.DE could
call in the loans at any time.
Lenders have mandated FTI Consulting as financial adviser,
people close to the matter said, bringing in an experienced
restructuring specialist that is advising U.S. car rental firm
Hertz on its Chapter 11 bankruptcy. Some of the banks have signalled that they do not for now
favour cancelling their loans and sending Wirecard into
insolvency, but have demanded full transparency as they seek to
recover their money, these people said. Wirecard is being advised by investment bank Houlihan Lokey
and the creditors by law firm Allen & Overy. Both declined to
comment, as did FTI.
($1 = 0.8857 euros)
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Wirecard 'disaster' piles on pressure for corporate reform in
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(
Additional reporting by Holger Hansen and Hans Seidenstucker;
Writing by Douglas Busvine; Editing by Alexander Smith and Mark
Potter)