Wirecard had commissioned the special audit when doubts about third-party transactions in Asia became known. The company collapsed in June 2020! Allegedly, the former Wirecard board led by Markus Braun had effectively blocked a special audit of the payment processor, according to auditor KPMG.
Information about the questionable Asian business had flowed “very, very tenaciously” over months, KPMG board member Sven-Olaf Leitz stated Thursday in the fraud trial against Braun and two other managers.
He said the company had even denied auditors access to its current IT systems. “It was clear to us then that there was no point in the investigation,” said Leitz, one of those responsible for the audit commissioned by Wirecard itself. He told Braun that KPMG had lost confidence in Wirecard’s cooperation. The latter had threatened the auditors with legal action and thus tried to put them under pressure.
In the special investigation initiated by Wirecard, the auditors had found no evidence of trust accounts in Asia allegedly worth billions. That was the beginning of the end for Wirecard, which had to file for insolvency in June 2020. Like the insolvency administrator, the public prosecutor’s office assumes that the business – which Leitz says accounted for more than 90 per cent of Wirecard’s reported profits from 2016 to 2018 – never existed. On the other hand, Braun insists, even in court, that the third-party business existed and that its proceeds were merely set aside.
Until the end, Braun tried to change the auditors’ preliminary report and reinterpret the results, Leitz said. Even in the final meeting, he had said, “After all, you couldn’t prove to us that we didn’t have the money.” Jan Marsalek, the board member responsible for the Asian business and a fugitive since the bankruptcy, whom Leitz said he had seen for the first time at the meeting, had asked, alluding to the North Korean dictator, “Who else is supposed to have the money? Kim Jong-il or who?”
Braun also misrepresented the results of the KPMG investigation in an ad hoc announcement to investors, he said. “The content was not acceptable to us,” Leitz said. He had tried to make that clear to him in writing and a telephone call and informed Supervisory Board Chairman Thomas Eichelmann. Braun had told him he was taking the communication “on his head.” In addition to fraud, the public prosecutor’s office also accuses the former CEO of misleading the capital market.
In the special audit, the auditors wanted to trace how the money flowed into Wirecard’s systems from the merchants’ customers, who conducted their transactions via alleged third-party partners of Wirecard. The Financial Times had cast doubt on the existence of the transactions Wirecard recorded as revenue and for which the processor collected commissions. The proceeds were to end up in an escrow account in Singapore and later in Manila in the Philippines, which allegedly totalled 1.9 billion euros. “For me, the question was: does the money exist, and where is the money?” said Leitz. He said Wirecard rejected his proposal to transfer the entire amount to a German account as proof.
Wirecard made it difficult for the auditors and delivered the requested documents late or not at all. Contracts with merchants did not exist, transaction data from the three years were no longer available, and the cash flows were not traceable, the KPMG auditor testified. “We had an investigative barrier. All the things you normally need to prove the existence of revenue that was missing.”
According to Wirecard, the merchants did not want to contact the auditors, and the alleged Wirecard partners’ balance sheets were unavailable. Instead, he said the head of Wirecard’s compliance department pushed to replace the KPMG team partially. “The attempt to influence us occurred several times,” Leitz said.
