After $2 billion scandal explodes,Wirecard’s former CEO Markus Braun arrested

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Markus Braun, the Austrian tech entrepreneur who built Wirecard into one of Germany’s biggest companies, has been arrested after a $2.1 billion hole exploded in its accounts.

Munich prosecutors confirmed that Braun, Wirecard’s former CEO, was arrested on suspicion of having inflated the digital payment company’s balance sheet and sales through fake transactions in order to make it more attractive to investors and customers. Prosecutors said that Braun may have acted in cooperation with other perpetrators.
Braun will be released from custody Tuesday on bail of €5 million ($5.7 million), prosecutors said.
Wirecard (WCAGY) acknowledged that €1.9 billion ($2.1 billion)in cash included in financial statements — or roughly a quarter of its assets — probably never existed in the first place. The company withdrew its preliminary results for 2019, the first quarter of 2020 and its profit forecast for 2020.
The scandal erupted last week when Wirecard said that its auditor, EY, could not locate the funds in trust accounts and refused to sign off on the company’s financial results. The fallout is raising questions over how the company’s regulators and auditors could have missed accounting irregularities that are already drawing comparisons to Enron, the American energy giant that filed for bankruptcy in 2001.
Braun resigned as CEO on Friday, suggesting that Wirecard itself may have been the victim of a massive fraud. Jan Marsalek, a board member and chief operating officer at the company, was fired on Monday.
Founded in 1999, Wirecard was once considered one of the most promising tech firms in Europe. It processes payments for consumers and businesses, and sells data analytics services. The company has nearly 6,000 employees in 26 countries around the world.

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