Frankfurt The investigators were discreet when they searched the headquarters of payment service provider Wirecard last Friday. No flashing lights, no conspicuous police force caused a sensation in the industrial area in Aschheim near Munich.
The prosecutors were targeting the data on the laptops and smartphones of the board members of the Dax group. The search was triggered by an announcement by the financial regulator Bafin about market manipulation, i.e. the deception of investors.
The responsible public prosecutor’s office in Munich I had confirmed the announcement of the guards on Friday evening when asked by the Handelsblatt. Since there is no corporate criminal law in Germany, such criminal charges are always directed against the persons acting in a company – in this case against the four-member board, which includes CEO Markus Braun, CFO Alexander von Knoop, Chief Operating Officer Jan Marsalek and Product Manager Susanne Steidl.
The announcement and the search increase the pressure on the Wirecard managers and especially on the CEO Braun. Wirecard plans to present its three-year postponed annual balance sheet on June 18. The auditor EY has to certify it, but there is growing fear among investors that this could lead to problems.
The suspicion against Wirecard is based on the fact that “those responsible could have given misleading signals for the stock market price of Wirecard AG shares through the ad hoc announcements of March 12, 20 and April 22, 20,” announced the public prosecutor on Friday.
Again and again negative headlines
Wirecard confirmed the raid in an ad hoc announcement. The company is cooperating “fully” with the investigators. A spokeswoman said: “The board is confident that the matter will clear up and the allegations will prove to be unfounded.”
For years, the group has been accused of falsifying balance sheets in media reports, especially in the business with foreign subsidiaries. A special audit commissioned by the supervisory board by KPMG was unable to completely clear up the allegations.
However, before submitting the KPMG final report at the end of April, Wirecard had stated in the ad hoc reports that the auditors had found no abnormalities. The Bafin apparently sees indications of market manipulation in this. Wirecard shares slumped by more than ten percent in after-hours trading on Friday.
Growing criticism of CEO Braun
Investors see responsibility for the turmoil especially with CEO Braun, who has dominated the group for two decades and, as the largest single shareholder, holds more than seven percent of the shares. Corporate governance expert Christian Strenger considers the top manager’s understanding of the office to be “increasingly problematic”.
“Braun’s problem is that he still strangers with the rules that apply to a DAX company in the capital market. In view of the public importance of the group, I can less and less understand the actions of the CEO. Braun’s actions may be well-intentioned, but they are detrimental to the group, ”says Strenger. “For that reason alone, the Bafin should have reacted much faster.”