The Munich Regional Court I considers that the financial statements of the Wirecard Group for 2017 and 2018 are incorrect. On Thursday, the court declared the two-year annual accounts and resolutions on dividends null and void. The competent chamber therefore accepted the appeal brought by the bankruptcy trustee Michael Jaffé, who had challenged the two-year budget. Jaffé had witnessed a violation of the Stock Corporation Act, according to which “the assets on both balance sheets were significantly overvalued”. The court followed suit.
This makes it official that Wirecard had artificially inflated its sales. Now it’s becoming uncomfortable for the group’s shareholders at the time: as dividend deliberations are also void according to the verdict, Jaffé could now fetch profit distributions of € 47 million. According to the verdict, Wirecard paid them “for no legal reason”. Anyone who has received dividends from Wirecard in the two years now has to worry about it.
However, small shareholders and private investors have little to fear. For 2017 and 2018, Wirecard paid a total dividend of EUR 0.38 per share. With an investment of € 10,000 and a share price of around € 150, that would result in a payback of around € 25, Jaffé calculated in a statement Thursday. The situation is different for major shareholders such as former CEO Markus Braun. Braun held approximately seven percent of Wirecard shares and was the largest shareholder. His participation was sometimes worth well over a billion euros.
The first criminal case in the Wirecard case could be this year
The lawsuit was based on alleged bogus bookings that Wirecard managers are said to have inflated their budgets by making up billions in sales. The group collapsed in 2020 because foreign accounts lacked € 1.9 billion in cash. The group from Aschheim, near Munich, has finally gone bankrupt. The rise of a new German economic star turned out to be the biggest accounting scandal in German economic history.
The former CEO Braun has been in custody for nearly two years. In mid-March, the Munich I prosecutor sued him and two other former executives. Among other things, it accuses Braun of misappropriation of company assets, commercial fraud and accounting fraud. Braun rejects the allegations and considers himself a victim. A trial could start as early as this year. Former CEO Jan Marsalek has not yet been charged. After the group collapsed, he apparently fled to Russia.
More than 600 million euros in profit – invented
In the years before the bankruptcy Wirecard had grown a lot, at least on paper, and had countless fans on the stock market. In September 2018, the group was even promoted to Dax instead of Commerzbank. In 2017 and 2018, the payment service provider had recorded profits of over 600 million euros and paid dividends of double-digit millions.
According to the investigations of the public prosecutor of Monaco I, these profits did not exist. Markus Braun, on the other hand, claims that the money was smuggled out of the group via shadow structures, which he knew nothing about.
The President of the Court, Helmut Krenek, said the question of the existence of the money was irrelevant to Thursday’s verdict. In any case, Wirecard has violated the principles of correct accounting. EY’s auditors had checked the financial statements for the two years and found no anomalies. After the verdict, shareholder representatives are hoping for better prospects for damages claims against EY.