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Wirecard’s former chief financial officer Alexander von Knoop and former chief product officer Susanne Steidl have been charged with breach of trust four years after the payments group crashed into insolvency.
Prosecutors accuse von Knoop and Steidl of having failed to fulfil their legal obligations to Wirecard when they approved more than €100mn of potentially fraudulent loans to sham companies controlled by a business partner of Wirecard’s fugitive chief operating officer Jan Marsalek.
Some of the funds were channelled to Marsalek who used them to repay a private loan from former chief executive Markus Braun.
Wirecard collapsed in June 2020 after disclosing that half its revenue and €1.9bn in corporate cash did not exist. It was one of Europe’s largest accounting scandals: at its peak just two years earlier, the company had a market capitalisation of €24bn.
The charges against von Knoop and Steidl are narrower than those against Braun and two other executives — former head of accounting Stephan von Erffa and Oliver Bellenhaus, the head of Wirecard in Dubai — who have been charged with fraud, market manipulation and accounting manipulation. However, von Knoop and Steidl could still face prison terms of up to 15 years if they are found guilty on all counts.
At the time of its collapse, Wirecard had more than €3bn of debt. In addition to other unsecured loans that were made without full risk assessments and business checks, Wirecard gave a €100mn loan to a Singapore-based company controlled by Marsalek’s business partner James Henry O’Sullivan shortly before the payments company collapsed into insolvency. This loan consumed a large part of Wirecard’s remaining liquidity.
O’Sullivan has been charged in Singapore in relation to the Wirecard accounting fraud.
Prosecutors allege that the €100mn loan, which was approved by the executive board, was “unjustifiable”. By agreeing this and other loans, von Knoop and Steidl “obviously and grossly violated their duties to Wirecard”, the Munich prosecutors said in a statement on Tuesday, adding that the financial damage to the company added up to “several hundred million of euros”.
Braun and von Erffa deny all allegations against them. Bellenhaus has admitted the charges and become a chief witness for the prosecution.
The ongoing trial of the first three Wirecard managers is expected to run until mid-2025 at least.
Late last year, von Knoop’s predecessor as chief financial officer, Burkhard Ley, was charged with fraud, breach of trust, accounting and market manipulation. Munich courts are expected to take months to review the charges and open trials.
A spokesperson for Steidl declined to comment. A lawyer for von Knoop did not immediately respond to a request for comment.