What went wrong at Wirecard

And how to stop it happening to you.

by Stephen Jones
Last Updated: 15 Jul 2020

A global network of suspected criminal wrongdoing, controversial characters and a mysterious, potentially fictitious, £1.7bn. Wirecard’s dramatic collapse from German fintech darling to insolvency has all the hallmarks of a contemporary crime thriller.  

The scandal that has been described as the “Enron of Germany” was long in the making and is at times hard to believe. The short version is that the German payment provider and former member of the DAX30 is suspected of grossly inflating its balance sheet.

In June 2020 auditor EY announced that €1.9bn held in Phillipine bank accounts probably did not exist after an ongoing FT investigation and subsequent KPMG report published in April found that Wirecard either intentionally overestimated or totally made up payments received by three third party companies in outsourced markets it didn’t have licences to operate within. 

Shortly after resigning, CEO Markus Braun was arrested and bailed on suspicion of manipulating markets and false accounting (claims which he denies). His former number two Jan Marsalek - who has suspected links to the Russian secret service - has gone missing after being fired, while a second executive, Oliver Bellenhaus, who ran the Dubai based division at the centre of the scandal, has also been arrested. The company, which was once worth  €24 billion, has declared insolvency.  

The story of what went wrong reveals lessons for all of us. 


There are countless examples of founders who have guided their businesses to long-term success without problems. There are also plenty of examples of what can happen when they become too influential or lose touch with reality. 

Markus Braun spent 18 years at Wirecard’s helm and is estimated to have a seven per cent stake in the firm. It’s been reported by FT sources that Braun secluded himself from the rest of the company. He used a special lift in the office to take him to a floor only accessible to a select few, and rarely visited firms acquired by Wirecard. 

Braun insists that he was unaware of the reality of the accounting scandal and, if we take him at his word, it’s perhaps easy to see how. 

The lesson: While long-serving CEOs are no more likely than anyone else to commit or permit fraud, there is a general danger in concentrating too much power in too few hands for too many years. If bad or misguided ideas become entrenched, who can challenge them? 


“This was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception,” was the damning verdict of EY, which has itself been accused of  failing to properly vet Wirecard’s fraudulent accounts for at least three years. Such a global problem suggests something was amiss in the company’s culture. 

Former staffers have talked of angry calls from managers to "do something" about the company’s share price fall, reports the FT. Although the staffer doesn’t go into detail, it's perhaps an indication that the priorities embedded in the company's culture were more concerned with the bottom line, than with eliminating bad behaviour. 

Wirecard’s defensive response to the allegations also suggests a culture that discouraged speaking out. 

Concerns have been raised about Wirecard’s balance sheet since 2008, allegations that the company always publicly denied. The company has attempted to sue critics, accusing FT journalists and analysts of short-selling and attempting to rig the market. Critics of the company claim they have also been subjected to spear-phishing campaigns by private investigators, although it’s not known exactly who is behind the campaigns. 

Clearly at the very least there wasn’t a willingness to find and address a problem that surely ought to have been investigated.

The lesson: The behaviours you encourage have consequences. If you favour short-term results above anything else, expect people to go to risky lengths to deliver them. It’s also not healthy to shame whistleblowers. By all means defend your reputation, but investigate any claims, even if you think they’re unfounded. 


Corporate scandals are usually the product of “weak institutional contexts,” says Kenneth Amaeshi, chair in business and sustainable development at the University of Edinburgh Business School. Germany and likewise Japan have a strong business tradition of stakeholder capitalism, where companies are orientated to serve the interests of all stakeholders, not just investors. 

This typically works alongside a long-term mindset and strong regulatory framework, says Amaeshi, and therefore “it is the system thought least likely to fail in preventing the kind of activities Wirecard was engaging in.” He adds: “Wirecard’s demise, when coupled with similar scandals in Japan in the last decade, suggests a worrying pattern: we may have to rethink our sense of the best methods of ensuring good corporate governance.”

Germany operates a two board model, where a supervisory board made up of shareholders and employee representatives monitors the executive board and is responsible for appointments and remuneration.

The former chairman of Wirecard’s supervisory board Wulf Matthias, who had served since 2008, dismissed growing calls for an independent review, telling the FT in October 2019 that “prima facie, EY is evaluating matters sufficiently”. While he acknowledged the “annoyance” of reports into the company’s accounts, he said he “had not looked in further detail.”

Matthias, who had been due to leave the post in 2021, stepped down in January to be replaced by the more sceptical Thomas Eichelmann, who pushed for a review.

The subsequent KPMG investigation and failure to find the missing funds led to EY’s own investigation and the scandal unravelling.

The lesson: Having a reputable and trustworthy board doesn’t automatically lead to good governance. Are you sure you’re looking hard enough?

Image credit: Lennart Preiss / Stringer via Getty Images.


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