What Happened to Wirecard? ⚠️ Scandal

Wirecard was founded in Munich in 1999 as a payment processor for industries that mainstream banks refused to touch. Its first clients were pornography websites and online gambling platforms. That origin was not a footnote. It set the tone for how the company operated for the next two decades, building a business model premised on serving clients whose money was hard to verify and whose transactions were difficult to audit.

Markus Braun joined as chief executive in 2002. He repositioned Wirecard as a respectable technology company and presented himself in the mold of a Silicon Valley visionary, appearing at conferences in black turtlenecks and describing Wirecard as the future of global finance. Jan Marsalek, an Austrian high school dropout who had joined the company in 2000, became chief operating officer in 2010. Between them they built one of the most elaborately fraudulent corporate structures in modern financial history.

The fraud centered on three partner companies based in Dubai, Singapore, and Manila. Wirecard claimed these firms processed payments on its behalf in Asia and generated more than half a billion euros in annual revenue. That revenue, and the cash supposedly sitting in trust accounts tied to it, was almost entirely fabricated. Forged bank documents and compliant intermediaries made the fiction appear credible on paper. EY, Wirecard's auditor for over a decade, signed off on the accounts year after year without verifying whether the cash actually existed in the accounts it was said to occupy.

The Financial Times began raising questions about Wirecard's Asian operations as early as 2015. Its reporters documented inconsistencies in the accounts, found office addresses that did not match the scale of business being claimed, and published a sustained investigative series that grew more damning with each installment. Rather than investigate Wirecard, Germany's financial regulator BaFin launched investigations into the journalists and short sellers raising the alarm. In early 2019 BaFin imposed a two-month ban on short selling Wirecard stock, an extraordinary intervention that amounted to using regulatory power to silence critics of a company it had failed to police.

SoftBank invested 900 million euros in Wirecard in 2019, lending the company a veneer of institutional credibility at the precise moment questions about its accounts were reaching a peak. By August 2018 the stock had hit an all-time high of 191 euros per share, valuing the company at more than 24 billion euros. Wirecard had replaced Commerzbank, one of Germany's oldest banks, in the DAX 30 index in September 2018. Germany's business press treated it as a national champion. Sell-side analysts were almost uniformly bullish on the stock until February 2020.

The collapse came fast. KPMG was hired to conduct a special audit and could not verify the majority of Wirecard's profits from 2016 through 2018 because Wirecard and its partners refused to cooperate fully. EY then declined to sign off on the 2019 annual accounts. On June 16 2020 Wirecard disclosed that 1.9 billion euros supposedly held at two Philippine banks could not be located. Both banks, BDO and BPI, denied ever having had a relationship with Wirecard. The Philippines central bank confirmed the money had never entered its monetary system. Wirecard then admitted the funds probably did not exist at all. Braun resigned on June 19 and was arrested four days later on suspicion of false accounting and market manipulation. The company filed for insolvency on June 25 2020, owing creditors roughly 3.5 billion euros in bank loans and bonds. It was the first DAX company to fail in the index's history.

Marsalek was suspended on June 18. He told colleagues he was traveling to the Philippines to prove his innocence. Instead, he fled to Belarus within hours of his dismissal and has not faced justice since. Interpol issued a red notice for his arrest in August 2020. Investigators later established he had been recruited by Russian military intelligence, the GRU, as far back as 2014. He had maintained a secret headquarters in Vienna next to the Russian embassy and used his position at Wirecard to gather intelligence on journalists and investigators working against Russian interests.

In December 2024 a London court convicted six Bulgarian nationals who had been directed by Marsalek to surveil dissidents, investigative journalists, and a US military training facility in Germany on behalf of Russian intelligence. Evidence presented at trial included tens of thousands of Telegram messages between Marsalek and the spy network's ringleader, Orlin Roussev. The messages showed Marsalek coordinating espionage operations, discussing drone procurement for Russia's war in Ukraine, and referencing GRU handlers by name. A subsequent investigation by Der Spiegel, ZDF, The Insider, and other outlets placed Marsalek in eastern Ukraine in early 2024, wearing Russian military insignia. He remains at large.

The consequences for Germany's financial system were sweeping. BaFin president Felix Hufeld called the Wirecard affair a complete disaster and acknowledged the regulator had failed. The German finance ministry granted BaFin new powers to intervene directly in listed companies, conduct forensic investigations, and access third-party information without prior judicial approval. The EU opened a separate investigation into whether BaFin had broken EU rules on financial reporting oversight. In the UK, the Financial Reporting Council required the Big Four accounting firms to separate their audit and consulting operations by June 2024 to reduce conflicts of interest, a direct response to the decade EY spent auditing Wirecard while also consulting for it.

EY faced a wave of legal action. A class action filed in the Netherlands on behalf of 13,000 individual and institutional investors sought more than 700 million euros from the firm, arguing EY had falsely certified Wirecard's accounts and ignored warnings that go back to at least 2016. Braun's trial before the Munich Regional Court was ongoing as of early 2025, with prosecutors accusing him of misrepresenting accounts and manipulating markets from 2015 onward. He denies wrongdoing and claims Marsalek deceived him. Former chancellor Angela Merkel faced criticism for lobbying Chinese officials on Wirecard's behalf during a 2019 state visit, at a time when her senior advisers were already aware of the fraud allegations.

Wirecard is not merely a story about accounting fraud. The money that passed through its payment infrastructure funded Russian intelligence operations. The regulator meant to catch it protected it instead. The auditor meant to verify it looked the other way for a decade. And the man who ran its international operations turned out to be working for a foreign government the entire time.