Munich court’s key witness said Wirecard was ‘slow fraud’

Wirecard was a “dirty scam” conceived by a group led by an “absolute CEO” bent on creating the illusion that the German payments company was more successful than it was, a former executive told a Munich court.

In long-awaited testimony, Oliver Bellenhaus, former head of Wirecard subsidiary and key witness for the prosecution, called the Munich-based company “a fraud from the start” doomed to fail.

The 49-year-old, who led the Dubai-based company at the heart of the scam, has apologized for his role in the multi-year deception. “There is no excuse for what I did. However, I want to apologize.”

In a hushed voice, Bellenhouse told the five judges that it was “not natural for me to be held responsible,” and that his role began with “minor transgressions” and then over the years ended with “criminal acts.”

Wirecard collapsed in 2020 in one of Europe’s biggest accounting scandals after it was revealed that €1.9 billion in cash and half of its revenue did not exist. Bellenhaus is on trial in Munich alongside former Wirecard CEO Markus Braun and Stefan von Erva, who was head of accounting for the payment group.

All three are accused of fraud, embezzlement, accounting and market manipulation. If found guilty, they could face up to 15 years in prison. Braun and von Erva denied any wrongdoing.

Bellenhaus has spent the past two and a half years in police custody after flying in from Dubai and voluntarily reporting himself to the authorities.

After the Financial Times obtained internal documents from a Wirecard whistleblower in early 2019, “we were having a backroom fight,” he told the court.

After reading a written statement amounting to more than 200 pages, Bellenhaus admitted that over several years he had fabricated documents intended to show that Wirecard generated €1 billion in annual revenue from its alleged offshore payment processing operations in Asia.

Bellenhaus told the court that each quarter von Erfa briefed him on the amounts needed to make up the gap between the group’s internal goals and the performance of Wirecard’s real operations. Bellenhouse said the deception was prompted by Brown, who was “obsessed” with reporting more growth by the company.

Neither “money nor social status” were his particular motives for participating in the fraud, Bellenhouse said, but the Wirecard “was my identity” and over time “the little lies got bigger and bigger.”

In his detailed and sometimes rambling statement, Bellenhaus described a meeting with Braun, former Wirecard second-in-command Jan Marsalek, and von Erva in the CEO’s office in October 2019, shortly after KPMG launched a criminal investigation into Wirecard’s books.

Bellenhaus said he told the meeting it would be impossible to stand up to scrutiny because KPMG was insisting on access to detailed information about so-called third-party business acquisitions (TPA) that did not exist.

“Brown said it would only be a semi-criminal audit,” Bellenhouse told the court, adding that the former Wirecard boss made it clear he had already been in touch with the KPMG CEO and would make sure the Big Four did a simple investigation.

Bellenhaus told the court how he created dummy IT systems for the dummy Asian operations, detailing how he relied on servers that were shut down by the payments group as well as some bought on Ebay. The former CEO also revealed his concern that an IT audit by EY in 2019 would expose the fake.

“None of TPA’s partners possessed the regulatory licenses necessary to conduct their business, nor did they lack the required IT certifications,” Bellenhaus said. He noted that KPMG also missed it during its forensic investigation.

The prosecution’s key witness also sought to refute an argument made last week by Alfred Dierlam, Brown’s attorney, who said that although outsourcing operations existed in Asia, the proceeds were misappropriated by Bellenhaus and Marsalek.

Bellenhouse disagreed, accusing Dierlam and Brown of “deliberately inventing new black boxes that would be impossible to investigate in years to come.”

Bellenhouse, who spent more than an hour of his testimony dissecting several of them, said the payments Diral referred to were not related to consumer protection law.

TPA had no contractual obligation to do business with Wirecard, Bellenhaus told the court, so ties could have been easily severed in the run-up to the group’s collapse. He also noted that despite processing billions of euros a month in paper payments, none of the TPAs’ customers ever sought to contact Wirecard after it failed.

Dierlam, who last week filed a motion to stay the trial, directed Bellenhouse to be targeted.

He told the court that new documents, which prosecutors recently shared with the defense, showed that from late 2019 Bellenhouse began transferring his personal wealth to his wife — money likely embezzled from Wirecard. Dierlam accused Bellenhaus of failing to disclose the transactions to prosecutors early in his co-operation with them.

Presiding judge Markus Vodish said on Monday that the court would need more time to decide on Dierlam’s motion to dismiss the trial. If the motion is rejected, Brown will likely testify “in the second half of January.”

Bellenhouse’s testimony is expected to resume on Wednesday.

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