Compliance is “CRAP” and UNNECESSARY, says former CEO

Former Wirecard CEO Markus Braun was not a big fan of compliance.

During court testimony Wednesday (June 8), a panel of judges in Braun’s fraud trial heard that the ex-chief executive told his general counsel that compliance was “crap” and unnecessary for the now-defunct payments company.

As the Financial Times reported,

• Judge Markus Födisch read out testimony Andrea Görres gave to prosecutors soon after Wirecard collapsed, including that Braun had told her during a private meeting that he did not want a compliance team because it was “unnecessary and crap.”

The group’s former top lawyer Andrea Görres, confirmed the basics of her testimony but noted that she could no longer recall Braun’s exact words.

• “But that was his general attitude [with regard to compliance].”

Görres claimed that

• Top managers, including Braun, frequently disregarded legal advice.
  • On one occasion, Braun said: “Every DAX CEO once in a while has one foot in jail,” Görres told the court.
  • Asked if she thought Braun was joking or serious, she told the judge: “I did not find it funny.”
• On several occasions Braun decreed that certain sensitive information must not be shared with the supervisory board, she said.

Görres told the court that, in 2019,

• Managers noticed there was no documentation of the 2012 and 2017 elections of members of the supervisory board at subsidiary Wirecard Bank, and there were doubts about whether the legally required vote had taken place at all.
• The company retrospectively created those minutes and had them signed by the relevant individuals. She told the judge that the legal department concluded that this conduct was not criminal, which was questioned by Födisch.
  • “I personally would have never signed a backdated contract,” she said,
  • Adding she warned executives, including then head of accounting Stephan von Erffa, that in certain situations this could be fraud.

Braun and a pair of other former Wirecard executives are charged with

• Fraud,
• Embezzlement and
• Market manipulation  

Braun

• Surrendered to German prosecutors in 2020 on a warrant as an investigation unfolded into 1.9 billion euros ($2.1 billion) found missing from Wirecard’s balance sheets.
• At the time of Braun’s surrender, he allegedly admitted to a scam involving others that manipulated figures to appeal to investors and customers.
• He was formally charged last year, along with
• Oliver Bellenhaus, a one-time managing director of a Wirecard subsidiary based in Dubai, and
• Stephan von Erffa, chief accountant and deputy chief financial officer.

According to the FT, Braun has

• Denied any wrongdoing and has painted himself as an advocate for greater controls and compliance at his company.
• He has said that contentious contracts that were approved by him and other board members had been examined by Wirecard’s legal department.

Görres disputed that claim, the FT said,

• Telling the judges that her dozen-member team lacked the resources for truly thorough checks.

Kiran Hebbar, chief financial officer at identity decisioning platform Alloy, told PYMNTS recently.

• The trial is happening at a time when the financial world is dealing with a glut of fraud, prompting regulators to up their oversight of bank-FinTech relationships
• That means that both parties [REGULATORS/FIRMS] may need to re-examine their fraud-fighting capabilities,
• As fraud prevention efforts of yesteryear can no longer keep up with the level and nature of modern-day fraud.
• For example,
  • Rules-based fraud detection and prevention platforms, a long-time fixture among fraud mitigation measures, are simply outmatched by the volume and growing sophistication of attacks, he said.

Sources

• https://www.pymnts.com/news/retail/2023/caseys-upgrades-rewards-as-c-stores-renew-digital-focus/
• https://www.ft.com/content/ab127025-1eb2-49bb-9437-4af86c943103
• https://www.linkedin.com/posts/mathew-beale-8aa49b1_markus-braun-told-wirecards-top-lawyer-that-activity-7072261872141398017-aJDN?utm_source=share&utm_medium=member_ios