Wirecard boss threatened ‘legal steps’ against KPMG over special audit
Partner at Big Four firm says Markus Braun invited him skiing as he sought to water down probe
Markus Braun tried to woo a senior KPMG partner with an invitation to his luxury ski hut and later threatened to sue the Big Four firm as he tried to water down its special audit into Wirecard, a Munich court has heard.
Sven-Olaf Leitz, an executive board member of KPMG Germany, told a panel of five judges on Thursday that the former chief executive of the payments group repeatedly lobbied to narrow the scope of the investigation into Wirecard’s outsourced operations in Asia.
Braun and two other former senior executives of the disgraced German company are facing charges of fraud, embezzlement, market and accounting manipulation that are punishable with up to 15 years in jail.
Wirecard collapsed in 2020 in one of Europe’s biggest accounting scandals after disclosing that half its revenue and €1.9bn in corporate cash did not exist. While Wirecard’s administrator and Munich criminal prosecutors have both concluded that the company’s outsourced operations did not exist, Braun argues that they were real.
The former chief executive, who has been in police custody since 2020, told the court he was genuinely concerned about fraud allegations raised by the Financial Times and pushed for a thorough investigation by KPMG to get to the bottom of the matter.
Leitz’s testimony, however, contradicted Braun’s version of events.
The KPMG partner said Braun had played down the allegations, repeatedly asking why it was necessary to check transaction data and payment flows between Wirecard’s outsourcing partners in Asia and merchants.
Leitz said Braun had argued that such detailed checks had not been required in the annual audits and were unnecessary, and that the former chief had implored him to “trust me”, stressing he “knew” that the outsourced business was real as he possessed “proprietary knowledge”.
He also said Braun had asked KPMG to further postpone the publication of the results, and to carve out a problematic bit where the firm faced an obstacle to its investigation.
“There were multiple attempts to influence us,” said Leitz, adding that in January 2020 Wirecard had sought the replacement of key KPMG team members who had vehemently pushed for access to data, a request KPMG ignored.
In one phone call, according to Leitz, Braun asked if he liked skiing and invited him to stay at his luxury chalet in the Austrian ski resort of Kitzbühel. “I told him that I only snowboarded and that this was out of the question anyway,” Leitz told the judge, adding that he had found Braun’s proposal “bizarre”.
When the Wirecard boss was briefed about KPMG’s findings, he said “you failed to prove that the money does not exist”, according to Leitz, who said he had responded to Braun that “you failed to prove to us that the money is there”.
He added that Jan Marsalek, then Wirecard’s second-in-command and now a fugitive, had intervened, asking: “Who else do you think may have the money? Potentially Kim Jong Il?”
In June 2020, two months after the report was published, KPMG was still trying to validate transactions from December 2019 that had been shared by Wirecard at the eleventh hour. When a KPMG request for direct access to the payment firm’s IT was turned down, KPMG decided to walk away from the mandate.
“We told Wirecard that we had lost the trust in any further co-operation,” Leitz said, adding that Braun had responded by trying to put pressure on the Big Four firm. “This was when he told us for the first time that they may take legal steps against us,” he said.
Weeks later, Wirecard collapsed into insolvency.
Leitz heavily implicated Braun with regard to a controversial Wirecard release in late April 2020 that said “no substantial findings have been made” and that failed to mention KPMG had run into an “obstacle to the investigation”.
After Braun had shared a draft of the release with Leitz, the KPMG executive said he had told Braun both by phone and in writing that he felt it was inaccurate and should be changed.