Wirecard AG (defunct)

Wirecard was founded in 1999 as a payment processor specialising in high-risk industries — primarily online gambling and adult content — that conventional banks refused to serve. CEO Markus Braun, an Austrian computer scientist, gradually repositioned Wirecard as a mainstream financial technology company, attracting institutional investors and eventually joining Germany's prestigious DAX index. Few investors asked too many questions about the company's origins.

Financial Times journalist Dan McCrum began investigating Wirecard in 2015 after receiving tips about accounting irregularities. Wirecard's response was aggressive: the company hired private investigators who tracked McCrum's movements, lobbied German regulators to investigate the FT for market manipulation, and filed criminal complaints against journalists. German regulator BaFin — which would later be severely criticised for its response — temporarily banned short selling in Wirecard shares, effectively penalising investors who had correctly identified a fraud.

In June 2020, Wirecard's auditor EY refused to sign off on the company's accounts because it could not verify €1.9 billion in cash supposedly held in bank accounts in the Philippines and Singapore. Wirecard announced the money "may not exist." The Philippine central bank confirmed that Wirecard had never held any money in the country. The accounts were fictitious. Wirecard had been booking revenues from a network of fictitious partners in Asia for years. The entire business model was fraudulent.

Markus Braun was arrested on June 22, 2020 and charged with market manipulation and accounting fraud. Chief Operating Officer Jan Marsalek — who had overseen the Asian business that proved fictitious — disappeared before he could be arrested. Marsalek, who had cultivated connections with intelligence services across Europe, vanished completely. He was later reported to be living in Russia under FSB protection. A German parliamentary inquiry found that Wirecard had paid for access to Austrian intelligence services.

A German parliamentary inquiry concluded that BaFin had failed catastrophically in its oversight of Wirecard — taking the company's word on financial matters, suppressing short sellers who had identified problems, and failing to act on multiple credible warnings. Germany's willingness to defend a "national champion" had allowed a fraud to continue for years longer than it should have. The Wirecard scandal prompted the most significant reform of German financial regulation since the Second World War.