In this story, the state, the market, and the auditors spent years looking at nothing and seeing billions.
In 1999, a company appeared in Munich that few would have remembered — a payment processor, one of dozens handling internet transactions in the early days of e-commerce. Wirecard began by processing payments for online casinos and porn sites — business that major banks disdainfully kept their distance from. It was this niche that gave the company its seed capital and its first reputational paradox: it made money from what respectable society was embarrassed by, then spent it building the image of a technological visionary. Since 2002, the company had been led by Markus Braun — an Austrian with a neat little beard and a talent for telling investors exactly what they wanted to hear. Braun turned Wirecard from a drab processing firm into the success story Germany was desperately looking for.
Germany is a country of cars, chemicals, and mechanical engineering. Its industrial giants are stable and dull as Swiss watches. But in the 2010s, while Silicon Valley was churning out unicorns and China was raising Alibaba and Tencent, the German establishment felt the absence of its own digital flagship acutely. Wirecard filled that void with alarming ease. The company reported surging revenues, bought up licenses and partners in Asia, talked about millions of transactions. Its shares rose so steadily that by September 2018, something happened that German finance viewed almost as a coronation: Wirecard entered the DAX index, displacing Commerzbank — a bank with a century and a half of history. A fintech company worth more than twenty billion euros took its place alongside Siemens and Deutsche Bank, while Markus Braun appeared on magazine covers as the face of Germany’s digital transformation.
Wirecard’s business structure resembled a matryoshka doll, each layer a little less transparent than the one before. At its center was an entirely real payment-processing business: the company handled card payments for merchants, collecting a fee on every transaction. The problem was that a substantial share of its declared turnover passed through so-called third-party acquirers — partners in Asia and the Middle East that supposedly processed payments on Wirecard’s behalf in markets where the company had no licenses of its own. These partners generated a colossal share of the profits, yet checking their activities from the outside was virtually impossible.
According to the accounts, money from these operations accumulated in trust accounts at Asian banks. On paper, everything looked impeccable: revenue was growing, margins were impressive, cash balances were documented. But the documents themselves, as later emerged, attested to the existence of money that did not exist in nature. Put bluntly, Wirecard presented auditors with account statements showing billions that were supposed to be sitting there — and for years the auditors accepted those papers as evidence. The scheme was both primitive and brazen: for it to work, no one — not the regulator, not the auditor, not the investor — could call the bank and ask: “But is the money actually there?”
What still strikes me is the sheer scale of the nerve. No complex financial engineering, no ten-layer derivatives: fictitious account balances that could have been checked with a single phone call. But the call never came. For years.
The first serious doubts about the reality of Wirecard’s business were voiced publicly long before its collapse. The Financial Times — and above all journalist Dan McCrum — methodically published investigations pointing to inconsistencies in the accounts, the suspicious role of Asian partners, and the abnormally high profitability of operations that no one could independently verify. Whistleblowers inside the company reported forged documents. Short sellers — investors betting on a fall in the share price — built up their positions, seeing in Wirecard a classic case of corporate fraud.
The German system’s response to these signals is the central nerve of the whole story. BaFin, the federal financial supervisory authority, did not investigate Wirecard. Instead, the regulator chose to protect the company from those attacking it. On 18 February 2019, BaFin imposed an unprecedented ban on short selling Wirecard shares — a measure that had previously been used in Germany only at the height of the 2008 financial crisis to protect systemically important banks. The ban lasted two months, until 18 April. At the same time, BaFin referred material on possible market manipulation to the Munich public prosecutor’s office — and the investigation was initially directed against McCrum and the short sellers.
Stop for a second and think about this arrangement. A journalist uncovers a multibillion-dollar fraud. Investors, having analyzed his findings, put money on the fraud being real. And the state regulator launches a criminal investigation — into the journalist and the investors. Not the company. Not its management. Not the auditor. But those trying to tell the truth.
Why BaFin acted this way is more complicated than simple corruption or stupidity. Formally, BaFin was responsible for market supervision — that is, preventing manipulation of share prices — and for banking supervision of Wirecard’s subsidiary, Wirecard Bank. But consolidated supervision of the Wirecard group as a technology company did not fully fall within BaFin’s jurisdiction. The review of financial reporting was divided among several institutions, including the private organization FREP (Financial Reporting Enforcement Panel, in German — DPR, Deutsche Prüfstelle für Rechnungslegung). This fragmentation created zones where everyone assumed someone else was checking — and in the end, no one was.
A separate chapter of disgrace belongs to EY — one of the world’s four largest audit firms, which signed off on Wirecard’s accounts year after year. An auditor’s job is to independently confirm that the figures on the balance sheet correspond to reality. In Wirecard’s case, that meant, among other things, confirming the existence of cash in trust accounts at Asian banks. EY received documents from Wirecard supposedly confirming the existence of those funds, and accepted them. The procedure for independent verification — a direct request to the bank, so-called “third-party confirmation” — was either not properly carried out, or its results were falsified.
When, in June 2020, a firm specially hired for an additional review made direct inquiries to the Philippine banks where the funds were supposedly held, it turned out that accounts with the declared balances simply did not exist. 1.9 billion euros — a sum making up roughly a quarter of the company’s balance sheet — proved to be fiction. Wirecard was forced to admit that the money “probably does not exist.” The wording is remarkable in itself: the company did not say “the money is gone”; it said that it “probably does not exist” — as though a billion and a half euros might have slipped behind the couch.
After the collapse, EY said it had fallen victim to a “sophisticated fraud.” But the question of why the auditor had failed for years to carry out elementary checks — or had carried them out in such a way that the fraudsters could easily evade oversight — remained open and became the subject of court proceedings. EY’s role in this story is a reminder that the auditing industry, built on a model where the client pays for its own inspection, contains a conflict of interest that no standards can ever fully eliminate.
On 22 June 2020, Markus Braun was arrested — three days before the insolvency filing (25 June). He was charged with fraud, market manipulation, and embezzlement. His trial began in Munich and is still ongoing — the proceedings have stretched on for years because of the volume of material and the complexity of the case.
But the most intriguing figure in this story is Jan Marsalek, Wirecard’s chief operating officer. The man who, by all accounts, built the Asian side of the business — the very place where the fictitious billions were hidden. Marsalek disappeared shortly before the company’s collapse. According to some reports, he flew from Austria to Minsk; according to others, he ultimately ended up in Russia. His whereabouts at the time of the collapse became one of the most discussed mysteries in Europe’s criminal chronicle. Reports emerged of his ties to the intelligence services of several countries, although the precise nature of those ties remains a matter of speculation rather than proven fact.
Marsalek is the figure who turns the Wirecard story from a corporate scandal into something resembling a spy novel. An Austrian without a university degree, fluent in several languages, moving between Munich, Manila, and Dubai, he gave the impression of a man who knew more about the world than a financial manager ought to. His disappearance is this case’s open wound: until Marsalek is found, the full picture of the fraud remains incomplete.
The most painful question in this story is not “who stole the money,” but “why did no one stop the theft when it was being pointed out to them.” The answer lies at the intersection of several factors, each understandable on its own and devastating in combination.
The first is institutional fragmentation. By the time Wirecard collapsed, Germany’s financial supervisory system was structured in such a way that no single body bore full responsibility for examining the group as a whole. BaFin supervised the banking subsidiary and the market behavior of the shares. Reviewing the consolidated accounts of the parent company — a technology holding, not a bank — formally fell under the authority of DPR, a private organization with limited resources and powers. DPR could request documents from the company, but had no right to conduct searches or question witnesses. When DPR finally began reviewing Wirecard’s accounts, the process dragged on and produced no results before the collapse. The result was a system in which every institution could honestly say, “This is not my area of responsibility” — and would have been formally correct.
The second factor was political. Wirecard was a national champion. Its success proved that Germany could produce not only cars, but global-class digital platforms. German politicians — including senior officials — publicly backed the company, promoted its interests abroad, met with Braun. When the Financial Times published its investigations, the reaction of much of the German establishment was predictable: Anglo-Saxon speculators were attacking a German company. This interpretation was convenient because it required no investigation — only patriotism.
The third was a defensive reflex. The short-selling ban imposed by BaFin in 2019 was the logical consequence of a worldview in which speculators, not fraudsters, were the threat to the market. BaFin saw the share-price decline following the FT reports and interpreted it as market manipulation rather than a market correction based on new information. The regulator, in effect, decided that the market was wrong and the company was right — and used state power to “correct” it. The result: investors who had assessed the situation correctly were punished; the fraudsters gained another year’s breathing room.
Wirecard’s collapse triggered a chain reaction of reforms that affected the entire architecture of German financial supervision. DPR — the private organization responsible for reviewing the accounts of public companies — was effectively dismantled, and its functions transferred directly to BaFin. BaFin itself underwent a sweeping restructuring: its leadership changed, its powers and procedures were revised. New legislation expanded the regulator’s ability to conduct forensic inspections and required it, under certain conditions, to carry out its own investigations into the accounting of companies in the DAX.
Court proceedings began in parallel. Markus Braun went on trial in Munich. EY faced lawsuits from investors who had lost money. The German Bundestag created a parliamentary inquiry commission that questioned dozens of officials, including the finance minister at the time. The testimony revealed the scale of the institutional blindness: officials knew of the suspicions, received warnings, but each time found a reason not to act — either because “this is not our jurisdiction,” or because “we cannot undermine confidence in a national champion.”
I think the most accurate diagnosis of this story is a collective unwillingness to know: something ordinary, and therefore more dangerous than corruption or incompetence. Germany wanted a fintech star. Wirecard offered itself for the role. And the whole system — regulators, politicians, auditors, investors — chose to believe, because the alternative — admitting that the champion was fake — was too unpleasant. The short-selling ban, the persecution of a journalist, years of unchecked accounts — all of it was a symptom of the same thing: institutions were not working to find the truth, but to preserve a comfortable picture of the world.
Jan Marsalek is still missing. Braun’s trial continues. And 1.9 billion euros have never been found — and, in all likelihood, never existed.