Chronicle of an Accounting Scandal: One Week in June 2020

Why one week in June 2020 matters to every business owner

Every day you rely on figures you have not checked yourself: the account balance in a bookkeeping report, a service provider's inventory list, a sales partner's revenue statement. Most of the time that works out. The Wirecard case shows what happens when it does not work out for one very large figure and nobody asks at the source for years.

Wirecard was a payment services company based in Aschheim near Munich. In 2018 it joined the DAX, the index of Germany's largest listed companies, and for a time its market value exceeded that of Deutsche Bank. In June 2020 it collapsed within a week. This first part of the dossier 'Trust as the Basis of Business' retraces the sequence and limits itself to what is publicly documented.

The chronicle is not an end in itself. It leads to a question that applies to a company with 20 employees just as much as to a corporation: which of your figures are only correct because someone else says so? To answer it, we first retrace the week in June 2020, then look at the warning signs, the third-party business, and the damage, summarize the legal and political developments, and finally clarify what an audit opinion says.

What happened between June 18 and June 25, 2020?

The 2019 annual financial statements had already been postponed several times. On Thursday, June 18, 2020, they were finally due. Instead, a sequence began that ended in insolvency seven days later.

1. Thursday, June 18: no audit opinion

   Wirecard postpones its financial statements again. The auditor EY states that it has not obtained sufficient audit evidence for bank balances of around 1.9 billion euros held in trust accounts. The share opens at 99.50 euros on the Xetra exchange and closes at 39.90 euros. The company warns that loans of around 2 billion euros can be terminated if no audited statements are available by the following day.

2. Friday, June 19: the CEO resigns

   Markus Braun, who had led the company since 2002, steps down. James Freis, appointed to the management board only shortly before, takes over on an interim basis. According to press reports, two Philippine banks that were supposed to hold the money state that Wirecard is not their client.

3. Weekend, June 20 and 21: denial from Manila

   According to press reports, the Philippine central bank states that the amounts in question never entered the country's financial system.

4. Monday, June 22: the admission

   At 2:48 a.m. Wirecard publishes an ad hoc announcement, a mandatory disclosure to the capital market. The management board assumes that the trust balances in all likelihood do not exist. The preliminary figures for 2019 and the first quarter of 2020 are withdrawn, as are the forecasts. That evening Markus Braun turns himself in to the Munich public prosecutor's office and is arrested.

5. Tuesday, June 23: bail

   Markus Braun is initially released on bail of five million euros. He has been in pretrial detention since July 2020. Former board member Jan Marsalek, responsible for operations, has already been removed from office by this point and goes into hiding. He is still wanted today.

6. Thursday, June 25: insolvency filing

   Wirecard files with the Munich district court to open insolvency proceedings on grounds of impending illiquidity and over-indebtedness. It is the first insolvency filing by a DAX member. The group's own Wirecard Bank is not part of the filing.

The missing 1.9 billion euros amounted to roughly a quarter of total assets. A company still regarded as a technology champion on Wednesday had no CEO, no audited accounts, and no financing eight days later.

What warning signs were there before the collapse?

The collapse came as a surprise only to those who had ignored the back story. Doubts about the figures had been public for years. The table shows the most important stages.

BaFin is Germany's Federal Financial Supervisory Authority. A short sale is a bet on falling prices. The ban and the complaint were directed at those who voiced doubts or bet on them. For a long time nobody pursued the company itself with the same rigor.

What was the third-party partner business and what were the trust accounts?

At the center was the so-called third-party partner business. In countries where Wirecard had no license of its own, partner firms were supposed to process payments on its behalf and pass commissions on to Wirecard. According to the company's own figures, a large share of reported profit came from this segment.

The proceeds were supposed to sit in trust accounts as collateral. A trustee manages money in its own name on behalf of someone else. For an auditor this means that the balance is not visible in an account held by the company. All the auditor sees is a third party's confirmation. Roughly a quarter of total assets depended on exactly this point.

In its ad hoc announcement of June 22, 2020, the management board wrote that earlier descriptions of the third-party partner business were not correct either. It said it was examining whether, in what manner, and to what extent this business had actually been conducted for the benefit of the company. According to the indictment, prosecutors assume that revenues running into the billions were invented. Whether this can be proven under criminal law, and against whom, is for the court to decide.

How large is the damage for creditors and shareholders?

Insolvency proceedings were opened in August 2020, and the Munich lawyer Michael Jaffé is the insolvency administrator. The registered claims exceed the available assets many times over.

Around 50,000 shareholders have registered damages claims. On November 13, 2025, Germany's Federal Court of Justice ruled that these claims rank behind those of ordinary creditors such as lending banks and former employees. Given the small estate, shareholders are unlikely to receive anything from the insolvency proceedings.

For business owners there is a sober calculation in this. The actual damage was many times the missing amount. It arose because trust in all the other figures disappeared along with that one figure: banks called in loans, customers and partners left, the market value dissolved.

What has happened legally and politically since the insolvency?

1. October 2020 to June 2021: parliamentary inquiry

   The German parliament sets up a committee of inquiry that examines the conduct of regulators, authorities, and auditors and presents its final report in 2021.

2. 2021: new legislation

   The Financial Market Integrity Strengthening Act (FISG) strengthens BaFin and obliges listed companies to maintain internal control and risk management systems.

3. 2022: accounts declared void

   The 2017 and 2018 annual financial statements, which EY had signed off, are declared void by a court.

4. December 2022: criminal trial

   The trial of Markus Braun, the former head of the Dubai operation Oliver Bellenhaus, and the former chief accountant begins before the Munich I Regional Court. The indictment puts the damage to lending banks at more than three billion euros.

5. April 2023: sanctions by the audit regulator

   The audit oversight body APAS imposes a fine of 500,000 euros on the audit firm and bars it for two years from taking on new audit mandates at public-interest entities. Five auditors receive individual fines.

6. Fall 2026: closing phase

   After more than 270 days of hearings, the trial enters its closing phase. According to press reports, no verdict had been handed down by the end of October 2026.

The defendants' positions are far apart. Markus Braun denies all charges and sees himself as the victim of a group around Jan Marsalek. Oliver Bellenhaus has largely confirmed the prosecution's account and appears as a key witness. After the collapse, EY stated that there were clear indications of an elaborate fraud involving multiple parties around the world. The presumption of innocence applies to everyone involved until a final and binding decision.

What does an audit opinion tell you, and what does it not?

An audit opinion is an auditor's judgment on a set of annual financial statements. Wirecard's accounts had received unqualified opinions for years. Since then, public debate has focused mainly on a question of craft: were balance confirmations obtained independently and directly from the banks, or did the documents arrive via trustees and the company itself?

Trust is no substitute for control. It is what remains once control has worked.

The confirmation test: three questions for every important figure

A simple checking pattern can be derived from the case, and it works in any business. I call it the confirmation test. Ask three questions about every figure that a lot depends on:

1. Source: Who says this figure is correct? The person responsible for it, or someone independent of that person?
2. Route: How did the confirmation reach you? Directly from the bank, the customer, the warehouse, or via the person whose work is being confirmed?
3. Cross-check: When did someone last look for themselves without prior notice, meaning open the account online, count the stock, or call the customer?

What you can check in your own business this week

You need neither an auditor nor a project for this. Take an hour, your latest balance sheet or management accounts, and go through this list.

• Note the five largest items on your balance sheet and write down who confirms each one.
• Mark every item that rests solely on information from a third party: trustee, payment provider, warehouse operator, sales partner, factoring company.
• For every bank account, check whether you or a co-owner has read access yourself, independent of bookkeeping.
• For the three largest open receivables, obtain a balance confirmation directly from the customer.
• Decide that payments and changes to bank details above a certain amount always require approval by two people.
• Put one fixed date per year in the calendar for an unannounced cross-check.
• Ask your tax adviser or auditor which evidence they obtain directly and which they receive from you.

The opening question was which of your figures are only correct because someone else says so. The Wirecard case shows that an audit opinion does not answer this question for you: it is a judgment about audit procedures and depends on how third-party confirmations come about. For your business, a sober rule follows from this. You should know the places where you rely solely on information from a third party and have them checked independently once a year.

The further parts of the dossier cover the role of the auditor, the reputational damage, crisis communication, and the consequences for supervision and corporate governance.