The former chief executive of Wirecard has been arrested in Germany on suspicion of falsifying company revenue, after auditors uncovered a €1.9 billion black hole in the company accounts.

Markus Braun, who stood down as chief executive of the German payments processor on Friday, turned himself in on Monday evening and will attend a hearing today (Tuesday), according to Reuters, which added that Munich prosecutors confirmed that a judge will decide whether he will remain in custody.

Wirecard said that the €1.9 billion that had been booked in its 2019 accounts - roughly a quarter of the cash on its balance sheet - likely did not exist. The amount was supposedly held in escrow accounts at two Asian banks, according to reports.

The company, a former unicorn of the German FinTech industry, is holding emergency talks with banks including investment bank Houlihan Lokey to avoid a cashflow crisis as a result of the missing money.

Following Braun’s resignation “with immediate effect” Wirecard announced that James Freis will take over as interim chief executive.

Chief operating officer Jan Marsalek has also been dismissed from the management board and his contract has been terminated.

In a statement, the company said there was a “prevailing likelihood” that the bank trust account balances for the missing amount “do not exist”.

The statement said: “Wirecard continues to be in constructive discussions with its lending banks with regard to the continuation of credit lines and the further business relationship, including the continuation of the current drawing coming due at the end of June.

"Together with the renowned and internationally active investment bank Houlihan Lokey, Wirecard is assessing options for a sustainable financing strategy for the company.”

It added that the company is examining a range of possible further measures to ensure continuation of operations, "including cost reductions as well as restructuring, disposal or termination of business units and products segments”.

Share Story: