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A Munich court has ordered three former Wirecard (LSE:0O8X) executives, including ex-CEO Markus Braun, to pay €140 million in damages. The ruling comes in response to a civil case brought by insolvency administrator Michael Jaffe, who claimed the executives breached their duties by approving unsecured loans to a Singaporean company.
The court found that Braun, along with former Chief Financial Officer Alexander von Knoop and former Chief Product Officer Susanne Steidl, were personally liable for the losses incurred from these loans. The decision stipulates that each of the three executives must pay the damages, along with interest.
The Financial Times reports that the court deemed the executive board's decision to approve the loans without requiring collateral as a violation of their professional responsibilities. The ruling characterized this decision as "untenable and at odds with the duty of care expected from a prudent businessman."
Former Deputy Chair Stefan Klestil, however, was not held liable for damages. Klestil’s spokesperson commented that the decision underscores the limitations of supervisory boards when executives choose to disregard regulations and act independently. The spokesperson emphasized that the ruling highlights the challenges faced by supervisory bodies in ensuring compliance and accountability within firms like Wirecard.
The judgment is not yet legally binding under German law, as there remains the possibility of an appeal. Wirecard’s collapse in June 2020, triggered by the revelation of a €1.9 billion discrepancy in its accounts, remains a significant financial scandal.
This civil case is distinct from the ongoing criminal proceedings against Braun and other former Wirecard executives. Braun has consistently denied any wrongdoing in these matters. The outcome of the criminal case, which is still unfolding, will address separate legal issues related to the broader Wirecard scandal.
