Wirecard Witness Admits Guilt But Pins German Fraud Blame On Ex-CEO

The key prosecution witness in Germany's biggest post-war fraud trial admitted guilt on Monday in a scam that led to Wirecard's collapse, but said the company was a "swindle" from the start with former chief executive Markus Braun at its core.

Wirecard's downfall two years ago shook the German business establishment, putting politicians who had backed it and regulators who took years to investigate allegations against the payments company under intense scrutiny.

Oliver Bellenhaus, who was head of Wirecard's subsidiary in Dubai, became a key witness in the case after turning himself in to German authorities in 2020.

Bellenhaus is on trial along with former CEO Braun, who denies wrongdoing and accuses others of running a shadow operation without his knowledge, and one other high-ranking manager of the defunct blue-chip company.

They face charges including fraud and market manipulation and if convicted could be jailed for up to 15 years.

Florian Eder, a lawyer for Bellenhaus, told Reuters that the cooperation of his client should result in a "very significant reduction" in his sentence.

At the start of the trial earlier this month, prosecutors accused the defendants of being part of a gang that invented vast sums of phantom revenue through bogus transactions with partner companies to mislead creditors and investors.

Prosecutors said the deception allowed managers to siphon money out of Wirecard for years.

"Small lies became big lies ... It was a swindle from the beginning," Bellenhaus told the court, saying he deeply regretted his involvement and the damage it caused.

In testimony last week, Braun's lawyers alleged that Bellenhaus was the main perpetrator of the fraud at Wirecard, which began processing payments for pornography and online gambling and rose to be a DAX company worth $28 billion.

But Bellenhaus told the court on Monday it was "blind loyalty" to Braun, whom he described as an "absolutist CEO", that had landed him in court in Munich.

"Braun gave the marching orders and everyone followed."

Founded in 1999 and based in the Munich suburb of Aschheim, Wirecard became a showpiece for a new type of German tech company that could compete with the established titans of Europe's largest economy.

But after successfully lobbying German authorities to investigate those who were scrutinising its finances, Wirecard was eventually forced to admit in June 2020 that 1.9 billion euros were missing from its balance sheet.

A verdict is not expected until 2024 at the earliest.