Munich (Reuters) - According to auditors KPMG, the former Wirecard board member Markus Braun effectively blocked a special audit of the allegations against the payment processor shortly before its bankruptcy.

Information about the questionable Asian business had been flowing "very, very slowly" for months, said KPMG board member Sven-Olaf Leitz on Thursday in the fraud trial against Braun and two other managers. The company had even denied the auditors access to its current IT systems. "It was clear to us then that the investigation was pointless," said Leitz, one of those responsible for the audit commissioned by the company itself. He told Braun that KPMG had lost confidence in the cooperation with Wirecard. The latter then threatened the auditors with legal action and tried to put them under pressure.

In the special investigation initiated by Wirecard itself, the auditors found no evidence of the existence of trust accounts allegedly worth billions in Asia. This was the beginning of the end for Wirecard, which had to file for insolvency in June 2020. Like the insolvency administrator, the public prosecutor's office assumes that the business - which, according to Leitz, accounted for more than 90 percent of Wirecard's reported profits from 2016 to 2018 - never existed. Braun, on the other hand, also insists in court that the third-party partner business did exist and that its proceeds were merely sidelined.

Until the very end, Braun had tried to change the auditors' preliminary report and reinterpret the results, said Leitz. In the final meeting, he said: "They couldn't prove that we didn't have the money." Jan Marsalek, the board member responsible for the Asian business and a fugitive since the bankruptcy, whom Leitz said he had seen for the first time at the meeting, asked, alluding to the North Korean dictator: "Who else should have the money? Kim Jong-il or who?"

Braun also distorted the results of the KPMG investigation in an ad hoc announcement to investors. "The content was not acceptable to us," said Leitz. He had tried to make this clear to him in writing and in a telephone call and had also informed Thomas Eichelmann, Chairman of the Supervisory Board. Braun told him that he would take the communication "on his head". The public prosecutor's office accuses the former CEO not only of fraud but also of misleading the capital market.

In the special audit, the investigators wanted to understand how the money from the customers of the merchants, who processed their transactions via alleged third-party partners of Wirecard, flowed into Wirecard's systems. The Financial Times had raised doubts about the existence of the transactions that Wirecard booked as sales and for which the processor collected commissions. The proceeds were supposed to end up in an escrow account in Singapore and later in Manila in the Philippines, which allegedly totaled 1.9 billion euros. "For me, the question was: does the money exist and where is the money?" said Leitz. His suggestion to transfer the entire amount to a German account as proof was rejected by Wirecard.

Wirecard had made it difficult for the auditors and had delivered the requested documents late or not at all. There were no contracts with merchants, transaction data from the three years was no longer available and the cash flows were not traceable, the KPMG auditor testified. "We had an obstacle to the investigation. Everything you normally need to prove the existence of sales revenue was missing." According to Wirecard, the merchants did not want to get in touch with the auditors, and there were no balance sheets from the alleged Wirecard partners. Instead, the head of Wirecard's compliance department pushed for the KPMG team to be partially replaced. "There were several attempts to influence us," said Leitz.

(Report by Alexander Hübner. Edited by Olaf Brenner. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)