Defense lawyers for Wirecard's former boss accused prosecutors of rule of law violations on Monday, calling for a delay to the trial.

The tense arguments come as proceedings in the bombshell financial scandal officially kicked off last week.

What did the defense argue?

Lawyers for former Wirecard chief executive Markus Braun accused the prosecution of bias and of committing investigative errors.

Braun and two other managers face an array of charges including fraud and market manipulation.

Defense lawyer Alfred Dierlamm dismissed the charges against his client as "absurd." He added that the prosecution's charges against Braun and accusations he oversaw a gang-like structure "have not been clarified in even a rudimentary fashion in the preliminary proceedings."

Dierlamm said prosecutors and perpetuated "serious violations of the principle of the rule of law."

Braun also accused the prosecution's star witness, co-defendant and ex-manager Oliver Bellenhaus, of being the main perpetrator.

"Bellenhaus is not a key witness," said Dierlamm. "Bellenhaus is the main perpetrator of a gang" whose aim was to divert and embezzle Wirecard funds.

Braun has denied any wrongdoing and has instead accused others in the company of running a shadow operation without his knowledge.

Braun's defense team filed an application to delay the trial and have prosecutors reexamine their evidence. Judges are considering the application and are set to make a decision later this week or next week.

What was the response from Bellenhaus' lawyers?

The defense team representing Bellenhaus confirmed the accusations levied against him by prosecutors. Bellenhaus was the former head of Wirecard's Dubai subsidiary and is cooperating with the prosecution in hope of a more lenient sentence.

Bellenhaus' defense team began by saying their client was admitting his role in the scandal and taking responsibility, and that he had returned to Germany to assist with the case on his own initiative. 

Bellenhaus' lawyer Florian Eder told the court that Braun's argument, on the other hand, was not credible. Eder argued that Braun was claiming to have never looked into Wirecard's accounts himself despite years of doubts. 

Eder also said it was "part of the Wirecard system" to "meet an attack with a counterattack," seeking to explain Braun's lawyers' focus on his client. 

He said the argument from Braun's defense team was "completely absurd and far-fetched," summing up the argument against his client as: "He's come from abroad, he's stowed away billions somewhere, and now he's coming back purely to throw Dr. Braun under the bus."

Why is the Wirecard scandal such a big deal?

Braun, Bellenhaus and a third high-ranking Wirecard manager are accused of inflating the company's earnings through fictitious transactions. The scheme allegedly involved a complex network of subsidiaries and partner companies.

Prosecutors argue that the three managers provided inaccurate financial results for the company from 2015 to 2018. The financial reports also included revenues from firms that "did not actually exist."

These firms, known as third-party acquirers (TPAs) —  businesses that processed payments for Wirecard where it lacked its own license to operate — accounted for around half of Wirecard's reported revenues and a large chunk of its profits.

Wirecard launched in 1999 as an online payment processor for gambling and pornography websites. Under Braun, who joined the company in 2002, Wirecard grew to be the star of Germany's financial technology sector.

When the company crashed and filed for bankruptcy in June 2020, the financial industry and German politicians were blindsided.

The scandal sparked criticism against then-Chancellor Angela Merkel's government, which briefly considered bailing out the company. Her Finance Minister, and now current German Chancellor, Olaf Scholz was criticized for faulty oversight of the company.

rs/msh (dpa, AFP, Reuters)

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