THE key prosecution witness in Germany’s biggest post-war fraud trial on Monday (Dec 19) has admitted guilt in a scam that led to Wirecard’s collapse.

But Oliver Bellenhaus, who was head of the payments company’s subsidiary in Dubai, said it 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. Politicians who had backed it, along with regulators that took years to investigate allegations against it, came under intense scrutiny.

Bellenhaus became a key witness in the case after turning himself in to German authorities in 2020. He is on trial along with Braun and one other high-ranking manager of the defunct blue-chip company. They face charges including fraud and market manipulation, and could be jailed for up to 15 years if convicted.

Florian Eder, a lawyer for Bellenhaus, told Reuters that the cooperation of his client should result in a “very significant reduction” in his sentence. Bellenhaus has been in custody for close to two years.

At the start of the trial 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.

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

Bellenhaus told the court: “Small lies became big lies... It was a swindle from the beginning.” He said he deeply regretted his involvement and the damage it caused.

In a 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 become a DAX-listed company worth US$28 billion.

But Bellenhaus told the court on Monday that 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,” he said.

In his 100-page statement, Bellenhaus described how accounts were fudged and revenues fabricated.

At one point, staff rented space in a Dubai hotel, where they generated fake transactions for an audit, he said. He added that the remote location was chosen for them to hide from journalists, and for its proximity to a shopping mall for food.

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 (S$2.7 billion) were missing from its balance sheet.

Braun has denied wrongdoing, and has accused others of running a shadow operation without his knowledge.

A verdict is not expected until 2024 at the earliest. REUTERS