- Anticipated Ruling in Wirecard's Compensation Dispute
In the lawsuit for damages initiated by Wirecard's insolvency administrator, Michael Jaffé, against former CEO Markus Braun, other ex-board members, and a former supervisory board member, the Munich District Court is set to deliver a ruling on Thursday. Jaffé is demanding 140 million euros in compensation for a loan that the Wirecard board approved and the supervisory board endorsed, which subsequently led to losses. (Case No.: 5 HK O 17452/21).
According to Jaffé, Wirecard's in-house bank had flagged several concerns about the loan to partner company OCAP due to the absence of collateral during the oral hearing. Judge Helmut Krenek identified "warning signs," particularly defaulted payments from a previous loan. However, the attorneys representing the Wirecard managers argued that, at the time, OCAP was a reputable company and no issues had been raised by auditors.
The manager liability insurance policy does not cover criminal actions. Although the managers may be found guilty of causing damages, the exact amount Jaffé would ultimately recover for the creditors remains uncertain. The managers are personally liable. Wirecard had also secured manager liability insurance for its board members and supervisory board members, potentially covering the claimed amount. However, manager liability insurance companies do not pay out for criminal actions committed by managers.
Braun and two other managers are standing trial on fraud charges, while former sales director Jan Marsalek remains at large. No criminal charges have been filed against the former deputy chairman of the supervisory board, Stefan Klestil. In Klestil's case, there may be potential compensation for Jaffé in the event of a favorable verdict.
Jaffé accuses Klestil of neglecting his duties. Klestil denies these allegations. The chamber highlighted that the supervisory board did not intervene when the board failed to report on sanctioned loans, despite being ordered to do so quarterly. According to preliminary legal opinion from the chamber, this lapse, along with the special audit conducted by KPMG, could have prompted the supervisory board to take stronger precautions in overseeing the board. Shareholders are already liable for damages resulting from negligence, without the necessity of intent, unlike in criminal law.
At the announcement hearing, the court may issue a verdict, or order further proceedings, or decide on the future course of action.
The Commission, overseeing the case, has the responsibility to ensure that appropriate actions are taken against individuals found liable for Wirecard's losses. Should the former deputy chairman of the supervisory board, Stefan Klestil, be found negligent in his duties, he may face financial consequences in favor of Jaffé.
Regarding The Commission's involvement, it is crucial to note that shareholders, including Klestil, can be held accountable for damages resulting from negligence, without the requirement of intent, in civil law proceedings.
