Eighteen Years of Accomplishments and a Reputation Shattered

Nearly two decades of accomplishments and leadership have ended in reputation ruin for Markus Braun, CEO of Wirecard. His name and career, broken by scandal, created intense negativity and pressure to resign, which he finally did.

As is common with scandal, crisis and reputation, neither the leader nor the organization saw it coming and both likely ignored warning signs. As is also common, Braun and Wirecard did not learn from the errors and rise and fall of other leaders or the crisis prevention shortcomings of other large organizations.

The CBNC headline that has to hurt Braun and Wirecard to see and read:

Wirecard CEO Markus Braun resigns as scandal batters shares

Ryan Browne has been skillfully covering the story and offers details, such as: 

James Freis would take his place as interim CEO.

Wirecard has confessed it could not find $ 2.1 billion of cash on its balance sheet.

Shares have fallen precipitously, as in off a cliff, reportedly down 60 percent last Thursday and an additional 45 percent on Friday.

Wirecard knew Braun (CEO since 2002) was struggling in his leadership lately, as he was fighting investors who wanted him to step down due to the company’s accounting practices.

Despite his accomplishments, which have been significant, the Financial Times has investigated Wirecard’s accounting over the last 18 months, reporting “about the alleged use of forged and backdated contracts at its Singapore office to inflate revenue,” and “a separate FT story in October claimed that staff at Wirecard’s finance team appeared to conspire to fraudulently inflate sales and profits at subsidiaries in Dubai and Dublin and potentially mislead EY.”

Braun, maybe truthfully or maybe in an act of misdirection said that it “‘cannot be ruled out’ that Wirecard was itself the victim of ‘considerable’ fraud.’”

Wirecard has denied, and angrily so, the Financial Times reporting and assertions and went so far as to sue the publication’s leadership, making its own scurrilous accusations, accusing the paper of colluding with short-sellers.

This is an important story about decision analysis, decision making and decision quality. It's also a story of governance and compliance.

Scandal and crisis could have been prevented. Braun could still hold the position of authority and power he worked hard to possess. Wirecard could have avoided massive drops in share price. 

Reputation for both Braun and Wirecard are in need of significant rebuilding. Not restoration. Rebuilding. The burden on Freis' back will prove heavy.

How will Braun and Wirecard choose to communicate, problem solve and work towards that critical need? The answers to these questions will greatly determine how much credibility, trust and reputation value, tangible, gets rebuilt.

How receptive will they be to the mindset, decisions and actions that will be required to wisely, successfully navigate through the (figuratively speaking) reputation fire in its scandal and crisis wilderness?

Michael Toebe is a specialist for reputation, professional relationships communication and wiser crisis management, serving individuals and organizations. He publishes the Red Diamonds Newsletter, a weekly publication (on Medium) on communication, decision making, behavior, conflict, trust, professional relationships, courage, resilience, reputation and crisis. 

He also publishes Red Diamonds Features, written by Michael Toebe, and is the host of the Red Diamonds Podcast.