World

Germany’s mammoth Wirecard fraud trial opens on Thursday, with ex-CEO Markus Braun and two former executives in the dock over their roles in the country’s biggest-ever accounting scandal.

The trial in Munich comes two and a half years after digital payments firm Wirecard collapsed in spectacular fashion after admitting that 1.9 billion euros ($2 billion) missing from its accounts didn’t actually exist.

Chancellor Olaf Scholz, who was finance minister at the time, described the scandal as “unparalleled” in Germany’s post-war history.

Notably absent from the courtroom will be Wirecard’s former chief operating officer Jan Marsalek, a shadowy figure with ties to foreign intelligence agencies.

Marsalek evaded arrest in 2020 by staging a daring escape from Austria by private jet. He was reported earlier this year to be hiding out in Russia.

Wirecard’s veteran CEO Braun, in custody since July 2020, faces charges of commercial gang fraud, breach of trust, accounting fraud and market manipulation.

The 53-year-old denies the allegations and claims to be a victim of the fraud, painting Marsalek as the mastermind.

His co-accused are ex-accounting boss Stephan von Erffa and Oliver Bellenhaus, the former head of Wirecard’s Dubai subsidiary.

Bellenhaus has admitted wrongdoing and will act as a key witness for the prosecution.

If found guilty, the trio risk lengthy prison sentences.

The opening day of the high-profile trial, held in a sprawling prison building in Munich, will mainly consist of prosecutors reading out the 90-page indictment.

The court has scheduled 100 trial dates for the complex case.

– Fake transactions –

The prosecution’s case centres around the claim that Wirecard executives inflated the company’s earnings, starting at least as far back as 2015, by inventing revenue streams from transactions with a web of partner companies.

These so-called Third Party Acquirer (TPA) companies in Dubai, the Philippines and Singapore accounted for a huge chunk of Wirecard’s sales and profits according to its books.

But “all the accused knew” that the revenues from these TPA businesses “didn’t exist”, the indictment reads, adding that the defendants used forged documents to hide the trickery.

The goal was “to increase the company’s financial strength and make it more attractive to investors and customers”, prosecutors allege.

Founded in 1999 as an outfit processing credit card payments for porn and gambling websites, Wirecard rose to become a respectable player in the booming “fintech” (financial technology) sector.

A favourite with investors, it entered Germany’s blue-chip DAX index in 2018 and at its peak was valued at more than 24 billion euros, outweighing giant Deutsche Bank.

Despite occasional speculation of wrongdoing at the company, Wirecard continued its meteoric rise.

– FT investigation –

But its troubles began in earnest in 2019 when the Financial Times published a series of explosive articles detailing accounting irregularities.

The scam finally unravelled when long-time auditor EY uncovered a 1.9-billion-euro hole in its accounts in June 2020.

The cash, which made up a quarter of Wirecard’s balance sheet, was meant to be sitting in trustee accounts at two banks in the Philippines.

But the Philippines’ central bank has said the cash never entered its monetary system and both Asian banks, BDO and BPI, denied having a relationship with Wirecard.

Wirecard’s share price tanked and it filed for insolvency soon after, leaving behind three billion euros in debt that creditors are unlikely to recover.

The company’s downfall sent shockwaves through Germany and prompted an overhaul of finance watchdog Bafin, which was heavily criticised for ignoring early warnings about Wirecard.

Many people simply “didn’t want to believe that fraudsters were at work” at a company long hailed as a German champion, said Volker Bruehl, a professor at the Center for Financial Studies in Frankfurt.

“The Wirecard scandal has damaged Germany’s reputation as a financial centre.”

A Guatemalan court on Wednesday sentenced former president Otto Perez to 16 years in prison, finding him guilty of leading a massive customs fraud scheme while in office.

Perez, who was forced to resign in 2015, was found guilty of racketeering and fraud targeting the customs system, Judge Irma Jeannette Valdes said as she read out the sentence.

Perez was sentenced to eight years on each count.

His former vice president Roxana Baldetti received the same sentence.

A UN-backed anti-corruption body revealed several scandals in Guatemala before it was shut down in 2019 by then-president Jimmy Morales after it began investigating him.

One of its key successes was uncovering a multimillion-dollar scheme to cheat Guatemala’s customs duty system, which ultimately led to Perez’s resignation.

Those involved in the scheme — known as “La Linea” (The Line) — received bribes of some $3.5 million, according to investigators, who estimate that Guatemala was defrauded out of almost $10 million in tax revenue.

After the sentence was handed down Perez, 72, told reporters: “I truly feel frustrated, I feel disappointed.”

He said he will appeal the ruling.

Sixteen other people involved in the scam were convicted during the sentencing and 11 others were acquitted.

“The ‘La Linea’ case is one of the most symbolic and is a milestone in Guatemalan history,” Edie Cux, director of Transparency International’s local chapter, Citizen Action, told AFP.

“It is important that in some way the people of Guatemala have justice and that the case does not go unpunished,” she added.

As the mercury drops to minus 20 Celsius, a research rocket lifts off from one of the world’s northernmost space centres, its burner aglow in the twilight of Sweden’s snowy Arctic forests.

Hopes are high that rockets like this could carry satellites as early as next year, in what could be the first satellite launch from a spaceport in continental Europe. 

At the launch pad, about an hour from the mining town of Kiruna, there’s not a person in sight, only the occasional reindeer herd. 

The vast deserted forests are the reason the Swedish space centre is located here, at the foot of “Radar Hill”, some 200 kilometres (124 miles) above the Arctic Circle.

“In this area we have 5,200 square kilometres (2,007 square miles) where no one lives, so we can easily launch a rocket that flies into this area and falls down without anyone getting harmed,” Mattias Abrahamsson, head of business development at the Swedish Space Corporation (SSC), tells AFP.

Founded by the European Space Agency (ESA) in 1966 to study the atmosphere and Northern Lights phenomenon, the Esrange space centre has invested heavily in its facilities in recent years to be able to send satellites into space.

At a huge new hangar big enough to house two 30-meter rockets currently under assembly elsewhere, Philip Pahlsson, head of the “New Esrange” project, pulls up a heavy blue door.

Under the rosy twilight of this early afternoon, construction machines nearby can be seen busily completing work on three new launch pads.

“Satellite launches will start to take place from here next year,” Pahlsson says.

“This has been a major development, the biggest step we have taken since the inception of Esrange.”

More than 600 suborbital rockets have already been launched from this remote corner of Sweden’s far north, including the Suborbital Express 3 whose late November launch AFP witnessed as the temperature stood at -20 degrees Celsius, or minus four degrees Fahrenheit. 

While these rockets are capable of reaching space at altitudes of 260 kilometres, they’re not able to orbit Earth.

– Booming business –

But with Europe gearing up to send its first satellite into space soon, Esrange is looking forward to joining a select club of space centres that include Baikonur in Kazakhstan, Cape Canaveral in Florida, and Europe’s space hub in South America, Kourou in French Guiana.

Various projects in Europe — in Portugal’s Azores, Norway’s Andoya island, Spain’s Andalusia and the UK’s Shetland Islands among others — are all vying to launch the first satellite from the European continent.

“We think we are clearly the most advanced,” says the SSC, which is aiming to launch at the end of 2023 or early 2024.

The satellite industry is booming, and the Swedish state-owned company is in discussions with several rocket makers and clients who want to put their satellites in orbit.

With a reusable rocket project called Themis, Esrange will also host ESA’s trials of rockets able to land back on Earth, like those of SpaceX billionaire Elon Musk.

While the Plesetsk base in northwestern Russia carried out several satellite launches in the post-Cold War period, no other country in Europe has done so.

– Small satellites driving demand –

So why is the continent — so far from the Equator, which is more suited for satellite launches — suddenly seeing such a space industry boom?

“Satellites are becoming smaller and cheaper, and instead of launching one big satellite you spread it out over multiple small satellites and that drives the demand,” explains Pahlsson.

More objects were launched into space in 2021 than ever before. And more records are set to be broken in the coming years.

Orbiting the North and South Poles is enough for many satellites, making sites like Esrange more attractive.

In addition, having a launch site close to European clients spares them and their satellites long boat journeys to Kourou.

In Sweden, like in the rest of Europe, the rockets being developed are “micro-rockets”.

These are around 30 metres long, capable of carrying a payload of several hundred kilos. In the future, SSC is aiming for payloads of more than a tonne.

But working in the harsh Arctic climate “comes with challenges”, SSC says.

With temperatures regularly dropping to -20 or -30 degrees Celsius, special attention needs to be paid to the metals used, which become more fragile in the cold.

The war in Ukraine — where the engines for the European Vega rocket are manufactured — and the abrupt end to the West’s space cooperation with Russia have meanwhile increased interest in having spaceports on the continent.

“Europe needs independent access to space. The horrible situation in Ukraine has changed the space business,” notes Pahlsson.

India’s largest winemaker Sula Vineyards is heading to the stock market, betting on the diversifying tastebuds of a booming urban middle class in a country that has long favoured strong liquor.

Wine makes up less than one percent of India’s massive alcohol market, with spirits the overwhelming drink of choice in the nation of 1.4 billion people.

On average, Indians each drink only a few spoonfuls of wine a year, but producers hope the country will replicate the wine boom in China when its economy took off in the 1980s.

Still, experts warn their rosé ambitions are tempered by uncertainties including the impact of climate change on viniculture, and an Australian trade deal lowering import tariffs.

“Wine’s time has come,” insists Sula’s founder and CEO Rajeev Samant.

When the Stanford University graduate returned from California, he initially tried growing roses and mangoes on family-owned land near Nashik, an ancient holy city about 160 kilometres (100 miles) from financial hub Mumbai.

“Where Sula is today, it was just grassland. There were leopards and snakes. There was no electricity, there was no telephone line,” as if it was a century earlier, Samant told AFP.

“I saw some beauty here, there was something about the place that really struck me.”

India is one of the world’s biggest grape producers and Nashik is one of its key regions, but back then the vines were all table grapes for eating and raisins, rather than wine grapes.

Samant was inspired by his visits to California’s Napa Valley wine country.

“Why not try to make a decent, drinkable wine right here in India, proudly made in India?” he thought. “And that’s what I decided to do.”

Named after Samant’s mother Sulabha, Sula planted its first vines in 1996, later building a sprawling resort and helping to cultivate a new reputation for Nashik as India’s wine capital.

Applications for shares in its IPO open next week, it said Wednesday, with its owners selling around a third of the company for up to 9.6 billion rupees ($116 million), valuing it at about $350 million.

– Sweet tooth –

Higher-priced Indian wines are becoming comparable to their international peers in terms of quality, according to Ajit Balgi, founder of Mumbai-based wine and spirit consultancy The Happy High, although they remained “Indian style” in flavour.

“They won’t be tasting the same as an Australian or a French wine,” he said. “India is too close to the equator, so our grapes that we choose are the riper ones.”

New drinkers tended to have a sweet tooth and were attracted to “jammier” wines, he added. “Most start their association with wine with sangria.”

Wine consumption in India has risen from negligible levels in 1995, while women drinking in public has become more acceptable as more joined the workforce, but volumes still stood at just 20 million litres last year, according to the International Organisation of Vine and Wine. 

Mumbai businessman Parimal Nayak is a fan, and visited the Sula vineyard with his family to celebrate his 44th birthday.

“Sula wines has improved a lot… and the atmosphere here is good,” he told AFP. “I’m proud of it.”

But the biggest obstacle to expansion was cost, said Balgi.

Wine is often taxed at similar levels to spirits in many Indian states, despite having much lower alcohol content.

“The price of a basic Indian wine is comparable to that of a full bottle of rum or basic whisky,” he said. “There is not much wine consumption in India because the masses cannot afford it.”

– Last glass –

Sula reported revenues of 4.5 billion rupees and a net profit of 521 million rupees in the last financial year, and saw average annual revenue growth of more than 13 percent in the decade to March 2022.

Samant, 55, plans to sell around five percent of his 27 percent stake in the firm.

But several recent Indian tech IPOs have flopped. Payments firm Paytm has lost three-quarters of its value since listing a year ago, and analysts say many firms are overvalued.

Previous wine pioneer Indage Vintners delisted in 2011 after debt and cash problems. 

Sula could face increasing competition from foreign wine, which currently makes up 17 percent of the Indian market.

A recent trade pact with its biggest supplier Australia will cut import duties for some wines from a punishing 150 percent.

Sula, meanwhile, warned in its IPO prospectus about the risk of “adverse climatic conditions” affecting grape quality.

Farmers in Nashik were already reporting floods and droughts nearly a decade ago, said the Mumbai-based World Resources Institute India’s climate programme manager Prutha Vaze.

Higher average temperatures also hasten grape ripening, lowering acidity and increasing sugars, which raises alcohol levels in wine. These changes impact a wine’s delicate balance of flavours, experts say.

If growers do not adapt to the changing climate, Vaze said, “there could be a day where we are… biting on the last piece of chocolate or having the last glass of wine”.

Russian President Vladimir Putin said Wednesday that nuclear tensions were rising, though he insisted “we have not gone crazy” and Moscow would not be the first to deploy them in the Ukraine conflict.

Speaking more than nine months after his forces launched their military operation, Putin warned the conflict could be “lengthy”.

Russian forces have missed most of their key military goals since February, raising fears that the battlefield stalemate could see Russia resort to its nuclear arsenal to achieve a breakthrough. 

“We have not gone crazy, we are aware of what nuclear weapons are,” Putin said Wednesday at a meeting of his human rights council. 

“We are not going to brandish them like a razor while running around the world.”

But he acknowledged the growing tensions, saying “such a threat is rising. Why make a secret out of it here?” 

He added, however, that Russia would use a nuclear weapon only in response to an enemy strike. 

“When we are struck, we strike back,” Putin said, stressing that Moscow’s strategy was based on a “so-called retaliatory strike” policy.

“But if we aren’t the first to use it under any circumstances, then we will not be the second to use them either, because the possibilities of using them in the event of a nuclear strike against our territory are very limited,” he said.

His comments drew an immediate rebuke from the US.

“We think any loose talk of nuclear weapons is absolutely irresponsible,” US State Department spokesman Ned Price told reporters.

“It is dangerous, and it goes against the spirit of that statement that has been at the core of the nuclear non-proliferation regime since the Cold War,” he said.

German Chancellor Olaf Scholz, however, declared that the risk of nuclear weapons being used in the Ukraine conflict has lessened thanks to international pressure heaped on Russia. 

“One thing has changed for the time being: Russia has stopped threatening to use nuclear weapons,” Scholz said in an interview with Germany’s Funke media group, saying it was “in response to the international community marking a red line”.

“The priority now is for Russia to end the war immediately and withdraw its troops,” he added. 

– Azov Sea –

Intense shelling continued along the front in eastern Ukraine, with President Volodymyr Zelensky announcing that strikes in Donetsk region’s Kurakhove killed 10 civilians on Wednesday. 

“The Russian army carried out a very brutal, absolutely deliberate strike at Kurakhove, precisely at civilians,” the president — who was named Time Magazine’s “Person of the Year” earlier in the day — said during his nightly address.

The shelling in Kurakhove comes a day after Ukrainian artillery strikes killed six people in the Donetsk region’s capital city of the same name, according to the Moscow-installed mayor.

Moscow had expected the fighting to last just days, but more than nine months after its forces entered Ukraine, Putin said its military operation could be a “lengthy process”. 

But he praised the announced annexation of four Ukrainian territories following September referendums held by Moscow proxies — denounced in the West as a sham.

“New territories appeared — well, this is still a significant result for Russia,” Putin said, referring to Donetsk, Lugansk, Kherson and Zaporizhzhia regions. 

He also made special reference to Russia’s gaining control of all the land along the Azov Sea.

“The Azov Sea has become an internal sea to the Russian Federation, that’s a serious thing,” he noted. 

Despite its best efforts, Russian troops at no point have entirely controlled any of the annexed territories and were even forced out from the capital of Kherson after a months-long Ukraine counter-offensive.

Amid domestic fears of a new callup — which triggered an exodus of Russians abroad in September to avoid an emergency draft — Putin said “there is no need” for a new mobilisation. 

“Out of 300,000 of our mobilised fighters, our men, defenders of the fatherland, 150,000 are in the area of operations,” including 77,000 in combat units, he said. 

– Person of the Year –

Meanwhile, Zelensky basked in unwavering support from the West as Time chose him as its most important global figure for 2022 — a title Putin himself received in 2007.

“In the weeks after Russian bombs began falling on Feb. 24, his decision not to flee Kyiv but to stay and rally support was fateful,” said Time editor-in-chief Edward Felsenthal.

“Whether the battle for Ukraine fills one with hope or with fear, Volodymyr Zelensky galvanized the world in a way we haven’t seen in decades.”

Winter temperatures that drop to minus 25 degrees Celsius do not stop cyclists in the Finnish city of Oulu.

The city which calls itself the “capital of winter cycling” has become a pin-up of sustainable transport, with most children still biking to school at minus 20 degrees Celsius (minus 4 degrees Fahrenheit).

“I cycle all year around. I don’t even own a car,” Ari Karjalainen told AFP as he returned home after shopping for groceries.

Despite the snow, bike racks are jam-packed in downtown Oulu, with bundled-up locals leaving vapour trails in their wake as they cycle around the city in the icy air.

“Just put on enough clothes,” quipped 22-year-old Mimmi Kahkonen when asked how she manages to cycle in the frosty weather.

For many locals, even the term “winter cycling” sounds odd, as biking all year round is so common despite the city being only a little more than 100 miles (160 kilometres) south of the Arctic Circle.

Many cyclists use wider winter tyres with better grip, sometimes with steel spikes, but some people bike with the same tyres year-round.

“We are so used to the winter that we don’t consider it much of a challenge,” Harri Vaarala, one of the city’s traffic engineers, told AFP.

While the seaside city averages five months of snow and below-zero temperatures, a fifth of all journeys within Oulu are done by bike.

Part of what makes this possible is the priority its main bike lanes get over roads for snow ploughs, said Vaarala.

– Bike ‘highways’ –

That means that 1,000 of the 1,200 pupils at Metsokangas school bike to school throughout the winter.

In recent years, the city has opened multiple new “cycling highways”, six-metre-wide roads paved in red asphalt, adding to the nearly 1,000 kilometres of existing bike lanes.

According to Vaarala, the city has made “a clear value-based decision” to support cycling, at times prioritising cyclists over motorists.

“In some cases, we have moved motorways to fit in a good quality bike lane,” he said.

When the city sought out contractors for its winter maintenance, one of the conditions was that the snow plough drivers as well as their supervisors had to cycle the routes they maintain.

“This gives them a first-hand understanding of how different conditions affect cycling,” Vaarala said.

The city also employs a number of “cycling agents” that report weekly on how well the bike lanes are maintained, which directly affects the contractors’ bonuses.

To combat snow covering traffic signs, Oulu is also experimenting with new technological solutions to make winter cycling safer.

In some locations along bike lanes, traffic signs are illuminated on top of the snow using projectors.