German Chancellor Angela Merkel has testified in the billionaire fraud case of the financial company Wirecard. She declined to admit that she was aware of the company’s problems and lobbied for its interests during her visit to China. According to experts, the scandal has become a “horror” for the German government, and in addition to Merkel, it also affected Finance Minister Olaf Scholz.
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Angela Merkel during her hearing in the Bundestag
German Chancellor Angela Merkel was heard by the Bundestag commission set up to investigate the case of Wirecard, which was accused of fraud worth € 1.9 billion. She testified and answered a series of questions from MEPs who she was accused of lobbying for the interests of an insolvent company during her visit to Beijing two years ago.
Arrest for the head of Wirecard after the lack of 1.9 billion euros
“Despite press reports, there is no reason to believe that there were any serious violations at Wirecard at the time … Wirecard AG did not enjoy any special treatment during my trip,” Merkel said.
According to the Chancellor, the promotion of German companies in the hope of breaking into the Chinese market is fully part of the usual part of her state visits to China. Moreover, at that time Wirecard’s attempts coincided with the goals of the German federal government.
According to Reuters, during her testimony, the chancellor confirmed a number of contacts with Wirecard’s chief lobbyist, former German Defense Minister Karl Theodor zu Gutenberg, but could not recall whether they directly concerned the company’s support.
Merkel’s statements in the Bundestag can be called the culmination of the public investigation into the biggest fraud in the post-war history of Germany, the agency notes.
The Wirecard fiasco tarnished the reputation of the German authorities and a number of opposition lawmakers are convinced that the government has deliberately turned a blind eye to reports of the company’s problems.
The financial bubble
Wirecard was founded in the late 1990s. In 2018, it was included in the list of the 30 largest companies in Germany. Forbes then named Wirecard the star of the technology startup market in Germany. But the situation changed a year later, when a number of media outlets reported possible fraud in the company. In particular, the Financial Times pointed to a number of strange transactions and fake contracts in one of Wirecard’s branches, but Germany’s financial regulator sided with the company and filed a defamation lawsuit against the journalists.
In the summer of 2020, an audit of the company’s activities began in Germany and it was investigated for the loss of € 1.9 billion revealed during the audit. Initially, German prosecutors speculated only about possible machinations with the company’s financial statements. But during the investigation it turned out that the situation in the company is much worse. Wirecard management has officially acknowledged that the missing € 1.9 billion simply does not exist. The company’s chief financial officer, Jan Marsalek, quickly left the country.
After that, events unfolded rapidly and the company admitted its bankruptcy, which was the beginning of its collapse. Merkel’s lobbying for Wirecard has surfaced in the media, despite reports of fraud. Marsalek was then charged with fleeing prosecution and placed on the international wanted list. Finally, members of the Bundestag set up a commission to investigate the case.
As Alexander Rar, the scientific director of the Russian-German forum, said in an interview with Gazeta.Ru, Wirecard was involved in risky machinations, although it had long been encouraged by the German government. In fact, Merkel supported the company’s cooperation with Chinese financial institutions in negotiations with China.
“This scandal has turned out to be a horror for the government, as corruption exists. Government officials are not directly involved in this scam, but a serious shadow has fallen on them, as they have been covering Wirecard’s activities for many months and even years, and they may not have known about it. The main lobbyist of this company was the former Minister of Defense Karl-Theodor zu Gutenberg, who left the government 10 years ago for lying about his doctoral dissertation, “the expert added.
In turn, Vladislav Belov, head of the Research Center at the Institute of Europe of the Russian Academy of Sciences, noted that in fact the company has created a financial bubble, which is currently not only blamed on the lazy. “There can always be a star on the market with nothing behind it. Those who created this financial bubble very wisely benefited from the support of politicians, and the fact that politicians support business is a common practice. “Whenever Merkel traveled to a certain country, she was accompanied by dozens or hundreds of entrepreneurs who relied on her support,” the expert explained.
The threat to the Chancellor
In addition to Merkel, Vice Chancellor and Finance Minister Olaf Scholz and Economy Minister Peter Altmeier also testified before the Bundestag.
From Alexander Rar’s point of view, the scandal has already reached its peak and will most likely not hit Merkel herself. In addition, the German authorities openly stated that they had not been involved in the company’s activities and that it was important for them to avoid a recurrence of such a situation.
“The German government is seeking to amend the legislation to make the country more transparent about financial mechanisms. That is, to make sure that the authorities monitor every step of financial investors, impose severe sanctions and maintain openness in everything. In this way, the German government wants to atone for its guilt in front of many people who have suffered from the machinations of Wirecard, “said the expert.
Vladislav Belov agrees that Merkel will not suffer from this investigation. According to him, when the Chancellor supported Wirecard, she was not aware of the company’s machinations and the company managed to deceive everyone.
“It is unlikely that Merkel or Scholz had a personal interest in lobbying for Wirecard. But it is a fact that there was a star on the market who had nothing behind him, and now Germany is watching closely. The consequences here are likely to be for the audit firm Ernst & Young, on whose research the German authorities, including Merkel, are relying. This company will definitely have to answer. The investigation itself is not over yet, but the German Chancellor is the last of the heavyweight category involved in it at the moment, “the expert stressed.
Ernst & Young has indeed already faced a number of difficulties due to the Wirecard case. At the request of the German government, the company audited the scandalous company in 2018, but then did not notice any problems. At the same time, according to the Financial Times, violations by Wirecard had already been observed at that time.
Ernst & Young lost a number of its large customers due to this mistake, including Commerzbank, KfW and Deutsche Telekom. And the Bundestag committee has already hired a third company to make an independent audit opinion on Ernst & Young’s audit.
(Translation for “Trud” – Pavel Pavlov)
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