After the breakdown of Wirecard, the pressure on the inspectors increases. The EU Commission wants to have whether the German financial regulator BaFin failed to control the payment service provider, as it announced on Friday – an unusual step.
The German government was alarmed by the events. “This is a worrying case,” said government spokesman Steffen Seibert on Friday in Berlin. Finance Minister Olaf Scholz (SPD) held out the prospect of stricter regulation of the industry. And there is a wave of lawsuits against the auditor EY, who had audited Wirecard’s balance sheets for years.
“We have to clarify what went wrong,” said Vice President of the EU Commission, Valdis Dombrovskis, the “Financial Times”. The European Securities and Markets Authority ESMA should determine whether there have been regulatory oversights. He expected an answer from her by mid-July.
Dombrovskis could use the results of the analysis to initiate a formal investigation and oblige BaFin to provide information to ESMA. If an infringement is found, BaFin could be instructed by Brussels to change its practices – an embarrassing situation for a national supervisory authority. Especially since Germany will take over the EU Council Presidency next Wednesday.
Chancellor Angela Merkel (CDU) described the accounting scandal as worrying. The aim now must be to avert damage from the financial center and to fix weaknesses, said government spokesman Steffen Seibert on Friday. The Munich public prosecutor had to clarify open questions. The relevant ministries of finance, economy and justice should review regulatory issues.
Finance Minister Scholz announced that he would examine the structures at BaFin in order to find possible errors. “In future, BaFin must be able to carry out special audits as quickly, efficiently and efficiently as possible,” said the SPD politician on Thursday evening. The functioning of the authority had to be reconsidered. Wirecard is a scandal that is unparalleled. That must be a wake-up call. Critical questions should be addressed to the Wirecard management, but also to the auditors.
BaFin boss Felix Hufeld should answer questions on Wednesday in the finance committee. He had admitted earlier this week that he had made mistakes at Wirecard. What happened there was a “shame” and a “disaster” for the entire financial center.
At the same time, the long-standing Wirecard auditor EY is increasingly being targeted by critics. The Protection Association of Investors (SdK) filed criminal charges against two acting and a former manager of EY. There are doubts that EY is suitable as an auditor at all. The SdK will therefore vote at future general meetings for the investors it represents against an appointment of EY as the auditor.
Another key investor, who did not want to be named, said corporations could not afford to have EY audited in the future as confidence in the auditor’s work was shaken. According to “Spiegel”, the Japanese technology investor Softbank, which is one of Wirecard’s investors, wants to take legal action against EY. Softbank was initially unable to comment, EY declined to comment.
EY had checked Wirecard’s numbers for more than a decade. Only when they looked through the 2019 balance sheet did they notice that confirmations to accounts in the Philippines were fake. There should be 1.9 billion euros. Wirecard had to file for bankruptcy on Thursday, with Wirecard subsidiaries threatening to be dragged into the deep.
The British financial regulator FCA prohibited the Wirecard subsidiary Wirecard Card Solutions from doing business. EY rejects a debt: Wirecard has set up a sophisticated, global fraud system that has been used to dupe auditors and investors. Wirecard CEO Markus Braun resigned, Jan Marsalek, the board member responsible for day-to-day business, like Braun, who was from Austria, was fired without notice.
According to the Filipino authorities, Marsalek is now in China. He entered the Philippines on Tuesday and left the country via Cebu airport for China on Wednesday, Justice Minister Menardo Guevarra said. According to insiders, Marsalek, like Braun, can expect to be arrested. The public prosecutor’s office in Munich is investigating suspected falsification of the balance sheet and market manipulation. Braun surrendered on Monday, was arrested and was released on Tuesday evening for five million euros and other conditions.
Wirecard is one of the largest bankruptcies in Germany. For the first time in the more than 30-year history of the DAX, a member of the leading index collapsed. Also on Friday, investors only wanted to get out of the shares – they rushed down 50 percent to EUR 1.82. Because the stocks are still listed in the Dax, some providers of index funds (ETFs) cannot get out, among other things. (apa / reuters)
–
