Europe Scandals

The high-profile scandal surrounding the Wirecard company in Germany

The high-profile scandal surrounding the Wirecard company in Germany

Angela Merkel has become the latest witness in the parliamentary of the Wirecard scandal — the most high-profile financial scam in recent decades in Germany.

Angela Merkel on Friday, April 23, acted in an unusual role-a witness in the parliamentary of the most notorious financial in Germany in recent decades. The German Chancellor had to answer questions from the control committee of the Bundestag, which is studying the activities and bankruptcy of the German stock exchange company Wirecard. The company, founded in 1999 in Aschheim, Bavaria, has rapidly broken into the top echelons of German business. But even more precipitous was its fall in June 2020, when it was discovered that the management attributed almost two billion euros to the company, which in fact was not in its accounts. But if only that could be revealed!

The Rise and Fall of Wirecard

Wirecard has grown to focus on intermediary services between credit and debit cardholders, banks, and merchants. She was considered the pride of German fintech, and many leading politicians publicly praised her. Starting with a “muddy” business — helping with payments in online casinos and on porn sites-Wirecard ended its existence, mired in criminal offenses and more than dubious connections with the special services. As it turned out later, Wirecard did not have advanced technologies, its management showed fictitious growth, and, at least since 2015, falsified its reports.

The former head of the company Markus Braun and many members of the board of directors are also put on trial. One of them, Jan Marsalek, is hiding-presumably in Russia. Even before the Wirecard came to light, Marsalek had repeatedly boasted in private about his ties to Russian agents.

The fact that Wirecard managed for years to lull the vigilance of auditors (it is possible that they managed to collude with them — this question will have to be answered by the court) and bypass the regulatory authorities, forced not only the prosecutor’s office but also parliamentarians to join the investigation.

Merkel is the last witness

The Control Committee of the Bundestag is perhaps the most influential tool at the disposal of the parliament for finding out the likely mistakes of representatives of the German executive branch, in this case, members of the Cabinet of Ministers, including the Chancellor. Merkel was the last witness. Prior to this, from Tuesday, April 20, the Minister of Economy Petr Altmaier, the Minister of Justice Christine Lambrecht, as well as the Vice-Chancellor and the Minister of Finance of Germany Olaf Scholz testified before the members of the control committee.

As for Merkel, the representatives of the committee were primarily interested in the events of September 2019, when during a visit to China, the German Chancellor, in a conversation with Chinese President Xi Jinping, put in a word about Wirecard, although at that time there were already suggestions in the media that the company could spread false information.

There was no surprise — German Chancellor Angela Merkel said that she does not see her fault in the most notorious financial in Germany in recent decades. “Despite all the reports in the press, at that time there was no reason to talk about serious violations in the activities of Wirecard,” she said before the members of the Bundestag control committee. The chancellor, according to her, “did not follow the then publications about possible fraud in the company — neither positive nor negative.”

What Merkel and Xi discussed

As for the Chinese trip, according to Merkel, Wirecard did not have any “special status” at those negotiations — they say that the company was mentioned in the context of the fact that Berlin called on the Chinese authorities as a whole to open wider access to its market to Western firms. As the German Chancellor noted, during negotiations, as a rule, it comes not to one, but to several large companies at once, and the maximum attention to each is “one proposal”.

Another important question that interested the parliamentarians was what role the lobbyist and ex-Minister of Economy of Germany Karl-Theodor Zu Guttenberg played in this story. Merkel admitted that she did meet with him, a once-rising political star of the German conservatives, who burned out on a scrapped dissertation. The Chancellor did not rule out that it was also about Wirecard, although she added that she no longer remembers the details of this “personal meeting”. In any case, she ruled out influencing herself in this matter.

“Billions turned into confetti. Someone has to answer for this”

Merkel puts the main blame for the incident on the “weak” financial regulator BaFin, whose chief, Felix Hufeld, left his post sometime after the scandal. The regulator considered itself responsible only for banking operations in the company’s activities. The authorities in Berlin have already announced that they are going to reform BaFin, giving it broader powers. A change of leadership has also taken place in the agency that oversees audit companies (APAS) and the body that verifies the balance sheets of exchange-traded companies (DPR).

A day earlier, Vice-Chancellor Scholz, giving testimony to the control committee, also said that ” the German government is not responsible for this fraudulent deception.” Scholz dismissed the opposition’s criticism that BaFin and the German Finance Ministry had “overslept” all the warning signs in their desire to have a national leader in the fintech industry as “an absurd fairy tale.” The Vice-Chancellor considers the change in the leadership of the supervisory bodies to be a sufficient measure in response to the incident.

Opposition representatives from the control committee were dissatisfied with both the results of Merkel’s poll and the results of their work since no one took political responsibility for the Wirecard scandal. When “20 billion euros turn into confetti overnight, someone has to take political responsibility for it,” said Fabio de Masi, a representative of the Left Party’s faction in the committee. The $20 billion he was talking about is the total market value of Wirecard before it went bankrupt.

Leave a Reply

Your email address will not be published. Required fields are marked *