The Wirecard scandal further splashes the German supervisory authorities

Posted on Dec 11, 2019 2020 at 18:04Updated 11 Dec. 2020 at 22:04

The hearings led by the nine German deputies of the commission of inquiry dedicated to the bankruptcy of Wirecard reveal, over the weeks, the extent of the blindness and lack of zeal of the various supervisory and control bodies. After the breaches of the firm EY brought to light at the end of November, it was those of its supervisor, the Apas, which came to light in the night from Thursday to Friday.

Asked shortly after midnight by the elected social democrat Cansel Kiziltepe, the head of this authority housed in the Ministry of the Economy, Ralf Bose, said he bought shares of the payment group on April 28, 2020, the day of the publication of KPMG’s special report indicating difficulties in verifying the veracity of a large part of Wirecard’s accounts. The title of the group had then unscrewed by 26% on the stock market. He then sold his shares on May 20. APAS had in the meantime launched a surveillance procedure against EY.

Peter Altmaier “taken aback”

The Minister of the Economy, Peter Altmaier, said he was “taken aback” by this information. “We are going to talk about it with the people concerned and see whether it is necessary to draw the consequences”, he assured. “Conflicts of interest must be reported to the person in charge of Apas, but for him, there is no such clear rule! », Tweeted the far left MP Fabio de Masi. “I did not think that this is possible in Germany”, for his part moved the elected FDP Florian Toncar, before demanding “a renewal at the head of the Apas”. A measure also demanded by the deputy of the CDU Matthias Hauer and Fabio de Masi.

Apas controls itself for quality assurance purposes

The latter was surprised that Ralf Bose was not required to report these transactions, the amount of which remains unknown. “The APAS controls itself for quality assurance purposes”, replied Sabine Hepperle, in charge of SME policy at the Ministry of the Economy. To justify its operations, Ralf Bose for his part assured that he had faith in the economic model of Wirecard. He also suffered a loss by selling his shares.

“Inadequate” surveillance rules

Despite the multiple alarm signals, Ralf Bose recalled that the market supervisory authority, BaFin, had banned short sales against Wirecard last February, giving the impression that the group was being unfairly attacked. His colleagues interviewed stressed that the mandate and powers of the Apas precluded the search for accounting errors. However, the members of the commission of inquiry also suspect that there is too much proximity between the members of the authority and the auditors.

Ralf Bose recalled that former employees of audit companies are excluded from investigations concerning their former employer. The fact remains that 60% of Apas employees have gone through one of the four major global audit firms. “The rules are completely unsuitable for preventing conflicts of interest and insider trading,” Florian Toncar concluded to the Ministry of the Economy.

Support from the Chancellery in Wirecard

Until then minimized, the political dimension of the Wirecard scandal could take a new turn next Thursday. After the shortcomings of Peter Altmaier’s teams, the deputies intend to tackle the reasons for the active support of the Ministry of Finance and the Chancellery to Wirecard. “We want to know how they were able to put aside all the warning signs”, explains Florian Toncar.

Former defense minister and current lobbyist Karl-Theodor zu Guttenberg should be the first to testify: he would have convinced Angela Merkel to intercede in favor of the development of Wirecard, with the Chinese authorities during a trip in September 2019. Secretary of State Wolfgang Schmidt, right-hand man of Olaf Scholz, should succeed him in order to enlighten elected officials in turn on his role in this Chinese expansion.

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