Security & Fraud

Germany's Parliament Announces Plans To Investigate Wirecard 

Germany's Parliament Announces Plans To Investigate Wirecard

As the criminal investigation into the collapse of Wirecard AG continues, the Bundestag (Germany’s Parliament) is planning to hold an inquiry into the payment company.

The Financial Times reported that as questions mount about the government’s failure to prevent the biggest corporate fraud since World War II, lawmakers want answers.

“Over several months, the government has not succeeded in comprehensively and thoroughly clearing up the Wirecard scandal, despite special sessions, parliamentary questions and lots of opportunities,” Danyal Bayaz, a member of the country’s Green political party, told the newspaper. “There are still a lot of questions and inconsistencies. That’s why we need an investigative committee, with a clear mission.”

The German payment processing firm filed for bankruptcy protection in June after admitting that 1.9 billion euros ($2.1 billion) said to have been deposited in two Philippines banks did not exist. It later failed under debt of 3.5 billion euros ($4.2 billion).

Prosecutors arrested former Wirecard CEO Markus Braun and two other executives. Police continue to search for other former employees on suspicion of orchestrating a criminal enterprise to inflate balances in order to hide losses.

The FT reports that the scandal will dominate next year’s Bundestag elections and put a spotlight on Chancellor Angela Merkel. Some lawmakers have alleged that her administration was more interested in protecting the company than taking the reported financial irregularities seriously.

For example, the newspaper reported that questions linger over why Merkel lobbied for Wirecard’s expansion into China while on a visit there in 2019, despite months of reports of suspicious activity at the company.

In addition, an inquiry is likely to focus on the finance minister who oversees the Federal Financial Supervisory Authority (BaFin) and the Financial Intelligence Unit, Germany’s anti-money laundering agency.

The call for the probe has also come from the Free Democratic party and the populist Alternative for Germany. Still, members of Parliament who are supportive of Merkel, including the Social Democrats, have opposed the inquiry.

Bayaz told the newspaper that the inquiry presents an opportunity to win back the trust of investors after the Wirecard scandal, and to help craft new rules for a sustainable financial market.

In July, German Finance Minister Olaf Scholz and Economy Minister Peter Altmaier faced questioning by Parliament over allegations that they failed to prevent the accounting scandal. Scholz has insisted that no mistakes were made.

“An investigative committee is inevitable in order to acquire full access to the files,” Fabio De Masi, a lawmaker from the opposition Left Party, told FT.

Also in July, the Finance Ministry said that BaFin will be granted sovereign powers to allow the agency to intervene immediately in publicly traded companies.

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