Germany’s finance ministry dropped ball in Wirecard scandal

London — The main responsibility for the failure to pursue alleged irregularities at Wirecard lies with the German finance ministry, and Chancellor Angela Merkel’s office was also at fault, according to an opposition legislator.

Members of the Bundestag’s finance committee continued grilling government and supervisory officials this week over Wirecard, including a top Merkel adviser and the head of financial market regulator BaFin. They want to know why authorities did not take a harder look at the payments company before it collapsed in June in the country’s biggest accounting scandal in modern history.

After a hearing on Tuesday in Berlin, the Greens and other opposition parties agreed to launch a full parliamentary probe — which will lead to several months of hearings and keep the scandal in the public eye as the country heads into an election year.

“The chancellery were really frighteningly naive towards lobbying for Wirecard,” Lisa Paus, a member of the finance committee for the Greens party, said Wednesday in an interview with Bloomberg Television.

“The main responsibility of course lies in the ministry of finance, because there were lots of references to accounting fraud for several years,” she added.

Lothar Binding, finance policy spokesperson for the governing Social Democrats, defended finance minister Olaf Scholz, saying that he had provided “very good information” in his testimony to the finance committee. Scholz is the SPD’s candidate to run for the chancellery in the next national election, due by September 2021.

“In particular, he outlined a 16-point plan on how we will monitor things more closely in the future and improve supervision,” Binding said Wednesday in an interview with DLF radio. He added that he is opposed to personnel changes at BaFin and said that no evidence has yet been provided that the authority’s president, Felix Hufeld, “made any mistakes.”

Paus said that the Wirecard collapse shows that BaFin is dysfunctional and that Germany needs a completely new kind of oversight body. She questioned whether Hufeld is the right person to lead an overhaul.

“His chair is really, really shaking,” Paus said.

Florian Toncar, a legislator for the opposition Free Democrats, accused authorities of failing to exercise proper scrutiny in investigating the Wirecard allegations, which were widely reported in the media over many months.

“This is also a political case of failure to supervise,” Toncar said in an interview with Bloomberg Radio Wednesday. Wirecard had a strong political lobby and enjoyed support from the government, which is why the authorities took a favourable view of the company, Toncar said.

“We have no evidence of direct political influence,” he added. “But we have a clear idea that Wirecard was promoted by the government.”

Justice minister Christine Lambrecht said Tuesday that the government would present legislation in September on reforms to financial supervision.

Bloomberg