The missing billions at the financial service provider Wirecard raise questions. The German financial regulator is in need of explanation. Now the federal government has to do something.
Finance minister Olaf Scholz wants to strengthen German financial supervision. In view of the Wirecard scandal, it is now up to the legislator to “review and improve the protective mechanisms,” said the SPD politician to the “Frankfurter Allgemeine Sonntagszeitung”.
Place large payment service providers under financial supervision
The Federal Financial Supervisory Authority (Bafin) must have more rights of access to the control of balance sheets, “regardless of whether the group has a banking division or not.” The Bafin needed “the opportunity to be able to carry out special tests on a large scale at any time,” said Scholz.
Large payment service providers should generally be subject to financial supervision. The institution could also be staffed. “If we come to the conclusion that Bafin needs more money, more jobs and more skills, I will do my best to ensure that this happens,” said Scholz.
Previously, all parliamentary groups had called for a reform of the authority, which is subject to the supervision of the Federal Ministry of Finance. The Ministry of Justice had also announced that it wanted to analyze the extent of the need for reform together with the Ministry of Finance.
A step in the right direction?
The FDP Group’s fiscal spokesman, Florian Toncar, said on Sunday to Scholz’s suggestions that they were “a step in the right direction but not going far enough”. Above all, Scholz must ensure that “the Bafin can really take care of the big risks effectively and not get bogged down in small and small”, Toncar demanded. “That is why the long-promised law on regulatory relief for small and medium-sized banks must finally come.”
The deputy chairman of the left-wing group, Fabio De Masi, welcomed the proposal that Bafin be given comprehensive responsibility for auditing. “In the age of fin-tech and digital business models, this has to be done regardless of whether a company has a high technological share – as long as it provides financial-related services,” De Masi told the “Handelsblatt”. “In addition, more investments must be made in digital forensics for balance sheet audits so that auditors are not armed with pencils in front of global corporations.”
Wirecard company headquarters in Bavaria: Payment service provider has declared bankruptcy. (Source: Sven Hoppe / dpa)
1.9 billion euros that do not exist
The payment service provider Wirecard, which had been listed in the Dax for almost two years, had recently admitted that the 1.9 billion euros that the company had booked in trustee accounts very probably do not exist. In the meantime, the company based in Aschheim near Munich has filed for bankruptcy. You can find out more in the video above or click here.
Bafin President Felix Hufeld had pointed out the limited scope for action by the financial supervisory authority last week in view of the criticism of his authority. “The problem is: Who do we oversee?” Technology service providers and technology companies that are not financial institutions and are not supervised by financial regulators are increasingly merging with banking services and banking institutions.
“Beyond the special Wirecard case, of course, this is a much greater challenge that we see everywhere,” said Hufeld, speaking of questions “that I have asked many times in the past two years and that we address at a regulatory, i.e. political, level have to”. Formally, Bafin was only responsible for part of the Wirecard Group: the Wirecard Bank.
A Wirecard manager has disappeared without a trace
In addition to ex-CEO Markus Braun, a key figure in the balance sheet scandal is Jan Marsalek, who was formerly responsible for day-to-day business on the Wirecard board. You can read his story here. As previously thought, his trail was lost in the Philippines a good ten days ago. The public prosecutor has made public that it is investigating Braun, Marsalek and others because of suspected incorrect information and market manipulation.
In the meantime, it became known that Marsalek may not have traveled to China via the Philippines. The data, which should document the entry and exit of the former board of directors at the end of June, are falsified, said the Philippine Justice Minister Menardo Guevarra on Saturday. This resulted in an examination of the recordings of surveillance cameras, passenger lists and other material.
“The immigration officials who made these fictitious entries have been released from their duties and are now facing administrative penalties,” Guevarra said, without quoting the exact number of employees. He ordered further investigations into the case.