Merkel Oblivious to Wirecard Allegations Before China Visit
(Bloomberg) -- German Chancellor Angela Merkel said she was unaware of any allegations of serious wrongdoing by Wirecard AG when she lobbied for the payments company in China.
As part of a broader discussion about Germany’s economic interests, Merkel broached Wirecard’s efforts to gain access to the Chinese market on the September 2019 visit at a time when media reports about alleged irregularities were already circulating widely.
In testimony on the final day of a parliamentary inquiry in Berlin, she said that she relied on the finance ministry and other government bodies to keep her informed and that she only learned of the allegations against Wirecard in June 2020, around the time of its collapse.
“It was right that I mentioned Wirecard on the state visit,” Merkel said. “At the time, it was about improving access to the Chinese market.”
Wirecard’s spectacular crash from rising fintech star to national disgrace has turned the spotlight on the German authorities, including officials in Merkel’s chancellery. Lawmakers have accused the government and financial regulator BaFin of ignoring allegations of wrongdoing because they were blinded by what they saw as a welcome national success story.
The Bundestag inquiry -- which has heard testimony from around 100 witnesses -- has been trying to determine how the unprecedented fraud by a company listed on the benchmark DAX index could go undetected for years, and why authorities failed to intervene.
Wirecard revealed in June last year that 1.9 billion euros ($2.3 billion) it had reported as assets probably never existed. Lawmakers estimate that the fallout from the company’s collapse caused more than 20 billion euros worth of damage, with many small investors losing money.
Merkel conceded that there is “room for improvement when it comes to Germany as a financial center” and that the Wirecard affair had been a “major setback” to its reputation.
Before her China trip, the finance ministry provided her office with selective information about Wirecard which implied that the payments company was a victim of manipulation, according to an internal email exchange seen by Bloomberg this week.
The ministry presented little information on apparent wrongdoing, such as critical reports in the Financial Times newspaper or details of an official investigation of the allegations, the exchange showed.
Finance Minister Olaf Scholz said Thursday when he testified to the inquiry that the idea that his office or BaFin protected Wirecard was an “absurd fairytale.”
In a new twist to the case, lawmakers accused him of having caused a security risk by using his private email account to communicate about Wirecard.
Scholz said he strictly distinguished between private and official communication, but conceded that he sometimes forwarded newspaper articles via his private email address.
Scholz is running for the Social Democrats to succeed Merkel as chancellor after September’s election, and the Wirecard affair has put him on the defensive as he struggles to win voter support and make up ground on rivals.
Merkel was also quizzed about compliance rules on financial trading by government officials and said she didn’t know whether any such rules existed. She pledged to look into the matter and come up with proposals to regulate the practice.
Frankfurt prosecutors said Monday they had opened an investigation into whether some BaFin staff illegally traded Wirecard stock.
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