Wirecard Prosecutor Pushes Back on Slow-Response Claims

(Bloomberg) -- The Munich prosecutor in charge of investigating fraud at collapsed payments company Wirecard AG defended her office’s response in the 1 1/2 years leading up to the company’s implosion, saying there wasn’t enough evidence to step in at the time.

Appearing in front of a parliamentary investigation in Berlin, Hildegard Bäumler-Hösl said her office had Wirecard “on our radar” more than a year before the Munich company filed for insolvency but that the evidence wasn’t sufficient. Reports in the Financial Times detailed wrongdoing that occurred in Singapore, outside her office’s jurisdiction, she said.

“We’re prosecutors, not auditors or supervisory boards,” Bäumler-Hösl said. “We show up when the milk has already been spilled. We’re pathologists.”

The high-profile collapse of the once high-flying German fintec company has raised pressure on German authorities to explain how alleged wrongdoing could have gone on for years in plain sight. The country’s Bafin regulator is under particular scrutiny, with lawmakers demanding that the financial watchdog come clean. While Bäumler-Hösl spoke, Bafin head Felix Hufeld announced that he will step down from his post, in what Finance Minister Olaf Scholz called a “management restart” for the regulator.

Wirecard collapsed in the middle of last year after disclosing that about 1.9 billion euros ($2.3 billion) in cash that was previously assumed was sitting in accounts in Asia in fact never existed. Former Chief Executive Officer Markus Braun is in jail, while his deputy, Jan Marsalek, is on the run.

In the years leading up to its implosion, the company had enjoyed a meteoric rise from fintech obscurity to darling of the investment community and political elite alike. But by the time Wirecard ascended to the Dax Index of 30 largest companies, allegations of wrongdoing began appearing, which management routinely deflected. According to Bäumler-Hösl, three separate money-laundering probes in 2019 into Wirecard were also dropped.

“We knew from the FT report that these were offenses, but these were taking place in Singapore and not in Germany, so we didn’t have enough to intervene,” Bäumler-Hösl said.

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