German Lawmakers Blame Merkel’s Government for Wirecard Debacle
German Lawmakers Blame Merkel’s Government for Wirecard Debacle
(Bloomberg) -- The main responsibility for the failure to pursue alleged irregularities at Wirecard AG lies with the German finance ministry and Chancellor Angela Merkel’s office was also at fault, according to an opposition lawmaker.
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 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 toward 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 spokesman for the ruling 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 told 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.”
Asked about the Wirecard case at a regular news conference, a finance ministry spokeswoman said that the government will give its “full backing” to the parliamentary probe.
“The government is already working on tighter rules for accounting firms, balance-sheet controls and payment services,” the spokeswoman added.
Paus told Bloomberg TV 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.
Hufeld said Wednesday that he believes he has the backing to remain in his job and pledged to continue carrying out his duties. As head of the watchdog, he needs to be able to deal with the kind of criticism he’s facing, he said at a conference in Frankfurt.
“If you can’t, you need to look for another job, which I’m not doing,” Hufeld said. He also received support from Deutsche Bank AG Chief Executive Officer Christian Sewing, who told the same conference that “targeting individuals” should be avoided.
”It’s about improving our financial system and probably supervising certain things better across the board,” Sewing said.
‘Supervisory Failure’
Florian Toncar, a lawmaker 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. Wirecard had a strong political lobby and enjoyed support from the government, which is why the authorities took a favorable 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 will present legislation this month on reforms to financial supervision.
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