The EU’s financial securities regulator has taken issue with how Germany’s financial regulator (BaFiN) has managed the Wirecard sandal.
Wirecard was once the toast of the German fintech scene, but had a spectacular fall into disgrace in June after auditor EY refused to sign off on the company’s 2019 accounts due to a €1.9bn hole in its accounts. It soon after filed for insolvency.
In its report, the European Securities and Markets Authority (ESMA) identified a number of “deficiencies” at BaFin, including that the financial supervisor did not maintain enough independence from the country’s Ministry of Finance, which created an "increased risk of influence by the Ministry of Finance.”
It also accused BaFin and Germany’s Financial Reporting Enforcement Panel, (FREP) of turning a blind eye to concerns raised about the accounting practices at the payments company between 2016 and 2018.
“FREP did not pick up signals in the international media and failed to select Wirecard for examination in the period between 2016 and 2018,” the ESMA report said.
The Financial Times first started reporting on suspicions about Wirecard’s accounting as far back as 2015 and has been investigating the company since then. “More attention should have been paid to the FT reporting during the first half of 2019,” the report said.
“Today’s report identifies deficiencies in the supervision and enforcement of Wirecard's financial reporting,” ESMA chairman Steven Maijoor said.
Felix Hufeld, president of BaFin, said in September 2020 that he would not resign from his post over the scandal.
On Monday (2 November), Munich prosecutors released former Wirecard chief financial officer Burkhard Ley on bail, saying that most of the fraud took place after 2017, when Ley had already left the company’s management board.
Former chief executive Markus Braun is still in custody, having been detained again in June after his initial arrest. Despite an ongoing Interpol search, former COO Jan Marsalek is still at large. According to a report last week by the Süddeutsche Zeitung, there are suspicions that Marsalek, who was born in Austria, may have been a spy for the Austrian intelligence service.
WATCH: German parliament pushes in-depth Wirecard probe