German lawmakers fault finance minister, auditor on Wirecard

AP International

FILE – In this Monday, July 20, 2020 file photo, the logo of payment company Wirecard is pictured at the headquarters in Munich, Germany. German lawmakers presenting a report into the collapse of payment processing company Wirecard accused the country’s finance minister and auditors Ernst and Young of numerous oversight failings. (AP Photo/Matthias Schrader, file)

BERLIN (AP) — German lawmakers presenting a report Tuesday into the collapse of the payment processing company Wirecard accused the country’s finance minister and auditors Ernst & Young of numerous oversight failings.

Wirecard filed for protection from creditors through insolvency proceedings last year after admitting that 1.9 billion euros ($2.3 billion) supposedly held in trust accounts in the Philippines probably didn’t exist.

The company’s former chief executive, Markus Braun, is being investigated on suspicion of criminal fraud. Interpol has issued a red notice for Wirecard’s former chief operating officer, Jan Marsalek, on allegations of “violations of the German duty on securities act and the securities trading act, criminal breach of trust (and) especially serious case of fraud.”

The nine-month parliamentary probe that concluded this week immediately weighed upon Germany’s upcoming election, with both opposition parties and Chancellor Angela Merkel’s Union bloc heavily criticizing the role played by Finance Minister Olaf Scholz in the affair. Scholz is the center-left Social Democrats’ candidate to replace Merkel in the Sept. 26 vote.

“Finance Minister Olaf Scholz and the leadership of the Finance Ministry bear political responsibility for the Wirecard scandal,” Union bloc lawmaker Matthias Hauer told reporters. “Mr. Scholz presented himself as a silent minister with implausible lapses of memory.”

He said the Finance Ministry should have stepped in when the country’s financial regulator in 2019 issued a ban on short-selling Wirecard stock. The ban gave credence to Wirecard’s claim that its stock was being manipulated at a time when media reports, particularly by Britain’s Financial Times, indicated the company was cooking the books.

In their 4,500-page report, lawmakers also heavily criticized the auditing company Ernst & Young, also known as EY, for repeatedly approving Wirecard’s annual accounts.

“EY could and should have noticed the accounting fraud,” said lawmaker Cansel Kiziltepe of the Social Democrats, who sought to defend Scholz against criticism from the other parties.

Questions have also been raised about political lobbying for Wirecard by Merkel during a 2019 visit to China. Germany’s longtime leader, who isn’t running for a fifth term, testified before the parliamentary investigations committee that the payments company received no special treatment.

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