The opposition in the Bundestag sees that its allegations at the European level have confirmed that the German Financial Supervision Authority and the Federal Ministry of Finance have made huge mistakes in the Wirecard case. On Tuesday, the EU financial market authority Esma published a report mentioning the shortcomings and omissions of both the Federal Financial Supervisory Authority (Bafin) and the ministry.
It is alleged that the cooperation between Bafin and the German Accounting Audit Office (DPR) which he commissioned did not work. According to the report, the two institutions did not have the same understanding of the role and possibilities of both institutions.
In addition, Esma sees signs of an “increased risk of influence” by the Ministry of Finance on Bafin. This is evidenced by the many contacts between the two bodies during the review of Wirecard’s balance sheets since 2018. The third key point is Esma’s misunderstanding that Bafin employees also during the review phase, when allegations of manipulation of financial services provider were traded.
Opposition party financial politicians are now intensifying criticism of the EU report. FDP politician Florian Toncar told Tagesspiegel: “It is definitely clear that Wirecard is the cause of Olaf Scholz.”
It was a protective statement by the Federal Minister of Finance that there was nothing he could do at Wirecard during the ongoing audits by FREP. Toncar accuses the ministry of even “engaging massively”. “This also confirms the suspicion that Wirecard enjoyed political protection.”
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Left-wing MEP Fabio De Masi is also considered confirmed. Esma’s report was a “slap in the face” for Bafin. There was an urgent need to reform financial supervision “so that it would have its teeth.”
“System cannot work”
Green politician Sven Giegold, a Member of the European Parliament, also called for a reform of German financial supervision. Esma’s report “tirelessly” reveals that the German system of joint control of the BaFin and FREP balance sheets cannot work. “If confidentiality rules thwart effective communication between authorities and sometimes disagree on their respective roles, it becomes too easy for fraudsters.” The chaos of responsibility must be ended.
Scholz responded defensively, saying that the improvements proposed by Esma were in line with the government’s known plans. “So I don’t see it as something critical.” Bafin and DPR also denied the allegations. The Parliamentary Committee of Inquiry into the Wirecard matter opened its first hearing last week and will continue its work this Thursday.
Bafin and DPR are responsible for auditing the balance sheet in a two-step process. Esma’s role is to design guidelines for harmonize balance sheet controls across the EU and to monitor compliance. it is to be harmonized throughout Europe and regularly monitors its implementation in a peer review. The European Commission could use the deficits of German supervision as an opportunity to push for greater standardization from Brussels.