Germany to hold special hearing on Wirecard scandal
Germany’s Bundestag will interrupt its summer recess to hold a special session today to discuss the Wirecard accounting scandal.
The request for an inquiry by Germany’s opposition comes after the government announced that it would cancel its contract with the country’s privately operated accounting watchdog, Financial Reporting Enforcement Panel, as a result of the scandal. Wirecard recently filed for insolvency; it owes creditors almost $4 billion after disclosing a $2.2 billion hole in its accounts that its auditor said was the result of a collusive fraud.
The scandal has set off a blame game among banks, auditors and public authorities and has also called into question what government officials knew about the payment firm’s financial problems. The inquiry hopes to uncover why officials failed to act earlier on the reports of suspected accounting issues at Wirecard and what political support the company may have received.
The collapse of the payments processing firm is a major setback to the German financial sector’s renewed play to become the main base for European financial operations after Brexit. Concerns for the sector’s future have fed into Finance Minister Olaf Scholz’s proposal of a tough reform agenda and new regulations that involve transparency requirements are likely to be announced within the EU. Furthermore, expect German financial watchdog BaFin to be given greater investigative and enforcement powers, a broader mandate to cover non-banking financial institutions and tougher penalties against careless auditors.
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