Maraaz 
In the Wirecard debacle, pressure is also increasing on the supervisory authorities in Germany. The EU Commission takes a close look at the actions of the inspectors. The federal government is also pressing for stricter requirements. Wirecard: Lost 2.1 billion was not actually there.
Payment systems company Wirecard said that $ 2.1 billion was actually missing. The company admitted that it was $ 2.1 billion out of nothing due to errors in the accounts.
A new statement came from Wirecard regarding the scandal, which resulted in the resignation of the company’s CEO, Markus Braun.
In the statement made by Wirecard, it was stated that the $ 2.1 billion in question actually consists of nothing in their accounts. In addition, it was stated that necessary studies were carried out in order for the company to continue its work.
After the billion dollar scandal surrounding the Dax group Wirecard, the German government is taking its first steps. The Federal Ministry of Justice and the Federal Ministry of Finance will terminate the contract with the German Accounting Office (DPR). Both ministries agreed on this, a spokesman for the justice department confirmed on Sunday in Berlin. The “Bild am Sonntag” had previously reported.
The DPR, which is organized under private law, controls the balance sheets on behalf of the state. According to the ministries, he had failed in the Wirecard case, writes the “Bild am Sonntag”. At the DPR, no comment was initially available.
According to the DPR, the Federal Financial Supervisory Authority (Bafin) had advised in February 2019 that there were inconsistencies in Wirecard’s 2018 half-year results. “We reacted immediately and arranged for an audit of the balance sheet at the German Accounting Office (DPR) in mid-February 2019,” said a spokeswoman on request. The Bafin was not responsible for the audit. The DPR alone is responsible at the first stage. The test there took so long. The “Bild” newspaper had previously reported.
Inspection body has little staff;
According to a report by the “Frankfurter Allgemeine Sonntagszeitung” (FAS), the inspection agency, also known as the “balance police”, has only a small number of staff. In the past 16 months, only one single employee had been entrusted with the complex and complex inspection. At the DPR, no comment was initially available on this either.
According to FAS, the division of tasks between Bafin and DPR is also at the center of the EU Commission’s hard criticism of Germany in the Wirecard case. The EU is now having the European financial regulators ESMA review the actions of German financial regulators in the balance sheet scandal.
Wirecard had filed for bankruptcy after the company had to admit that the EUR 1.9 billion in cash reported on the balance sheet that was said to be in Asian bank accounts could not be found. Bafin President Felix Hufeld described the events as “shame”. Federal Minister of Finance Olaf Scholz (SPD) announced stricter regulation: “We also have to rethink our supervisory structures.” This Wednesday, Hufeld should answer questions in the Finance Committee of the Bundestag.
The payment processor struggling to survive after the balance sheet scandal wants to continue operations after the bankruptcy application. “The management board is of the opinion that a continuation is in the best interest of the creditors,” said the Dax group in Aschheim near Munich. “The business operations of the group companies including the licensed units are currently being continued.” The message was aimed at “customers and partners”.
According to the company, the bank belonging to Wirecard in particular is not currently part of the bankruptcy proceedings. Payments to merchants would continue to be made without restrictions. It is also “in constant communication with the credit card organizations,” wrote the Wirecard board in a message.
However, the British financial regulator FCA has shut down the Newcastle-based subsidiary Wirecard Card Solutions indefinitely and has frozen their accounts. The Company is now prohibited from doing business in the United Kingdom for an indefinite period of time, or transferring funds or assets without the Authority’s written consent, as is apparent from the FCA’s public order on the Authority’s website.
Insolvency report in progress;
The board of the German parent company Wirecard AG had filed for bankruptcy at the Munich district court. The court appointed the lawyer Michael Jaffé as an expert, one of the best-known insolvency administrators in Germany. The first step is to prepare the insolvency report. A very central question in insolvency reports is whether the respective company can continue its business operations. Jaffé’s law firm has relevant experience with major bankruptcies, such as the bankruptcy of the Kirch media group, as well as with dealing with air transactions, such as with the investment company P&R, which cheated tens of thousands of small investors by renting non-existent shipping containers.
Wirecard handles cashless cash flows between merchants on the one hand and banks and credit card companies on the other. The group employs almost 6,000 people worldwide. The trigger for the bankruptcy application was the admission of alleged air bookings in the amount of 1.9 billion euros. The accounting firm EY, which audited the 2019 financial statements, assumes fraud on an international scale. The Munich public prosecutor’s office is investigating ex-CEO Markus Braun and other former and active top managers.
The German financial regulator Bafin has also come under pressure because the alleged manipulation of the balance sheet has remained undetected for a long time. However, there is a two-stage process for checking the balance sheet of listed companies, as Bafin writes on its website. Accordingly, the DPR examines the suspected cases in the first stage, and the Bafin only becomes active in the second stage. The DPR’s activity report only states that 86 tests were completed in 2019, including one at the request of Bafin. In one case, the bank identified “specific indications of a mistake in a half-yearly financial report and asked the DPR to initiate an audit”.
