Wirecard scandal: financial sector out of control?

The German financial regulator Bafin has filed a complaint against the payment service provider Wirecard for market manipulation through falsification of its balance sheet. The company's former head was arrested on Monday. Prior to the move Bafin had long protected Wirecard and even filed a report against journalists who made allegations of financial wrongdoing public. Commentators denounce basic deficits in the supervision of the financial sector.

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Financial Times (GB) /

This shouldn't have happened

For the Financial Times, which reported on whistleblowers' allegations against Wirecard 18 months ago, it speaks volumes that the revelations fell on deaf ears:

“From the outset, the instincts of the German authorities have been to investigate not the alleged transgressor but the messenger, and investors who, suspicious of Wirecard's model, had shorted its shares. Journalists from this news organisation have faced not just a misinformation campaign from Wirecard but investigations and even criminal allegations from Germany's financial regulator and prosecutors. ... It is time for a reckoning by the German corporate and political establishment: of how this case happened, and why regulators and criminal authorities took no action against it for a year and a half.”

taz, die tageszeitung (DE) /

A regulatory authority as lobbyist

This scandal must have consequences, demands taz:

“First of all for the auditors. Up to now, a global oligopoly of four large firms has dominated in this sector, almost all of which attract lucrative audit assignments and which already failed miserably in the 2008 financial crisis. ... But Bafin [the German Federal Financial Supervisory Authority] must also change. One of the crazy twists of the Wirecard scandal is that Bafin reported two journalists from the Financial Times to the Munich public prosecutor's office because early on they had reported on the possibility of balance sheet fraud at Wirecard. You'd have to think hard to come up with this absurd idea. Bafin did not behave like a regulatory authority but like a state lobbyist for the German financial groups. This must never happen again.”

Die Presse (AT) /

Auditors more worried about losing contracts

Die Presse is reminded of similar scandals in Austria:

“We know about the mechanisms that make such things possible from our own painful experience with scandals: well-meaning auditors who are worried about the impending loss of a lucrative contract; frequently clueless rating agencies; toothless financial market regulators and authorities that focus more on investigating whistleblowers than on taking action against politically-connected companies. ... It will take a lot to restore the lost trust. Particularly when it comes to implementing sensible regulations. Of course, fraud and manipulation can never be completely prevented. But letting things ride and then donning a sad expression afterwards and muttering something about 'a disgrace' is definitely not enough.”

Ziarul Financiar (RO) /

Romanian savers have a right to know

The largest private pension fund in Romania, NN Pensii, may also be dragged into the scandal. Ziarul Financiar demands that the Romanian financial supervisory authority and parliament investigate why the company acquired over 250,000 Wirecard shares:

“The two million Romanians who transfer 3.75 percent of their monthly salary to NN Pensii can't find out what happened to the Wirecard shares because the fund manager only provides information on the overall situation. ... But the ASF, as the regulatory and supervisory authority, can investigate the case. ... If the investment in Wirecard shares was profitable, we must be told who to congratulate - and if money was lost, we must know how much and who was responsible for the investment.”