German lawmakers probing the collapse of payments firm Wirecard are this week grilling top ministers and even Chancellor Angela Merkel as a parliamentary inquiry into the massive fraud reaches a dramatic climax.
Finance Minister Olaf Scholz, who has described the Wirecard scandal as "unparalleled" in Germany, will find himself in the hot seat on Thursday, two days after Economy Minister Peter Altmaier appeared before the parliamentary committee.
Lawmakers are investigating the political and regulatory failings that allowed the Wirecard cheating to go unnoticed for years, with critics saying early warning signs were ignored.
Once a rising star in the booming fintech sector, Wirecard filed for bankruptcy last year after admitting 1.9 billion euros was missing from its accounts.
As Wirecard's auditor for over 10 years, accountancy giant EY signed off on the firm's accounts even as a string of media reports raised alarm about Wirecard's accounting practices Photo: AFP / TOLGA AKMEN
The company's former CEO Markus Braun and several other top executives were arrested on fraud and money-laundering charges.
The focus on politicians' roles in the drama comes at an awkward time for Merkel's ruling conservatives and their Social Democratic (SPD) coalition partners, five months before a general election.
Once a rising star in the booming fintech sector, Wirecard filed for bankruptcy last year after admitting 1.9 billion euros was missing from its accounts Photo: AFP / Christof STACHE
Outgoing chancellor Merkel will be quizzed over her role in the scandal on Friday, after it emerged she promoted Wirecard on a trip to China in September 2019 when the firm was eyeing a foray into the Chinese market.
Her intervention has raised eyebrows because journalists were already voicing doubts about Wirecard's books at the time.
Merkel should ask herself whether "promoting Wirecard was really appropriate or whether her office should not have looked into the warning signs earlier," said Frank Schaeffler, an MP from the pro-business FDP party who is on the committee.
Also accused of being too slow to react is Merkel's would-be successor Scholz from the centre-left SPD, whose finance ministry oversees banking regulator Bafin, which has come under fire for its lax oversight of Wirecard.
Wirecard's former CEO Markus Braun and several other top executives were arrested on fraud and money-laundering charges Photo: AFP / Christof STACHE
That, in turn, "raises the question of the political responsibility of Olaf Scholz and his state secretaries," said Matthias Hauer, a conservative MP on the committee.
Bafin has been particularly criticised for its decision to impose a two-month ban on shorting Wirecard shares in early 2019, which Schaeffler said "seriously damaged trust in Germany as a financial centre".
Bafin also controversially filed a complaint against two Financial Times journalists who reported about irregularities at Wirecard, while dismissing their suspicions.
The regulator has in recent months undergone sweeping reforms and a reshuffle at the top.
With the election battle in full swing, SPD and opposition MPs have sought to shift the spotlight onto the conservative-run economy ministry by highlighting the role of Wirecard auditors.
As Wirecard's auditor for over 10 years, accountancy giant EY signed off on the firm's accounts even as a string of media reports raised alarm about Wirecard's accounting practices.
As they grilled Economy Minister Altmaier on Tuesday, lawmakers questioned whether the ministry's auditing watchdog APAS should have scrutinised EY's work more closely.
Any shortcomings on the part of APAS would mean "the minister had not done his work properly either," said FDP MP Florian Toncar.
Though he denied responsibility for the scandal, Altmaier told the committee that compliance rules at APAS would be tightened.
In a midway report in March, lawmakers on the committee slammed what they called "a culture of non-responsibility" and said that financial authorities and political leaders had "well-founded indications of criminal behaviour at Wirecard".
Some of those responsible have already lost their job, including former Bafin chief Felix Hufeld, who was dismissed in January.
