German regulator claims Wirecard scandal was a 'massive crime'
Germany’s top financial regulator branded the accounting scandal at Wirecard a “massive criminal act” as the country’s authorities face a backlash over their failure to prevent the payments firm’s spectacular collapse.
Felix Hufeld, the president of BaFin, Germany’s top financial regulator, said: “It is plain vanilla, old-fashioned criminal behaviour.”
Wirecard filed for insolvency last week after revealing that €1.9bn (£1.7bn) of cash on its balance sheet probably does not exist.
Mr Hufeld’s allegations of criminality came a day after prosecutors and police raided Wirecard’s Munich headquarters and four other sites in Germany and Austria as part of the investigation of one of the biggest accounting scandals of the century.
Authorities in Singapore and the Philippines are also investigating.
Regulators, auditors at EY and investors are facing intense scrutiny over their failure to ask tough questions of Wirecard’s management when the Financial Times published allegations of fraud at the company.
As a financial technology company Wirecard fell into a regulatory grey area in Germany.
Mr Hufeld told the Bundestag’s finance committee on Wednesday that decisions about how to categorise Wirecard were made in conjunction with the Bundesbank and the European Central Bank.
He previously labelled Wirecard’s demise “a complete disaster” and admitted that his own watchdog was “not effective enough to prevent something like this happening”.
“It is a disgrace that something like this happened,” he said, adding that the fallout was “the most appalling situation I have ever seen a DAX company in”.
Deutsche Bank, which once had a smaller market value than Wirecard, is weighing up a move to provide financial support to Wirecard Bank, a subsidiary of the stricken German firm, Bloomberg reported.
Administrators are seeking buyers for various parts of Wirecard’s business and bankers are already involved in running a sale process.
Wirecard’s UK subsidiary has appointed Alvarez & Marsal to explore options for the business which was forced by regulators to temporarily halt operations last weekend amid concerns over the security of consumers’ money.
