German opposition lawmakers have collected enough votes to launch a parliamentary enquiry into the fraud scandal that has brought down bankrupt payments company Wirecard.
The Greens, the Left Party, and the Free Democratic Party said on Tuesday that they have formed an alliance to compel the coalition government — made up of the Christian Democratic Union and Social Democratic Party — to open an enquiry. The probe would examine, among other things, what the government knew and whether it or the financial regulator had turned a blind eye to concerns about Wirecard’s operations.
Wirecard, once the darling of the German fintech scene, was revealed in June this year to be missing €1.9bn (£1.69bn, $2.27bn) from its balance sheets. Its auditor EY, who had refused to sign off on the 2019 accounts due to the missing money, said in June that there were “clear indications” Wirecard had carried out an “elaborate and sophisticated fraud involving multiple parties around the world...with a deliberate aim of deception.”
The timing of the parliamentary probe is far from ideal for the two ruling parties, as it will likely run into 2021, which is federal election year in Germany.
The enquiry could also spell bad news for finance minister Olaf Scholz, who is running as the Social Democrat candidate to replace Angela Merkel as chancellor. Merkel has said that this is her final term, but the CDU has not yet chosen its candidate for 2021.
Scholz’s ministry is in charge of the country’s top financial regulator, BaFin, which has been harshly criticised for a lack of oversight on Wirecard.
The Financial Times first reported on suspicious accounting practices in Wirecard’s Asian businesses in 2019.
Wirecard declared itself insolvent in June, and was ejected from Germany’s DAX 30 in August.
Insolvency administrators cut Wirecard’s workforce in Germany by half late last month, letting 730 employees go as part of the insolvency proceedings. The company’s other assets are being sold off to try and recoup some of the €4bn that it owes creditors.
Its former chief executive Markus Braun and two other executives are in the custody of the Munich authorities, accused of fraud and other charges, while former chief operating officer Jan Marsalek is on the Interpol most-wanted list, and has been on the run since June.