German financial supervisor resists calls to resign over Wirecard

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The German financial supervisor has rejected calls to resign over the Wirecard scandal, while saying that in hindsight he should have called on prosecutors to open an investigation sooner.

Felix Hufeld told a conference on Wednesday that he would not resign “as long as my country and Europe trust me”.

The BaFin boss, whose position has been questioned by some German deputies, admitted that “we have not seen wood for trees” and “for too long we have relied on formal instruments”. He said the regulator was “too late” to find suspected “criminal activity”.

Wirecard collapsed into bankruptcy on June 25 after admitting that around 1.9 billion euros in cash were missing from its accounts. German prosecutors suspect the group has been looted, with $ 1 billion funneled to shadowy partner companies even as the payments group battles allegations of accounting fraud.

The German parliament on Tuesday opened an in-depth investigation into the matter.

BaFin has been criticized for failing to properly investigate the allegations and for revealing that its staff were trading Wirecard shares shortly before declaring insolvency, raising questions about potential conflicts of interest.

BaFin last year banned investors from betting against Wirecard shares for two months, the first such restriction on a sole proprietorship in the history of the German stock market. This was quickly followed by a criminal complaint against two Financial Times reporters who had reported on allegations by whistleblowers about alleged fraud in the payment business.

Mr Hufeld criticized the “lack of openness” of his detractors and pointed the finger at Wirecard EY’s listener, adding: “I don’t know of any country in the world where financial supervision is not based on financial supervision. audit of public enterprises. “.

The FT reported in June that Wirecard auditors at EY’s German office had failed for at least three years to request crucial account information from a Singapore bank where Wirecard claimed to have up to € 1 billion in cash. , a routine audit procedure that could have uncovered the fraud.

“We have established that third parties, with the deliberate intent to deceive, provided EY with false documents as part of its 2019 Wirecard audit. The extent and sophistication of these suggests large-scale international fraud at Wirecard EY said at the time.

In Germany, the accounting and financial reporting of listed companies has long been regulated by a separate body called the Financial Reporting Enforcement Panel. But the government plans to drop this and transfer its responsibilities to BaFin.

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