Following the Wirecard scandal, Germany has announced it will give company accounting responsibilities to the market regulator BaFin.
The German payments group, Wirecard, filed for insolvency last week after accounting firm Ernst & Young found that €1.9 billion were missing from the company’s accounts.
The German government has decided to terminate its relationship with Financial Reporting Enforcement Panel or “Deutsche Prüfstelle für Rechnungslegung” (DPR), a quasi-government entity that investigates accounting issues on behalf of public authorities. The DPR has been examining financial reporting of publicly listed companies since 2005 and reportedly audited Wirecard in 2019 but failed to “notice” the company’s issues.
After Wirecard has been growing and prospering for years and only know events have uncovered the financial discrepancies going on in the background, BaFin is also under pressure. Felix Hufeld, head of German financial supervision has admitted he shares responsibility.
BaFin was not formally responsible for Wirecard since the payment group is not a bank but Hufeld admits it would have been possible to take supervision.
The President of the Bavarian Finance Center, Wolfgang Gerke spoke about the failure of the supervisory authorities and said the scandal has done damage that will have “impact for years”. He also said he suspects a corrupt network stands behind the scandal.
Following the scandal in Germany, the UK Financial Conduct Authority suspended Wirecard’s UK subsidiary and left thousands of people in the UK unable to access their money. The UK watchdog stated that it has taken actions to stop Wirecard’s UK business in order to protect its customers. The Newcastle-based UK subsidiary, Wirecard Card Solutions provides technology to issue prepaid cards and process payments to companies including Curve, ANNA, Pockit, Dozens, Soldo and Revolut.
FCA also released a statement that they have been working with Wirecard UK to resume the activities of the company so that people could access their money.
“We have been working closely with Wirecard UK and other authorities over the last few days to ensure that the firm was able to meet certain conditions required to lift the restrictions we imposed on it. We are now in a position to allow Wirecard to resume operational activity.
This means customers will now, or very shortly, be able to use their cards as usual.
The Monetary Authority of Singapore (MAS) also issued a statement that Wirecard’s Singapore entity has complied with the Singapore regulator’s directions to keep customers’ funds in separate bank accounts in Singapore.
