Role Of Wirecard Supervisors To Be Probed By EU

The repercussions of the spectacular collapse of Munich fintech start-up Wirecard continues to be felt across Europe.

Wirecard collapsed in late June after it filed for insolvency following a financing scandal. That scandal saw former CEO Markus Braun being briefly arrested before he posted bail set by a Munich court at 5 million euros ($5.65 million).

And now Reuters has reported that the European Commission has asked the bloc’s market regulator to assess the responsibilities of financial supervisors in the scandal that led to the collapse of Wirecard.

Supervisor probe

The EU executive’s vice-president, Valdis Dombrovskis, reportedly told a news conference that the analysis should focus on what happened regarding Wirecard’s bankruptcy, including “the adequacy of supervisors’ response to the events leading to the collapse of Wirecard.”

German prosecutors are already conducting a money laundering probe of the firm, as well as an investigation into alleged fraud, balance falsification and market manipulation.

And Germany has recognised that the case will result in changes to laws on financial oversight, at least according to Finance Minister Olaf Scholz.

“It’s about really getting to the bottom of what happened with Wirecard. It will lead to us having to change a whole range of national laws,” Scholz was quoted by Reuters as saying.

German financial regulators have previously called the situation at Wirecard a “scandal” and a “disaster”.

Missing money

It is understood that prior to its collapse, the company had been in emergency talks with its lenders, whom it owed 1.75bn euros.

Wirecard had been until recently one of Europe’s highest-profile fintech start-ups, but it recently confirmed it was unable to release its annual results for 2019 because 1.9bn euros ($2.1bn) was missing from its accounts,

CEO Markus Braun resigned after the massive discrepancy was discovered in its accounts, and last week rating agency Moody’s withdrew the company’s credit rating.

Wirecard said the funds it had declared on trustee accounts at two banks in the Philippines, had probably never existed.

That declaration came after it attempted to trace the funds and reached a dead-end in the Philippines.

German investigation

Munich prosecutors and police are understood to have searched Wirecard’s headquarters and four further properties.

Twelve prosecutors and 33 police officers were involved in the raids to investigate suspected fraud, including market manipulation, prosecutors said.

Prosecutors are also said to be investigating Wirecard board members Alexander von Knoop and Susanne Steidl, as well as Braun and former chief operating officer Jan Marsalek.

German prosecutors are also said to be considering whether to issue an international warrant for  Jan Marsalek, who has disappeared, but some media reports state he is currently in the Philippines.

Marsalek, who is also an Austrian citizen, was responsible for Wirecard’s business in Asia that is at the centre of suspicions the group inflated its assets and revenue.

The Philippines do not have an extradition treaty with Germany.

Meanwhile according to documents, which have been reviewed by the Financial Times, Jan Marsalek touted having documents about the use of a Russian chemical weapon (novichok) in the UK and bragged about his ties to the intelligence services.

His documents allegedly included the formula for novichok, which is the world’s deadliest nerve agent.