German Regulator Had Just 1 Person Checking Wirecard’s $3.1B Books: Report
Germany's finance and accounting agencies seem to have missed their chance to spot a $2.1 billion black hole in Wirecard's accounts.
Jul 3, 2020 at 1:33 p.m. UTCUpdated Aug 19, 2021 at 2:54 a.m. UTC
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Germany's accounting watchdog reportedly had only one person checking Wirecard's books in the months before the company admitted to the massive accounting irregularities that led to its insolvency.
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- Sources speaking to Reuters on Thursday said Germany's chief financial regulator, BaFin, had assigned only one staff member at the Financial Reporting Enforcement Panel (FREP) to report on Wirecard's books in 2019.
- FREP is a privately owned agency with a contract with BaFin.
- Wirecard claimed in February that it had earned revenue upwards of €2.8 billion (~$3.1 billion) in 2019.
- On June 18, the Munich-based company admitted some of its employees had purposefully inflated revenue, resulting in an estimated $2.1 billion black hole.
- FREP's report had not been published by that point and has still not been made public.
- The private agency had previously assured BaFin it had investigated Wirecard as far as it could, Reuters said.
- A spokesperson said Wednesday it was not FREP's responsibility to investigate accounting fraud.
- BaFin has since confirmed it will be canceling its contract with FREP.
- On June 23, Wirecard's former CEO, Markus Braun, was arrested on suspicion of accounting fraud and market manipulation.
- The collapse of Wirecard meant cards from cryptocurrency firms TenX and Crypto.com temporarily stopped working; the cards were reactivated earlier this week.
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