German financial regulator departs over Wirecard fallout

Wirecard collapsed last year with €1.9bn missing from its balance sheet

Almost until Wirecard’s collapse last June, the German regulator dismissed serious fraud claims against the company. Photograph: iStock

Almost until Wirecard’s collapse last June, the German regulator dismissed serious fraud claims against the company. Photograph: iStock

 

Germany’s Wirecard collapse claimed another head on Friday with the departure of Felix Hufeld as head of Germany’s financial supervisor (BaFin).

Finance minister Olaf Scholz said Mr Hufeld’s departure had been a mutual decision to allow a fresh start at an organisation that overlooked Germany’s greatest postwar accounting fraud.

Since Wirecard’s collapse last year, with €1.9 billion missing from its balance sheet, Mr Hufeld insisted his institution was not directly responsible for overseeing the Munich-based financial services provider.

Before the bank filed for bankruptcy and a leading executive vanished, however, the regulator responded quickly to Wirecard claims that allegations against it were part of a financial conspiracy. BaFin acted in 2019 to suspend temporarily short selling in the company. The regulator also filed complaints against two journalists at the Financial Times who reported on the company’s accounts

In a statement Mr Scholz thanked Mr Hufeld for his “great commitment” as BaFin head in the last years, “shaping and advancing significantly the supervision of financial services in Germany and Europe in that time”.

His deputy, securities division chief Elisabeth Roegele, announced on Friday evening she was also stepping down in an “amicable” parting with BaFin.

The BaFin head and his deputy are scheduled to give evidence to an ongoing Bundestag inquiry into the Wirecard collapse at the end of March.

Dismissed claims

Almost until Wirecard’s collapse last June, the German regulator dismissed serious fraud claims against the company and dismissed as “spurious” documents from Asian banks disputing Wirecard’s claimed cash position.

Faced with a growing body of evidence against the company, BaFin noted the “homogenous cultural background” of its accusers, “mainly Israeli and British”.

While BaFin’s senior officials defended the Munich company, its own employees were trading heavily in Wirecard shares and derivatives.

BaFin said on Thursday it had suspended an employee suspected of using sensitive information to trade in structured financial products on June 17th, 2020.

A day later, Wirecard’s auditor EY announced that it could not explain the gap of nearly €2 billion in the company’s accounts, triggering a 60 per cent collapse in share value within 24 hours. On Thursday, Wirecard’s former chief financial officer Alexander von Knoop said he was “surprised and shocked” to learn of the hole in the company balance sheet.