June 23, 2020
Today Sky News reported that “the former chief executive of payments firm Wirecard has been arrested amid an accounting scandal that centres on a missing €1.9bn (£1.7bn). Markus Braun had resigned on Friday after the company revealed that auditors could not find accounts containing the money.[note] Skye News, June 23, 2020, https://news.sky.com/story/former-wirecard-boss-arrested-amid-scandal-over-missing-eur1-9bn-12013031[/note]”
Sky News also reported that “Wirecard said last week that its auditor EY had refused to sign off on its 2019 accounts as it was unable to confirm the existence of €1.9bn in cash balances in trust accounts, about a quarter of its balance sheet.” [note]Ibid[/note]
Whistleblowers motivated the Financial Times (FT) to unleash its journalists to investigate the allegations of accounting fraud at Wirecard. The FT article entitled “What are the Wirecard allegations?” and published on May 17, 2019, provides a comprehensive overview of the allegations of financial misconduct [note]Dan McCrum, Financial Times, May 17, 2019, https://www.ft.com/content/12d751e8-6c0c-11e9-80c7-60ee53e6681d[/note].
Wirecard also “disputed whistleblower claims, reported by the FT, that Wirecard’s largest subsidiary by sales, based in Dubai, was not audited in 2016 and 2017. The figures were overseen by EY as part of the global audit, the company said. Wirecard also said it had disclosed some information about the subsidiary in German-language filings not prepared under international accounting standards.”[note]Ibid[/note]
Who Should Pay For It?
Where were BaFin, Germany’s financial watchdog?
Where were the Board of Directors of Wirecard?
Where were EY, the independent auditor of Wirecard?
Where were the relevant regulatory agencies of Singapore and Dubai?
Made in Germany
Though the investigation is still in its early stages, there is a stinky smell in many shameful transactions in many countries. We believe that BaFin was not responsive to the whistleblowers, red flags, and FT reports. The German reputation is on the line. If such a mega scandal happens in Germany, it happens everywhere.
Salute the Whistleblowers
We salute the whistleblowers who sacrificed their lives to protect all of us: the public interest. We want to thank the Financial Times and its excellent team of journalists for the exemplary investigative reporting they did and publish about Wirecard.
