The German supervision of the payment processor Wirecard fell short. The risk that the regulator BaFin would allow itself to be influenced by the German Ministry of Finance was too great, the European watchdog ESMA concluded in a 190-page report published Tuesday.
Wirecard collapsed in June when it turned out that nearly 2 billion euros had been lost on the balance sheet and that the amount may never have existed. Former CEO Markus Braun and other former directors of Wirecard have been arrested on suspicion of money laundering, accounting fraud and forgery. They deny any wrongdoing.
ESMA evaluated how the German authorities dealt with the rules on business information for markets and investors. A number of shortcomings were discovered. For example, there was an increased risk of influencing BaFin by the German Ministry of Finance.
Brussels has previously requested ESMA to conduct the investigation. As a result of the report, it is investigated whether supervision of the markets should be centralized in order to prevent such scandals.
“The Wirecard case further emphasizes that high quality financial reporting is essential in order not to betray investor confidence in the capital markets. And the need to enforce that reporting consistently and effectively across the European Union,” said Steven Maijoor , the Dutch ESMA chair.
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