The Bundestag’s committee looking into the Wirecard case, Germany’s biggest financial scandal in years, met for the first time on Thursday (8 October). It could be particularly unpleasant for Finance Minister and SPD chancellor candidate Olaf Scholz. EURACTIV Germany reports.
The Wirecard investigative committee is intended to clarify the political responsibility in the affair that rocked the country. The main target is Vice-Chancellor and Finance Minister Scholz, who is in charge of Germany’s financial markets watchdog, BaFin.
Moreover, since Scholz has already been declared the Social Democrats’ candidate for chancellor for next autumn’s federal elections, the other parties on the committee might be tempted to add a few scratches to his image.
The committee should work until the summer break in 2021 right up to the election campaign.
This is probably one of the reasons why Scholz already put his defence to the forefront. On Wednesday, he held a press conference on the German government’s Wirecard action plan, which has been in existence for weeks, but only then passed through the cabinet.
In the right direction, but not far enough
The timing was not a matter of tactics, Scholz said: “The action plan is ready, because it has now been completed.” He welcomed the committee of inquiry, because “without the committee, the political force would probably not be sufficient” to implement the action plan.
It is striking that the SPD’s government partners, the conservative Christian Democrats (CDU/CSU), apparently went along with Scholz’s defence, in light of the approaching elections.
Scholz’s action plan wants to target auditors in particular, who should be made more easily liable, not only in cases of deliberate fraud but also in cases of gross negligence. To reduce conflicts of interest, auditors should also no longer audit the balance sheets of companies that they advise at the same time.
Sven Giegold, a Green MEP in the European Parliament’s Finance Committee, told EURACTIV Germany this was going in the right direction, but by no means far enough
Since the conflicts of interests continue to exist, supervisory boards hire consulting firms to carry out an audit. These companies have an interest in being commissioned again next time, but if they damage the company with their audit, this will not happen.
The rotation of auditors every ten years, as provided for in the action plan, misses the core problem, said Giegold, “because then you have the conflict of interest for ten years, that is not convincing.”
Instead, he suggested that a public body would assign the audit firms. They would then no longer have to be afraid of scaring away supervisory boards.
Likewise, for Giegold it is not enough to strengthen the BaFin’s rights of intervention. It already had the right to approach Scholz at any time with the request to screen Wirecard, but it did not do so due to the agency’s internal culture.
“It is lax in many areas, the action plan does not change anything there. You have to throw some people out,” said Giegold.
However, he welcomed the committee of inquiry, which could bring improvements, “especially if it sheds light on the relationship between the Ministry of Finance and the BaFin.”
EU also under pressure to reform
Wirecard was also a topic of discussion in the European Parliament on Wednesday, as MEPs discussed the role of the EU authorities in the scandal with the Commissioner for Economic Affairs, Valdis Dombrovskis.
Dombrovskis stressed that it was “too early to draw any final conclusions about the reasons for the Wirecard collapse,” but announced a possible strengthening of the EU financial supervisory authorities ESMA.
Giegold, who was involved in the debate, thinks ESMA has a certain responsibility. It should have been more attentive to the BaFin, but when ESMA addressed possible inconsistencies at Wirecard at an early stage, BaFin turned its back, leaving the bulk of the responsibility with Germany.
Giegold sees potential at the European level, above all in reforming the audit regulation so that decisions to audit companies do not come from supervisory boards but from a public foundation, for example.
Alternatively, ESMA and its sister authorities could be set up at a more European level. At the moment, ESMA is home to representatives of the national supervisory authorities, who might have an interest in protecting their national champions.
“It will be interesting to see whether Dombrovskis dares to go for it,” Giegold said.
[Edited by Zoran Radosavljevic]