EY’s auditors have approved Wirecard’s balance sheets for years. In addition to the supervisory authorities, they are considered to be responsible for the failure of all control mechanisms. EY boss Di Sibio now presents the story in a very different way in a letter to his customers.
The pressure on the auditing company EY is huge. Investors join forces for possible billions in claims for damages. Well-known corporations no longer want to consider them for test orders. Banks and analysts point their fingers at EY and blame the company for the fact that the apparent balance sheet fraud at Wirecard went undetected for so long. EY did not comment for a long time, but now the boss of the world’s third-largest auditing company in terms of sales is going on the offensive.
In a letter to customers, EY boss Carmine Di Sibio expresses his regret that the fraud was not discovered earlier. However, he “firmly rejects” any joint responsibility or even the accusation of the involvement of EY auditors in the fraud. This scam has since been designed by a “highly complex criminal network” to deceive everyone – investors, banks, regulators, lawyers, experts and audit firms. Di Sibio even writes that “we have successfully uncovered the fraud”.
The EY boss is convinced that his examiners, to whom he certifies “highly professional” work, are actually the heroes and in no way complicit in history. They had approved the Wirecard balance sheet for years. But after such allegations had been reported in the British “Financial Times” in particular, they became more skeptical and, after competitor KPMG had also carried out a special audit, finally uncovered a 1.9 billion euro balance sheet hole.
Wirecard had to file for bankruptcy in June after a special audit by KPMG discovered air bookings of 1.9 billion euros. Shares plummeted, private investors and professional investors lost billions. The payment processor from the Munich suburb of Aschheim was listed in the German leading index Dax for two years.
“You just have to be able to rely on the certificate”
Di Sibio has little chance of getting his version through and thereby limiting the damage to EY’s image. “You just have to be able to rely on a certified balance sheet,” said the president of the BdB banking association, Hans-Walter Peters, to the “Handelsblatt”. “That is the basis for everything else. Many investors have repeatedly referred to this in discussions with us about Wirecard.”
Goldman Sachs Germany boss Wolfgang Fink sees no fault in analysts who have recommended Wirecard shares to investors: “Of course, investors and market participants rely on what is published, and there are auditors and certificates Company is fundamentally wrong and if you have attestations and balance sheets that confirm the correctness, it will be difficult for any company to determine whether there is fraud or something went wrong. “
According to BdB President Peters, more stringent rules are needed for auditors. “No stone should be left unturned. If the auditors – as in the Wirecard case – do not have access to all data and documents, they are not allowed to test a balance sheet.”
The Green finance politician Danyal Bayaz said that banks would also have to look at their own noses. “A little more self-criticism in terms of Wirecard would also do the banking industry good.” There were banks that, despite the test reports, made their own critical assessment of Wirecard. “And then on the other hand there were analysts at banks who have praised Wirecard shares up to the sky.”
There were already two changes to the Dax this year: Lufthansa was relegated in June and the insolvent Wirecard Group in August. Initially, the composition of the leading index will not change any further, but that of the MDax.
In the first stock exchange league Dax there after the recent exchange of the insolvent Wirecard through the delivery service Delivery Hero no further changes in September.
The plastics manufacturer Covestro was able to defend his Dax place. As the German Stock Exchange announced on Thursday evening in Frankfurt, but there are numerous changes in the second and third row.
RTL has to leave MDax
Im MDax there are several changes: The media group RTL must leave the index of medium-sized stocks. The company, which also owns the TV station of the same name, was promoted to the MDax in September 2013.
The real estate financier Aareal Bank is also increasing into the SDax. The shop pharmacy succeeded in advancing from the SDax as a corona crisis winner and, as expected, the specialty chemicals manufacturer Wacker Chemie .
These companies are promoted to the SDax
There are also changes below the MDax. The furniture dealer Steinhoff , the engineering service provider Bertrandt, which is primarily geared towards the automotive industry and the human resource management software provider Atoss must have their seats in the SDax vacate.
The newcomers are the specialty pharmaceutical manufacturer Medios , the online fashion retailer Global Fashion Group founded by Rocket Internet among others and the Essen IT company Secunet Security .
That is why changes in the Dax are important
The changes will be implemented on Monday, September 21. Changes are especially important for index funds, too ETFs called.
A computer algorithm forms one of these Stock index to. So investors invest in all stocks that are listed in the index. In the ETF, changes in the index must be made accordingly, which can affect the share price.
In addition, a stock index can also be a question of prestige. As the top German stock market league, the Dax particularly attracts the interest of investors from Germany and abroad.
The meeting of the finance committee on the Wirecard affair remained largely inconclusive: the secret services did not want to know anything and the federal government only represented economic interests. It is precisely this attitude that encourages the opposition to dig deeper.
The Federal Chancellery unintentionally pinned a fine award on the lapel of the “Handelsblatt”: According to this, the Wirtschaftsblatt is better informed than the German secret services in the scandal surrounding the fraud of the German financial services provider Wirecards, which has garnered billions of dollars. At least with regard to the whereabouts of the wanted Austrian ex-CFO Jan Marsalek. Minister of State Hendrik Hoppenstedt said in his appearance today in the Bundestag Finance Committee that neither the BND nor any other German intelligence service knew anything about Marsalek’s whereabouts. The “Handelsblatt”, on the other hand, had already reported the evening before, citing his acquaintance that Marsalek was near Moscow – under the protection of the Russian foreign secret service.
Wirecard is more than a scandal about economic fraud or an affair about a possible failure of German supervisory authorities. The figure Marsalek, who is obviously in contact with foreign secret services, the alleged blindness of the German security authorities to the dubious activities of Wirecard and Marsalek, the unclear relationship between the Federal Chancellery and Wirecard: all of this makes the billion-dollar fraud a political affair. A year before the federal election, the federal government is very inconvenient, which is why it is eagerly awaited whether the Greens, FDP and left will enforce a committee of inquiry. The FDP and the Left do not want to be dependent on the votes of the AfD to appoint a committee and hope for the approval of the still undecided Greens.
A busy retiree
A possible investigative committee would not only shed light on possible errors by the financial supervisory authority BaFin, which reports to the Federal Finance Minister and SPD candidate for Chancellor Olaf Scholz. The question will also be how conclusive the statements of the Federal Chancellery so far on the role of the secret services and on meetings with German lobbyists are. One person combines both aspects: the former secret service coordinator in the Chancellery Klaus-Dieter Fritsche.
In September 2019, Fritsche arranged a meeting with Wirecard representatives at Lars-Hendrik Röller, the economic advisor to Chancellor Angela Merkel. Since his retirement, which began in early 2018, Fritsche has not retired to old age. Rather, he hired himself as a consultant to the then Austrian Interior Minister Herbert Kickl. He was supposed to help the FPÖ politician reform the BVT secret service. After the government was overthrown over the Ibiza affair, Fritsche worked for Wirecard and arranged a meeting with Angela Merkel’s economic advisor, Lars-Hendrik Röller, in September 2019. In the meantime, Fritsche is again a consultant in Vienna, but now for an ÖVP-led Ministry of the Interior.
Austria again and again: The imprisoned Wirecard founder Markus Braun – also Austrian – was part of the advisory team of ÖVP Chancellor Sebastian Kurz. Marsalek, who was born in Vienna, was close to the FPÖ and the Russian ruling party. Marsalek should also have contactsto the Federal Office for the Protection of the Constitution and the Fight against Terrorism (BVT). Now he is supposed to be protected by the Russian foreign intelligence service.
BND doesn’t know anything
Whether this is actually the case is not certain, but many traces of Marsalek, who researched the “Financial Times”, the “Spiegel” and the research platforms Bellingcat, lead to Russia. Marsalek is said to have often boasted about his contacts with intelligence services. However, his conspiratorial lifestyle – dozens of short trips to Russia, alleged flying visits to Syria and Libya, showing around secret documents about the Russian poison Novitschok and the possession of several passports – allegedly bypassed the German secret services.
At least that’s what State Minister Hoppenstedt said in the committee. The SPD MP Jens Zimmermann is skeptical. “I was absolutely amazed that the BND knows nothing about Wirecard,” he told ntv.de after the hearing. Whereby he recognizes a back door for the Chancellery: after all, Hoppenstedt is not the secret service coordinator. This is Johannes Geismann and you don’t know what he knows. Unlike Hoppenstedt, Röller and the department head responsible for secret services, Bernhard Kotsch, he did not appear on the finance committee. There then almost only Hoppenstedt spoke, which means that there were at least no contradictions in the statements, said Zimmermann. “That was all filtered through Mr. Hoppenstedt,” says Zimmermann. He criticizes the appearance of the three interviewees: “The Chancellery has not contributed to the fact that the speculation is less.”
Stephan Thomae, who oversees the secret services for the FDP in the parliamentary control committee, also has ideas for speculation. “A payment service provider that also handles business in the gambling and porn industry from the Middle East and Asia is actually an obvious observation object for secret services,” Thomae told ntv.de. “I also don’t think that Marsalek was noticed so late.” Especially since reports indicate that a business partner Marsalek’s German authorities pointed out to Marsalek’s espionage stories as early as 2017. Thomae finds it “peculiar” that the BND should have ignored such information from a CFO of a DAX company.
A wild theory
If the reports about Marsalek and his Russia contacts are correct, he would have been a very interesting object of observation for the BND. Marsalek had loud “Financial Times“Among other things, trying to set up a private mercenary militia in Libya. And it should Cross connections between Marsalek and Russian mercenaries active in Libya. Then there are the Russia travel. Despite Marsalek’s penchant for bragging, the German secret service does not want to have noticed anything. An alternative, conceivably scandalous explanation would be: The German secret services knew at least partially about Wirecard’s dubious activities, but let the company do it out of interest in the object under observation. In principle, almost nothing is excluded in the hallways of the Bundestag. Almost anything seems conceivable in this billion-dollar fraud case.
Fritsche, whom Thomae considers “insufficiently illuminated”, could play a key role in the investigation. His advisory work for the Interior Minister Kickl, who is notorious for his contacts in the extreme right-wing milieu, was approved by the Chancellery – on the condition that he did not divulge any knowledge from his more than 20 years of leadership in the German secret services. “But what else did the Austrians reward him for so well?” Asks Thomae. Or, conversely, was there a German interest in Fritsche’s work in and his information from Austria? And how does that fit in with Fritsche’s advertising for Wirecard with Chancellor adviser Röller?
The U committee is approaching
Röller weighs in on the finance committee. Such appointments are nothing special. “If you only knew who is looking at everything here,” says Röller, according to the SPD MP Zimmermann, in one of his few statements. In fact, it does not seem unusual for the Chancellery to exchange ideas with representatives of DAX companies and to promote German corporate interests abroad. Then why these tight-lipped statements and contradictions?
The Chancellery presents the Fritsche appointment as a get-to-know meeting, although at this point there was already an appointment between Merkel and the lobbyist and ex-Defense Minister Karl-Theodor zu Guttenberg. After his advertising, Merkel had campaigned for Wirecard in China. So the company was already well known. Left-wing MP Fabio di Masi announces a need for clarification in this context. “All the alarm bells are ringing for me,” he says about Fritsche’s activities after the finance committee meeting.
Di Masi is now relying on a committee of inquiry. Thomae regards the German secret services’ insistence on their ignorance as “another reason for an investigative committee”. The Greens also seem to be inclined to a U-Committee: Lisa Paus accuses the federal government of “naivety” in dealing with Wirecard. The co-ruling SPD parliamentary group is hesitant. Zimmermann says: “Today’s survey also showed that clarification is feasible without a committee. We believe that we are making so good progress.” The decision on this now rests with the Greens.
The Morning Briefing by Gabor Steingart – controversial, critical and humorous. Know what is being discussed politically. Today: the megalomania of the ex-Wirecard boss Markus Braun, the joys of the Americans, which are the pain of the Europeans, and the schools in North Rhine-Westphalia, which are not allowed to exclude students without masks from lessons.
In a precisely researched story, the “Financial Times” reported this morning about the megalomania of the ex-Wirecard boss and co-owner Markus Braun. Because he had hired McKinsey to prepare a plan to take over Deutsche Bank. The code name was “Project Panther” and could just as well have been called “Project megalomania”.
The new company should be named “Wirebank” and “think and act like a fintech bank on the scale of a global bank”. McKinsey estimated that it could generate six billion euros in additional profit by 2025. Furthermore, the McKinsey report promised a doubling of the joint stock exchange valuation at almost 50 billion euros.
In the opinion of the FT, however, another point might have been decisive for the “Project Panther”: a takeover of German bank offered the prospect of an exit from the fraud that Wirecard had operated. Round 1.9 billion euros in cash were missing from their accounts and much of their business in Asia was in reality an elaborate hoax. By embedding the Wirecard business in Deutsche Bank’s balance sheet, it was possible to conceal the missing cash and replace the swindle with real business with real customers.
However, the plan had a catch: In order to prepare such a deal seriously, needed Wirecard an opinion from KPMGthat gave him flawless running the company as well correct balance sheets confirmed. KPMG’s approval never came.
Shortly afterwards, Wirecard filed for bankruptcy and Braun was arrested. The FT balances:
“His dream of taking over Deutsche Bank had turned into a nightmare.”
Olaf Scholz ensures compliance with old folk wisdom
Addendum: The big ones are let go, the little ones are hanged: Ironically, the social democrat Olaf Scholz ensures that this old popular saying is upheld.
Neither the Berlin supervisory bodies nor the managers in Bonn responsible for controlling Wirecard are being prosecuted. For this, however, one loses Most of the workforce of the financial service provider the workplace. Around 730 of 1,300 employees will be given notice, declared the insolvency administrator yesterday Michael Jaffé.
The joys of the Americans are the pains of the Europeans
Donald Trump doesn’t need a new trade war with Europe – he has the dollar. Its exchange rate against the euro is falling and falling, which makes it more than just easier for American exporters to export. Because: If the dollar falls and the euro rises, US goods become cheaper.
The joys of Americans are the pains of Europeans. European exporters – and that means German industry in particular – are troubled by the solid euro. Goods worth over 200 billion euros put only the German corporations, first and foremost the automotive, chemical and mechanical engineering industries USA from. A large part of the costs – wages and intermediate products – are incurred in the hard currency euro, while the proceeds are settled in the soft currency dollar.
There are essentially two reasons behind the tension in the transatlantic monetary system to lead:
First: The exchange relations of the currencies are always a mirror of the economic resilience. America is vulnerable in the midst of the pandemic. It is unclear whether the country will face lockdown after a Democratic takeover. Joe Biden presents himself to voters as the early Merkel.
Secondly: The dollar is losing its nimbus as an anchor currency. Meanwhile, in the past every shock in the world – oil price shocks, terrorist attacks, threat of war – animated investors to buy dollars, the “flight to safety”, this time the USA itself is the epicenter of political uncertainty. Trump is the Vesuvius of Washington. He can spit ash and lava at any time.
Conclusion: In view of this currency disparity, Germany has to secure the cost base of its domestic production, including on the wage side – no Corona helps. In other words: if the euro hits the gas, it should Wage policy slow down. This connection is socio-politically fatal, politically undesirable and nevertheless imperative for the overall economy.
Schools in NRW are not allowed to exclude students without masks
Crashing defeat for the Düsseldorf state government: Schools in North Rhine-Westphalia are not allowed to exclude students without a mask from lessons. The Düsseldorf administrative court pointed this out on Tuesday. After refusing to wear masks, two students at a grammar school in the Lower Rhine region defended themselves against the exclusion from classes in court – with success.
In North Rhine-Westphalia need students to secondary schools Wear a mask in class and during breaks. This causes frustration in the educational institutions. Laschet is coming under increasing pressure with his school policy:
The School Management Association of the country has criticized the responsible ministry in an open letter. Already in the second paragraph of the letter it says that school policy takes place in connection with the organization of school lessons under the conditions of Coronavirus-Pandemic “too little” the actual Framework the schools was.
“The requirements of the Ministry of Education can hardly be met due to the local conditions and the general school conditions!”
Almost 44,000 people have already signed an online petition against the mask requirement in schools. It was initiated by Miriam Schmitz, a woman who worked in the Morning Briefing Podcast says:
“I have a child in high school, fifth grade. My little one came to this school brand new and would have liked to get to know his classmates. But with the mask requirement, he has never seen half of his class.”
Louisa Dellert in the Moring Briefing Podcast
Louisa Dellert, better known as Lou, visited us at PioneerOne yesterday. The 31 year old is Entrepreneur, podcaster and influencer. She has around 400,000 followers on Instagram. With her I have for the Morning Briefing Podcast spoken – about the contradictions of Corona politics, the human longing for closeness and their idea of eroticism in times of the pandemic.
Electoral reform in the coalition committee
The coalition committee met tonight under the leadership of the Chancellor. Two topics were in the foreground: On the one hand, there was electoral reform, which is intended to prevent the Bundestag from constantly growing and soon becoming larger than the People’s Congress in China.
Everything that helps not to make the corona consequences noticeable was decided. So an extension of the Short-time allowance and the enactment of Social contributions for companies in need.
The painful one for the MPs Reform des Bundestag – because a reduction in size means the elimination of mandates – was postponed to the next legislative period.
My colleagues from “Capital Newsletter” have more information about the negotiation marathon that has ended.
The dispute between Turkey and Greece is coming to a head
The dispute between Turkey and Greece over the Turkish Natural gas explorations off the Greek islands is coming to a head. Foreign Minister Heiko Maas has now called on both NATO partners for talks during a visit to Athens:
“What we urgently need now are signals of de-escalation and a willingness to engage in dialogue.”
The situation in the eastern Mediterranean has become one “Play with the fire” according to the SPD politician.
“Even the smallest spark can lead to a disaster.”
At the same time sharpened Maas the conflict continued, in which he stood behind Greece. He assured Athens the full support of the EU, which in Ankara would be considered impossible Willingness to dialogue can interpret. Conclusion: The honest man Maas made his appearance as an arsonist.
The great fearless man in the German economy
Michael Mronz is the great fearless man in the German economy. The organizer of Europe’s largest horse show, who cannot ride himself at all, is also the most committed operator of an Olympics in Germany in 2032. He wants to start the sports facilities Rhine and Ruhr connect to a large Olympic Park, which should not result in any building ruins and no ecological ancillary costs. “Rhein Ruhr City 2032” is what he calls his initiative, which the NRW state government and meanwhile the Olympic Committee support.
But what do they think Citizen? At least in Munichwhen it came to the 2018 Winter Olympics, they thwarted the Olympic planners democratically. But Mronz, the indestructible, believes not only in the radiance of the Olympics, but also in the beauty of democracy. In the Morning Briefing Podcast, he says:
“I am convinced that people would like and enjoy saying yes to this idea of the Olympics.”
Indeed, the new thing about the Mronz Plan is that the region should not suffer for the Olympics, but rather benefit from the Olympics. The cultural “We in NRW” would be achieved through investments in Mobility and digitality economically primed: gold for North Rhine-Westphalia.
I wish you an optimistic start to the new day. Sincerely yours
“Steingarts Morning Briefing” informs about current world and economic events. The “Pre-Breakfast Medium” is a modern form of the miniature daily newspaper which, in addition to news, comments and graphics, also publishes exclusive interviews with opinion leaders from politics, business and culture. The podcast of the same name is Germany’s leading Daily Podcast for politics and business.
Falsified accounts, bankruptcy, 200 million euros less market value: the reasons why Wirecard is thrown out of the Dax are diverse. But so far, Deutsche Börse has been obliged to wait until September. Now the rules are being changed.
After the billion-dollar balance sheet scandal, the insolvent payment processor Wirecard will soon be out of the German leading index Dax. In a survey by Deutsche Börse, a majority of market participants voted for a change in the rules that would lead to the ban on the group that went bankrupt at the end of June, as Deutsche Börse announced. Wirecard is now leaving the leading index after close of trading on August 21.
Whoever follows the payment provider in the Dax will not be announced by the stock exchange until next week. In all likelihood, the race will be won by the restaurant delivery service Delivery Hero and the flavor manufacturer Symrise. According to the previously applicable index rules, Wirecard would not have been thrown out of the index until September 21 – because of the bankruptcy, but also because of the stock market value that had collapsed to 200 million euros.
The pressure from market participants to react faster, however, increased. The stock exchange therefore proposed a rule change in mid-July, which has now been approved by investors. In the future, companies will be temporarily out of the Dax selection indices (including MDax, SDax and TecDax) after filing for insolvency. Previously, this was only planned for the next regular check, which is due every three months.
The possible successor Delivery Hero had sold its Germany business to competitor Just Eat Takeaway (“Lieferando”) – so the former startup can hardly be seen as a reflection of the German economy, which the Dax is supposed to represent. However, a few years ago the stock exchange took away all leeway for the Dax composition from the working group for stock indices. It only makes decisions based on the market value of the free float and the trading volume. Independently of the lightning survey, the exchange is working on a reform of the Dax rules, which the market participants should then vote on again. The index provider has so far kept a low profile on the content.
Auditors EY warned that the accounts of one of the leaders of German Finance ‒ Wirecard is not enough 1.9 billion euros. Shares of intercompany, which is part of the Dax-30, the highest stock index on the Frankfurt stock exchange, collapsed Thursday, June 18, at the auction of more than 60% following these news. In 2018 the company’s market capitalization amounted to 24 billion euros, now it is estimated at less than 5 billion Euro, reports The Financial Times. Bonds for 500 million euros issued in June, on Thursday quoted below 40 cents on the Euro.
The last half of the year the company, which is based in the suburbs of Munich and annually handles tens of billions of euros in credit and debit transactions, have tried to prove the purity of their accounting practices. In 2019, the company commissioned a special audit by KPMG after having doubts about the veracity of her statements. During a six-month special audit experts KPMG are unable to trace the transactions underlying net profit Wirecard between 2016 and 2018, the Results of this audit, the newspaper was published at the end of April 2020, After the auditors EY announced a shortage of funds in the accounts, Wirecard will not be able to publish its audited results 2019 Wirecard three times postponed publication of its results for the 2019 March, stating to investors that it expects the independent auditor’s report. If the company does not publish audited results up to 19 June inclusive, it will violate Treaty obligations in the amount of 1.75 billion Euro revolving line of credit, organized by Commerzbank, ING, ABN Amro and LBBW and the other lenders. Banks will be able to terminate the loan deals of almost 2 billion euros.
Wirecard has always denied any wrongdoing. Wirecard in a statement released on 18 June, says the company is “working intensively together with the auditor in the direction of clarify the situation”. She also announced that chief operating officer were suspended from posts with the possibility to recall him from this post till June 30. CEO Markus Braun said that “previously issued confirmation banks were no longer recognized by the auditor” and added that “at present it is unclear whether there has been fraudulent transactions to the detriment of the Wirecard”. The largest asset Manager of German company DWS, one of the largest shareholders of Wirecard, said that estimates legal steps against the company. Head of sustainable development and corporate management Deka Investment, one of the largest shareholders of Wirecard, Ingo Speich said, “We look at the situation with distrust. More than ever, you need to start a new job in management”. Spic earlier called for the dismissal of brown.
In October, The Financial Times reported that employees of Wirecard, apparently, joined the conspiracy the fraudulent overstatement of sales and profits in the subsidiaries Wirecard in Dubai and Dublin and misled EY, auditor of the group for decades. Then in December, the FT reported that the so-called Deposit accounts, controlled on behalf of Wirecard and some of the Trustees were used to increase cash balances of the group. Wirecard has filed a lawsuit against FT for the publication of his statements, claiming that the newspaper violated a trade secret. At the end of September 2019 at Wirecard was € 1.8 billion of outstanding debt, while the Munich Bank that it controls, holding 1.7 billion euros in deposits of customers.