German watchdog chief calls Wirecard scandal a ‘massive criminal act’

The head of Germany’s financial watchdog on Thursday called the accounting scandal at Wirecard “a massive criminal act”, while Deutsche Bank said it was considering support for the collapsed payments company’s banking unit. FILE PHOTO: The logo of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions, is pictured at its headquarters in Aschheim, near Munich, Germany, July 1, 2020. REUTERS/Andreas GebertThe comments from BaFin president Felix Hufeld are his most outspoken yet about Wirecard, which last week filed for insolvency owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.1 billion) hole in its accounts that auditor EY said was the result of a sophisticated global fraud. “It is plain vanilla, old-fashioned criminal behaviour,” Hufeld said in an online panel discussion. BaFin, which oversaw Wirecard’s banking subsidiary, has defended its role after taking much of the flak so far for the scandal. Germany’s largest bank said it was working with BaFin and Wirecard’s insolvency administrator on the possible support for Wirecard Bank. “We are in principle prepared to provide this support in the context of a continuation of business operations, if such assistance should become necessary,” Deutsche Bank said. Wirecard’s insolvency manager Michael Jaffe said that Wirecard Bank continued to operate, but six German subsidiaries of Wirecard had also applied for insolvency proceedings. “Wirecard Bank AG is not insolvent. Payouts to merchants and customers of Wirecard Bank are being executed without restrictions”, Jaffe said in a statement. A source familiar with Wirecard said the equity value of the bank was around 160 million euros, and selling the asset to Deutsche Bank would help avert a bank run. Meanwhile, some of Wirecard’s customers and partners are breaking ties. Discount supermarket chain Aldi Sued, a major customer, said on Thursday that Wirecard was no longer processing its credit card payments as of July 1.

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