The Bundestag committee of inquiry into Wirecard should examine why the payment service provider from Aschheim near Munich had to file for bankruptcy. Why didn’t anyone suspect anything about it? Where were the regulators? A chronology of the crash.
Fin-Tech from Germany
2005: A touch of Silicon Valley wafts over the east of Munich, over the Wirecard company headquarters, a simple functional building in the suburb of Aschheim for a German fin-tech that processes digital payments for a large number of illegal online casinos and porn websites.
In 2005 the payment processor went public and the company only seems to know one direction: up. The supposed growth is breathtaking. Even the IPO is unusual: Wirecard is teaming up with another company that was already listed on the Neuer Markt; this may not only save a lot of money, but also improve the view of the balance sheets.
Wirecard ousts Commerzbank from the DAX
September 2018: The operator of Deutsche Börse includes Wirecard in the DAX-30. Commerzbank, a veteran in the stock market index, flies out. It seems to be the fin-tech victory over the old banking houses. However, there had already been critical press reports , especially from the Financial Times and these will accumulate from the beginning of 2019. The target is Wirecard’s business in Singapore as contracts were forged there. There was also money laundering and also documents circulated that managers in Germany were aware of the scams.
Special audit by the financial regulator and KPMG
In February 2019, the financial supervisory authority BaFin commissioned a special audit. There is only one man responsible for this, who is hopelessly overwhelmed by it. And later in the year, KPMG’s auditors review the payment service provider. These proceed with forensic, i.e. criminalistics, methods and constantly encounter new inconsistencies. The competing company EY had previously examined and audited the balance sheets for many years which makes it part of the scam.
No Balance Sheet for 2019
Early 2020: The stories about dubious bogus companies, trustees and dodgy middlemen are getting more known from week to week and Wirecard had to postpone the publication of the annual balance sheet several times. The auditors refuse to attest the documents, as it is called in technical jargon, i.e. to sign that the figures given are actually correct. You can’t find any plausible evidence that there are accounts in Asia that should be close to two billion euros. At the beginning of June, the company headquarters in Aschheim was searched by the Munich public prosecutor.
Wirecard files for bankruptcy
Wirecard files for bankruptcy on June 25, 2020 due to a 1.9 billion euro hole in the balance sheet, “the Management Board of Wirecard AG has decided to file an application for Wirecard AG at the competent Munich District Court to open insolvency proceedings due to impending insolvency and over-indebtedness,” the company announced. Michael Jaffé from Munich is employed as the insolvency administrator.
Arrests and escape
On July 22, the Munich public prosecutor reported several arrests , including that of a key witness from Dubai. Since then, the former CEO Markus Braun has been in custody. Initially, it is only about the allegation of market manipulation. Now senior public prosecutor Anne Leiding is also talking about possible falsification of accounts, breach of trust and fraud. Important business figures have been embellished for years, sales and profits inflated in order to get new credits. The nested group consisted of more than 50 subsidiaries. The former Chief Operating Officer (COO), Jan Marsalek, is now in hiding. As early as June 22nd, the Munich I public prosecutor issued an arrest warrant against Marsalek, which, however, could not be executed.
Initially it is believed that he fled to Russia. It is later said that his trail was lost in Belarus.
Opposition calls for a committee of inquiry
On July 29, the Wirecard bankruptcy reached the German Bundestag and all members of the finance committee have been recalled from their summer vacation. They interview Finance Minister Olaf Scholz , Economics Minister Peter Altmaier and the President of the German Audit Office (DPR) for a total of seven and a half hours.
It becomes clear that Wirecard is one of the biggest economic scandals in German history which could have been stopped since 2018.
The financial service provider was a pseudo giant that should never have been included in the DAX, says CSU politician Hans Michelbach after another two-day meeting of the committee on September 4th. The opposition pushes through a committee of inquiry.
Wirecard is thrown out of the DAX
August 21: Wirecard leaves the German DAX index. In view of the bankruptcy, Deutsche Börse has to hectically change its rules. Nobody expected a DAX company to go bankrupt. Insolvent companies are now supposed to disappear from the indices with a period of two trading days. Meanwhile, insolvency administrator Michael Jaffé leaves no doubt: Wirecard is over-indebted with billions, the insolvent holding company is not viable. There are only interested parties for individual business units in different countries. There is hardly anything to recycle. Pretty much everything was leased from Wirecard, from office equipment to IT service and the banks have to write off their loans.
Thai Parliament Opens Special Session Over Protest Tensions
Thailand’s Parliament began a special session Monday that was called to address tensions as pro-democracy protests draw students and other demonstrators into the streets almost daily demanding the prime minister's resignation.
As Speaker of the House Chuan Leekpai began the session, only 450 of the total of 731 members of both houses had signed in for the meeting.
The demonstrations by student-led groups in the Bangkok and other cities have three main demands: that Prime Minister Prayuth Chan-ocha step down, the constitution be amended to make it more democratic and reforms be made to the monarchy to make it more accountable.
Public criticism of the monarchy is unprecedented in a country where the royal institution has been considered sacrosanct, and royalists have denounced the protesters for raising the issue.
“The only way to a lasting solution for all sides that is fair for those on the streets as well as for the many millions who choose not to go on the streets is to discuss and resolve these differences through the parliamentary process,” Prayuth said last week.
The non-voting session of Parliament is expected to last two days.
The protesters have little confidence in the parliamentary path, declaring the government’s efforts insincere.
They noted the points of discussion submitted by Prayuth’s government for debate dealt not with the protesters' concerns but were thinly disguised criticisms of the protests themselves.
They concern instead the risk of the coronavirus spreading at rallies, the alleged interference with a royal motorcade by a small crowd earlier this month, and illegal gatherings and the destruction of images of the royal family.
The protesters allege Prayuth, who led a coup in 2014 as the army chief, was returned to power unfairly in last year’s election because laws had been changed to favor a pro-military party. The protesters also say the constitution, written and enacted under military rule, is undemocratic.
Parliament in September was scheduled to vote on six proposed constitutional amendments but instead set up a committee to further consider such proposals, and then recessed.
Constitutional changes require a joint vote of the House and the Senate, but the proposals lack support in the Senate, whose members are not elected and are generally very conservative and hostile to the protesters.
Instead of confronting lawmakers and counter-protesters on Monday, the pro-democracy protest organizers have called for an afternoon march to the German Embassy, apparently to bring attention to the time King Maha Vajiralongkorn spends in Germany.
Germany's foreign minister, questioned in Parliament by a member of the Green Party, recently expressed concern over any political activities the king might be conducting on the country's soil.
Protesters’ criticism of the royal institution has roiled conservative Thais. Self-proclaimed “defenders of the monarchy” mobilized last week online and in rallies in several cities, in many cases led by local civil servants.
A small group of royalist demonstrators were outside Parliament on Monday morning, saying they were there to let lawmakers know of their opposition to any changes in the status of the monarchy.
Typhoon Displaces Thousands, Floods Villages in Philippines
A fast-moving typhoon forced thousands of villagers to flee to safety in provinces south of the Philippine capital Monday, flooding rural villages and ripping off roofs, officials said.
There were no immediate reports of casualties from Typhoon Molave, but authorities reported at least one person was missing and seven others were rescued after their yacht sank off Batangas province south of Manila.
The typhoon has sustained winds of 125 kilometers (77 miles) per hour and gusts of up to 180 kph (112 miles) per hour and was blowing westward at 25 kph (15 mph). Molave is expected to start blowing out of the country into the South China Sea on Monday, government forecasters said.
At least 25,000 villagers were displaced with about 20,000 taking shelter in schools and government buildings which were turned into evacuation centers, according to the Office of Civil Defense.
“Villagers are now asking to be rescued because of the sudden wind which blew away roofs,” Humerlito Dolor, governor of Oriental Mindoro province, told DZMM radio.
Dolor said pounding rains overnight swamped farming villages in his province then fierce winds toppled trees and power posts early on Monday, knocking off power. Authorities were clearing roads of fallen trees and debris in some towns after the typhoon passed, he said.
More than 1,800 cargo truck drivers, workers and passengers were stranded in ports after the coast guard barred ships and ferry boats from venturing into rough seas.
About 20 typhoons and storms annually batter the Philippines, and the Southeast Asian archipelago is seismically active, with earthquakes and volcanic eruptions, making it one of the world’s most disaster-prone countries.
Australian Anguish at Passenger Strip Searches in Qatar
The Australian Broadcasting Corporation reports Australia has formally complained about what it is calling the "offensive and grossly inappropriate" treatment of passengers at Doha airport in Qatar. The report says thirteen Australian women were taken off a flight to Sydney after a newborn baby was found in an airport bathroom and the travelers were forced to have invasive internal examinations.
Airport authorities say when a premature baby was discovered in a bathroom at the Hamad International Airport in Doha, Qatar, on October 2, all female passengers onboard a flight preparing to fly to Sydney were taken off the aircraft. The group included 13 Australian women.
They were taken to two ambulances waiting outside the airport and subjected to strip searches. Some of the women have told local media they were terrified and were not told why the examinations were being carried out.
The Australian Federal Police have been informed, although it is unclear what powers investigators might have over an incident that occurred in the Middle East.
Australian foreign minister Marise Payne says Australia has formally complained to Qatar.
“We also understand the matter has been reported to the Australian Federal Police. This is a grossly, grossly disturbing, offensive, concerning set of events. It is not something I have ever heard of occurring in my life in any context. We have made our views very clear to the Qatari authorities on this matter,” Payne said.
Media reports have said the Australian women could take legal action against authorities in Qatar.
Australian Labor opposition leader Anthony Albanese says their treatment has been unbelievable.
“Reports of this treatment are really disturbing. The idea that women could be subject to these very intrusive searches is in my view an absolute disgrace," Albanese said.
In a statement, airport officials in Doha said the baby was “safe” and being cared for in Qatar.
They added that medical staff had expressed concern to them “about the health and welfare of a mother who had just given birth and requested she be located prior to departing.”
Australian authorities have said they are expecting a report on the incident from the Qatari Government later this week.
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