German ‘Siege Mentality’ Blamed for Failures in Wirecard Scandal
BloomberglawJun 07, 2021
Germany's Wirecard fraud trial began on Thursday in Munich, with ex-CEO Markus Braun and former executives Stephan von Erffa and Oliver Bellenhaus in the dock over their roles in the country's biggest-ever accounting scandal.
Austrian-born Braun, who has been in custody since his 2020 arrest, made his first public appearance in more than two years, entering the courtroom to hear the charges along with the two other managers. If convicted, each of them could face up to 15 years in jail on charges of fraud and market manipulation.
Despite clear evidence of crimes committed by Wirecard, authorities not only failed to detect its unprecedented fraud, but they also intervened on the wrong side by initially persecuting journalists who denounced the company. This failure is partly due to the German siege mentality, political cronyism, and the desire for a digital national champion.
German politicians and financial regulators must not be treated as scapegoats for the accounting scandal that led to Wirecard's collapse. While they did fail to detect irregularities, so did EY, which is as much as — if not more — responsible for ensuring its compliance. Either way, nobody is more to blame than those directly behind the scheme.