|Bid||1.9000 x 37100|
|Ask||1.9190 x 20900|
|Day's range||1.8842 - 1.9600|
|52-week range||1.0802 - 159.8000|
|Beta (5Y monthly)||0.17|
|PE ratio (TTM)||0.49|
|Earnings date||05 Aug 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||19 Jun 2019|
|1y target est||205.49|
(Bloomberg) -- Crispin Odey, one of Europe’s highest-profile hedge fund managers, has been charged with indecent assault, U.K. prosecutors said.Odey was charged with one count under the Sexual Offences Act, and is set to appear at Westminster Magistrates Court in September, the Crown Prosecution Service said Friday. The charge relates to an alleged incident in the summer of 1998, the CPS said.“The allegation is denied and I will strongly contest this matter,” Odey said in an emailed statement.Odey, a backer of Brexit and U.K. Prime Minister Boris Johnson, is known for his eye-catching comments and bearish market outlook. The 61-year-old was one of a small number of bearish investors to profit from the market crash earlier this year, after comparing the current pandemic to the Great Depression of the 1930s.But by the end of the first half Odey’s flagship hedge fund, which manages $624 million, had slumped to a 17.9% loss. The fund’s losses come despite Odey Asset Management reportedly making at least 25 million euros ($29.4 million) betting against shares in scandal-hit German payment company Wirecard AG.The performance follows years of losses as Odey maintained bearish bets during an historic bull run.(An earlier version of this story was corrected to fix the date prosecutors gave for the date of the alleged incident.)(Updates with Odey comment in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- German lawmakers plan to grill officials from Angela Merkel’s office over Wirecard AG, as the political fallout from the scandal threatens to ensnare the chancellor and some of her closest allies.After a special hearing in Berlin Wednesday that lasted eight hours, members of the lower house of parliament’s finance committee said they will need answers from the chancellery before deciding on a deeper investigation. Finance Minister Olaf Scholz, the main target of criticism, defended his handling of the case and called for tighter financial oversight.“We will not get a complete clarification because the chancellery’s chair is empty today,” said Fabio De Masi, a member of the committee from the Left party. Lisa Paus from the Greens said that the committee intends to invite Merkel’s economic adviser, Lars-Hendrik Roeller, and possibly others, to testify, and noted that the chancellery continued to promote Wirecard “even when the allegations were already known.”“We want a complete explanation,” Paus said Thursday in an interview with broadcaster ZDF.Scholz, who testified at the hearing together with Economy Minister Peter Altmaier, is under fire over the government’s failure to pursue warnings about the payment company’s accounting practices. While the spotlight of a more rigorous parliamentary investigation may only be delayed, it’s not a given in Germany’s complicated political landscape.Just the BeginningFlorian Toncar, a member of the Free Democrats, said he planned to propose the creation of an investigative committee to the Left party and the Greens -- together they would have enough votes. But the far-right Alternative for Germany also supports the effort, which could create the appearance of an alliance that might put off many voters.“The chances that such a committee is coming have risen a lot since yesterday,” Danyal Bayaz, a lawmaker with the Greens, said in an interview with Bloomberg TV, adding that the backing of the AfD isn’t a concern. “We’re at the beginning and not the end of this inquiry.”If a probe is called, it could last well into 2021 and overshadow the early stages of next year’s election campaign.The Wirecard debacle threatens to undermine Scholz’s bid to lead the Social Democrats in a run at the chancellery. He has the most government experience of any contender, including hopefuls from Merkel’s Christian Democrats.Reforms and RepairsAfter the closed-door hearing, Scholz said Germany needed to strengthen its financial enforcement and called for the creation of a European equivalent of the U.S. Securities and Exchange Commission.“We need reforms,” he said. “There must be consequences in terms of legislation and repairs.”He also spoke in favor of a faster rotation of auditors compared with the current 10 years. He suggested four years to lawmakers, according to a person familiar with the discussions. That responsibility lies with Economy Minister Altmaier, who’s a member of the CDU.“Every minister is reviewing the procedures under his responsibility,” Altmaier told reporters, adding that rotating auditors need to be seriously considered. “Scholz needs to hold discussions very quickly about strengthening” Germany’s financial watchdog, BaFin.Scholz oversees the regulator and had to explain why his officials didn’t detect irregularities. He has come under additional pressure because his deputy Joerg Kukies, who regularly briefed his boss about developments of Wirecard probes, had at least two meetings with Markus Braun, the former Wirecard chief executive officer who has been arrested.Frank Schaeffler, a lawmaker from the Free Democrats, called on Kukies to step down, according to an interview in Bild newspaper.Merkel’s InvolvementMounting pressure prompted Merkel’s office to take the unusual step of unveiling a time line of interactions with Wirecard. It showed the chancellery maintained regular contacts with the company.Merkel promoted Wirecard’s efforts to gain a Chinese license during a state visit in September 2019. Her office was informed of inquiries into allegations of market manipulation just prior to the trip but denied that she was aware of the possibility of “severe irregularities” at the time.Wirecard, a member of Germany’s benchmark DAX index, became a national disgrace after acknowledging that about quarter of its balance sheet probably doesn’t exist. Before and after Wednesday’s gathering in the glass-domed Reichstag in Berlin, Scholz went on the offensive, appearing on national television to promote his proposals for strengthening Germany’s financial oversight. “We have done what was legally prescribed,” Scholz told ARD late Wednesday in his third TV interview of the day, bluntly rejecting the suggestion that his officials were blinded by the prospect of a German fintech company being successful on the international stage.(Updates with comments from lawmaker in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
German lawmakers on Wednesday questioned Finance Minister Olaf Scholz and Economy Minister Peter Altmaier over their failure to detect and prevent the Wirecard [WDIG.DE] accounting scandal, one of the biggest in post-war history. Payment services company Wirecard filed for insolvency last month after admitting that 1.9 billion euros ($2.2 billion) supposedly held in trustee accounts by overseas partners probably did not exist. Prosecutors have arrested former Wirecard Chief Executive Markus Braun and two other former executives on suspicion of orchestrating a years-long criminal racket to inflate revenue and balances to hide losses dating back at least to 2015.
German lawmakers on Wednesday questioned Finance Minister Olaf Scholz over his failure to detect and prevent the Wirecard accounting scandal, one of the biggest in post-war history. Payment services company Wirecard filed for insolvency last month after admitting that 1.9 billion euros ($2.2 billion) supposedly held in trustee accounts by overseas partners probably did not exist. Prosecutors have arrested former Wirecard Chief Executive Markus Braun and two other former executives on suspicion of orchestrating a years-long criminal racket to inflate revenue and balances to hide losses dating back at least to 2015.
(Bloomberg Opinion) -- Thomas Gottstein indicated that he didn’t plan to change much when he was promoted to the top job at Credit Suisse Group AG earlier this year. It’s a company he knows well, having worked there for two decades. But a reappraisal of the Swiss lender’s complexity and its appetite for risk appears to have changed his mind. That’s no bad thing.According to Bloomberg News, Gottstein wants to combine the lender’s risk and compliance units, and to reunite the global markets and investment banking divisions that his predecessor split. The overhaul may be announced on Thursday. Credit Suisse is also weighing whether to streamline its international wealth-management business, undoing a structure put in place just two years ago. So much for not messing with things.With the pandemic upending entire industries, the world of banking has changed since Gottstein took over as chief executive officer in February. Losses from bad loans, an accelerated shift to digital banking and a squeeze on margins from rock-bottom interest rates will force financial firms to focus ruthlessly on where they’re strongest, and to hunt for new ways to cut costs.The new boss’s shift in direction reflects the new reality, but it’s also a judgment on Credit Suisse’s trajectory under his predecessor, Tidjane Thiam, who was ousted after a corporate spying scandal.Credit Suisse wouldn’t be the first bank to split and then recombine its investment banking and trading units again. Deutsche Bank AG did the same in 2017. Bringing the trading operations and advisory activities back under one roof will make it easier to cut expenses and simplify businesses. The current structure adds unnecessary layers of management, creates competition for clients between bankers in different departments and gets in the way of the swift execution of deals.At present, the bank runs an international capital markets division, a global markets unit and has trading and advisory activities that report into its other operating units. That has made measuring performance difficult from the outside.Gottstein’s plan to tighten controls by combining the risk and compliance departments is perhaps even more revealing of his concerns about the bank. Yes, it’s an opportunity to reduce duplication, but the bank has also been wagering on risky deals that could damage its reputation and business.Two clients — Luckin Coffee Inc. and Wirecard AG — have been embroiled in scandals. A margin loan to Luckin’s founder prompted an internal review of how the bank lends to billionaire clients — an important part of its expansion under Thiam — including loans backed by illiquid assets. Credit Suisse has also been looking at its supply-chain finance funds (used by companies to pay their suppliers) amid accusations of conflicts of interest over its links to a key investor in the funds, Masayoshi Son’s SoftBank Group Corp.Under Thiam, Credit Suisse cut costs and reduced its exposure to volatile trading revenue. But there were concerns about whether its private banking business would be of the requisite quality to strengthen the franchise. Gottstein’s early moves suggest there’s room for improvement. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Wirecard AG (OTC: WCAGY, WRCDF) between August 17, 2015 and June 24, 2020, inclusive (the "Class Period"), of the important September 8, 2020 lead plaintiff deadline in the securities class action commenced by the firm. The lawsuit seeks to recover damages for Wirecard investors under the federal securities laws.
(Bloomberg Opinion) -- European regulators and policy makers have moved quickly during the pandemic to loosen banks’ capital rules to keep the lending taps open. The latest wheeze is to make it easier for lenders to buy insurance against the risk of their borrowers defaulting. The danger with this fix is that the industry gets hooked on an unproven piece of financial engineering that adds even more complexity to the banking system.It isn’t surprising that the European Commission, which is pushing for the change, is eager to help the lenders. Unlike in the U.S., the continent’s companies rely on bank lending for most of their borrowing. What’s more, the European Central Bank delivered grim news on Tuesday: Some banks might not have enough capital to meet minimum requirements by 2022 in the event of a severe economic downturn.Traditionally, banks have securitized their loans by packaging them together themselves and selling the exposure to other parties. But the Commission is proposing that they should be allowed to do “synthetic securitizations” too, where lenders buy a guarantee against potential loan losses — typically in the form of a derivative — from a hedge fund or insurer. The difference with this approach is that the assets being insured remain on the banks’ balance sheets, meaning they could now free up capital.These so-called “capital-relief trades” were seen as toxic in the aftermath of the financial crisis, when they were used for nefarious purposes, and Europe has taken years to find ways to make them less open to abuse.Regulators have found ways to reduce some of the risk: Under the Commission’s proposal, those providing the credit protection will probably have to post collateral against the transactions, shielding the bank from the danger of a counterparty not meeting its promise to cover losses. But not everyone will be reassured. As I’ve argued before, moving risk outside the regulated banking industry could do more harm than good without adequate protective measures.And this could be a big market, even with the collateral requirement. Yield-starved investors have been knocking on banks’ doors, eager to offer guarantees on anything from U.S. corporate loans to pools of loans to small and medium-sized companies.Hard numbers are hard to come by because most deals tend to be bilateral transactions with little disclosure, but data compiled by the European Banking Authority show synthetic deals are already more popular than traditional securitizations. They had a total value of about 126 billion euros ($148 billion) as of last year. These deals tend to be most popular among the larger banks and attract a narrow group of buyers, according to the EBA. Deutsche Bank AG reportedly cut its risk to the now bankrupt Wirecard AG with one such transaction.Regulators also hope that letting banks treat synthetics like actual securitizations will bring more transparency to the market and make it clearer where risk has shifted.Nevertheless, bank leaders shouldn’t over-rely on the appetite for risk from investors that could just as easily vanish. A rise in company defaults — an inevitability when governments eventually halt their pandemic spending — could dampen demand. Best for Europe’s lenders to focus on how they can help themselves.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Germany must toughen its rules for auditing and accounting to prevent another billion-euro scam like the Wirecard scandal, Bundesbank President Jens Weidmann said in a newspaper interview published on Monday. Payment services company Wirecard filed for insolvency last month after admitting that 1.9 billion euros supposedly held in trustee accounts by overseas partners probably did not exist. "Wirecard is a scandal, and we have to do more to prevent it in the future," Weidmann told Funke media group.
German Finance Minister Olaf Scholz on Friday proposed to toughen financial oversight of companies, seeking to pre-empt an expected parliamentary backlash over the failure of regulators to spot the huge fraud that obliterated Wirecard <WDIG.DE>. Scholz rushed out a reform agenda that would give financial watchdog BaFin greater investigative and enforcement powers, broaden its mandate to cover non-banking financial institutions and toughen penalties against lax auditors. "We need to trust balance sheets," Scholz said.
The collapse of German payments firm Wirecard has become a focal point for an overhaul of how the European Union regulates the finance industry as it evolves away from traditional banks towards fintech companies, its financial services chief said. Wirecard's implosion to leave a $2.1 billion hole in its books came more than a decade after the first allegations of fraud by some investors and journalists. As a financial technology company, albeit one that owned a bank, Wirecard was long considered as being in a grey area when it came to traditional bank supervision.
(Bloomberg) -- Germany’s BaFin was sued by Wirecard AG investors who say the regulator turned a blind eye widespread evidence of an accounting scandal that led to the company’s collapse.Lawyer Andreas Tilp, who filed the suit in Frankfurt, said the regulator should have been aware of the financial problems engulfing the payments processor early last year.Prosecutors arrested former Wirecard Chief Executive Officer Markus Braun a second time this week over allegations the company covered up massive losses by inflating the balance sheet with fake assets. Regulators and prosecutors have been criticized for ignoring media reports about the company’s financial problems for more than a year.“BaFin grossly neglected its duties and powers by refusing to investigate Wirecard AG for market manipulation, while taking biased action against journalists and short sellers,” Tilp said in a statement Friday. If Bafin had “properly investigated the matter,” any wrongdoing would have come to light earlier, he said.Bafin questioned whether the lawsuit was legal, saying that the agency works on behalf of the public interest rather than investors. A spokeswoman also said that the regulator acted on every indication of wrongdoing at Wirecard.The company filed for bankruptcy in June after acknowledging that 1.9 billion euros ($2.2 billion)it had listed as assets probably didn’t exist. Wirecard admitted that previous descriptions of its business with third parties were “not correct” after pulling its financial results for 2019 and the first quarter of 2020.Tilp has already filed a suit against Wirecard and later added its longtime auditor Ernst & Young to the case.EY is struggling to explain why it signed off on Wirecard’s books for years without flagging any issues. The payment processor’s demise was finally triggered in June when the accounting firm made a u-turn and refused to sign off on the company’s annual report.(Adds Bafin statement in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
German Finance Minister Olaf Scholz is seeking a regulatory overhaul to avoid a repeat of the supervisory failures that allowed Wirecard build up a 2 billion euro hole in its accounts before collapsing last month, Sueddeutsche Zeitung reported. The proposals, contained in a draft seen by the newspaper on Thursday, involve a relaxation of rules preventing the body that regulates auditors from informing the Finance Ministry if they find any irregularities. Wirecard <WDIG.DE> collapsed in June after EY, its auditor for more than a decade, refused to sign off on its 2019 accounts.
(Bloomberg) -- Former Wirecard AG Chief Executive Officer Markus Braun and two other former officials were arrested as prosecutors said the company knew about massive losses as early as 2015.The trio conspired to obtain about 3.2 billion euros ($3.7 billion) in fraudulent loans, Munich prosecutors said Wednesday. Company officials allegedly decided to inflate the books with fake assets to make the company appear more attractive to investors, clients and lenders.“The suspects knew at least by the end of 2015 that the Wirecard Group was losing money,” prosecutors said. “Deceived by faked accounts, banks in Germany and Japan as well as other investors granted funds of about 3.2 billion euros, which are now most likely lost.”Wirecard filed for bankruptcy after acknowledging that 1.9 billion euros it had listed as assets probably didn’t exist, deepening its accounting woes. The company admitted that previous descriptions of its business with third parties, which processed transactions on Wirecard’s behalf, were “not correct” after pulling its financial results for 2019 and the first quarter of 2020.Germany Wonders How Wirecard Could Misplace $2 BillionWirecard declined to comment before the prosecutors’ announcement. Braun’s lawyer, Alfred Dierlamm, didn’t immediately reply to an email and calls seeking comment.The other two suspects detained Wednesday are former the former Chief Financial Officer Burkhard Ley and Stephan Freiherr von Erffa. Prosecutors identified them as “suspect L., CFO until the end of 2017” and “suspect E., the former head of accounting.”Bloomberg was unable to locate lawyers for Ley and von Erffa.All three are being investigated for fraud, breach of trust, forging accounts and market manipulation. A Munich court on Wednesday ruled that all three man have to stay in custody, according to the statement.Shares of the company, which were worth more than Deutsche Bank AG only a few months ago, fell as much as 5.2% before recovering.Wednesday’s arrests weren’t the first in the case and likely won’t be the last. Prosecutors openly lobbied at a press conference for witnesses to come forward, pointing out that suspects who cooperate are eligible for “considerable leniency.”“But it’s also true that the value of any information continues to drop as our investigations proceed,” prosecutor Anne Leiding, told the press.The aggressive approach is in sharp contrast to how prosecutors treated Wirecard before it owned up to its accounting problems. In previous years, prosecutors said they would investigate short sellers and even the media in the face of negative reports about the company’s finances.“In our questioning we learned that there was a strict hierarchical system, characterized by an esprit de corps and pledges of allegiance to the then CEO,” Leiding said.Braun had already been detained in June, but was released on bail a day later. Earlier this month, investigators arrested Oliver Bellenhaus, the former managing director of a Dubai-based Wirecard unit, who is cooperating with the case. Prosecutors on Wednesday said their new findings and the arrests were based in part on information provided by a “crown witness.”Former Chief Operating Officer Jan Marsalek, who was fired in June after Wirecard disclosed about four fifths of its net cash was missing from its balance sheet, is still at large.Marsalek apparently fled to Belarus last month and is presumably still there or in Russia, German media has reported.(Adds custody ruling in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
German prosecutors arrested three former top executives of Wirecard <WDIG.DE> on Wednesday, saying it suspected them of masterminding a criminal racket to fake the company's accounts and bilk creditors of billions of euros. Former Chief Executive Markus Braun, already a suspect, was re-arrested along with Wirecard's former chief financial officer and chief accounting officer on the strength of testimony from a cooperating witness. The collapse of the high-flying financial technology company last month exposed a breakdown in oversight.
(Bloomberg) -- Wirecard AG had repeated contact with Angela Merkel’s chancellery in the months before its collapse, according to a chronology of events by her office.Merkel has come under pressure to clarify her interactions with the digital payments company after the chancellery confirmed that the German leader promoted Wirecard during a trip to China in September 2019 after her office was informed of ongoing investigations.Opposition lawmakers are threatening to call for a parliamentary investigation as they press Merkel’s administration over how it pursued fraud allegations against Wirecard, a member of Germany’s benchmark DAX index.Underscoring the impact of the scandal, the finance committee in Germany’s lower house of parliament plans to interrupt the summer recess to hold a special session on July 29 to discuss the firm’s collapse. Finance Minister Olaf Scholz and Economy Minister Peter Altmaier have been invited.Munich prosecutors on Wednesday scheduled an ad hoc press conference to inform about the “latest developments” in their Wirecard probe. The investigators declined to say beforehand what the announcement will be. The press conference is scheduled for 3:30 p.m. local time.Here’s a time line of interactions between the German government and Wirecard as laid out by the chancellery:Nov. 19, 2018: Digitalization czar Dorothee Baer visited Wirecard’s offices in AschheimNov. 27, 2018: Wirecard’s then-CEO Markus Braun requested a meeting with Merkel and her chief of staffJan. 22, 2019: Merkel’s office turned down the request and instead offered an appointment with Merkel’s economic adviser Lars-Hendrik Roeller, which Braun canceledAug. 23, 2019: Finance Ministry relays information to Roeller about Wirecard, including market-manipulation probes, in preparation for a meeting with a company representativeSept. 3, 2019: As part of preparations for a trip to China, Merkel meets Wirecard representative Karl-Theodor zu Guttenberg, a former defense minister who resigned in disgrace over plagiarism. Guttenberg follows up with an email about Wirecard’s plans to acquire Chinese company Allscore Financial to gain a license in the Asian countrySept. 5-7, 2019: Merkel mentions Wirecard’s plans during her trip to China. “At the time of her trip she had no knowledge of possibly severe irregularities at Wirecard,” the chancellery said, adding that the company wasn’t part of the delegationSept. 8, 2019: Roeller informs Wirecard of the discussion and offers additional followup. He asked for and had contact with Germany’s ambassador in Beijing and China’s ambassador in Berlin about Germany’s economic interests in China, but didn’t further follow up on the Allscore acquisitionSept. 11, 2019: Roeller has meet and greet with Wirecard officials, who speak broadly about Asian activitiesMay 20, 2020: Braun holds a telephone discussion with Roeller. He rejects press reports of accounting irregularities and promises a thorough clarification.June 10, 2020: As the head of a DAX company, Braun takes part in a video conference about Germany’s coronavirus tracking app with MerkelJune 30, 2020: Merkel informed of the accounting scandal and Wirecard’s insolvencyAsked whether Roeller should have warned Merkel about Wirecard before her China trip, Merkel’s deputy spokeswoman Ulrike Demmer said on Wednesday: “If we had known what we know today about a financial scandal which led to the bankruptcy of a DAX company, this is true, but the knowledge at that point of time was a different one.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The press has rarely been under attack as it is today. Hong Kong’s new national security legislation has chilled reporting in a territory that was long a beacon of free speech. Russia’s harassment of current and former journalists has this month alone included detentions, searches and a conviction. Meanwhile, in the U.S., where press freedoms are guaranteed by the constitution, President Donald Trump regularly refers to critical media as “enemies of the people.”This is bad news for investors as well as journalists. Fund managers need cheap, unfettered access to information to thrive in the long term. Yet big money rarely wades in to defend free media. Consider how dark the picture has become over the past decade. At the end of 2019, there were 248 journalists in jail, not far off double the number a decade earlier.Far more pervasive are everyday pressures: the squeeze on media owners, the rise of state-owned, government-friendly outlets and efforts to silence opposition voices with laws intended to protect official secrets, or to prevent the spread of fake news. Prime Minister Viktor Orban in Hungary used the coronavirus emergency to tighten already extensive controls. I have written before on the Philippines, where the country’s largest media company, often accused by President Rodrigo Duterte of bias, was denied an extension of its broadcast franchise earlier this month. In Malaysia, an election win for the opposition in 2018 was supposed to herald a new era of freedoms, yet the editor of the country’s best-known online outlet faces a potential jail term in a contempt case related to reader comments.Financial troubles aren’t helping. Research published by the Pew Research Center in April showed newsroom employment at U.S. newspapers halved between 2008 and 2019. Overall journalist numbers dropped by nearly a quarter. And that’s hardly improved during the pandemic, when the BBC, Britain’s Guardian, Australia’s ABC and many others have shed employees.As with climate, or broader environmental, social and governance concerns, there's a clear moral case for investors to take an interest, and avoid the sovereign bonds of countries with poor records on free speech, or shares in state-owned entities. After all, many already shun weapon manufacturers, tobacco or gambling stocks.Self-interest speaks even louder. At a basic level, press freedom is positively correlated with good levels of development. Research carried out by Sciences Po in Paris and published by Unesco in 2008 established that link. It did find outliers with high gross domestic product per capita and limited media liberties — Singapore, for one — but no country had a free press and low wealth. There’s more. Unrestrained reporting dramatically reduces the price of information, leveling the playing field for investors. More questions are asked and more corruption is uncovered. In repressive systems, it’s not only about those who are hounded, but about others who become silent. U.S. energy giant Enron couldn’t stop the 2001 Fortune article that began its unraveling, any more than German payments processor Wirecard AG was able to silence questions on its accounts. Without that persistent interrogation, risks rise and so does the cost of borrowing. A study by the University of Notre Dame and the University of Illinois at Chicago, tracking counties where the number of newspapers dropped to two or less between 1996 and 2015, found bond yields rose as much as 11 basis points.Finally, there is practical evidence that media coverage makes it more likely bad corporate decisions will be reversed. Not only do board members have more cover to question decisions, but regulators are pressed to act. A 2008 study on media and corporate governance in Russia observed that a single additional article in the Financial Times or the Wall Street Journal increased the probability of reversing a corporate governance violation by five percentage points. And the effect is present both in countries with bad courts, and in countries with good ones, where the press amplifies existing mechanisms to effect change.Divesting from problematic spots isn’t always realistic, given how widespread limitations are: For almost 90% of the world's population, the media is partially or fully restricted. It's also harder to build a global consensus than, say, over environmental causes. Engagement can be difficult. That doesn’t mean it is impossible, or that it isn’t worth trying, given the outsize benefits for investors, companies and wider society.In some democracies, like the U.S., there is room to speak out more forcefully. In countries with significant refinancing needs, buyers of stocks and sovereign bonds have clout, as seen over the issue of Amazon deforestation.In others, like China, it will be harder. Dictating to sovereign governments is unpalatable for either funds or companies investing directly, but both can argue that certain policies, like restricting the press, impede their ability to work and to continue to invest. That is certainly true in Hong Kong, as in the Philippines, Malaysia and Russia. Investors can even press behind closed doors. But they can ill-afford to remain silent, while also eagerly flying the flag for diversity and ESG.For years, fund managers, investment banks and large corporates have defended their work in some of the world’s least liberal countries, say Saudi Arabia, by arguing that the direction of travel indicates progress. That won’t work with press freedom, where the only movement in recent years appears to be in reverse. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
German payments company Wirecard has hired Alix Partners for a forensic investigation of the accounting scandal that led to its collapse, people close to the matter said. The blue-chip company filed for insolvency last month, owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.17 billion) hole in its accounts that auditor EY said was the result of a sophisticated global fraud. Alix Partners has been given the task of finding out which Wirecard employees, including executive and supervisory board members, knew what about potentially criminal incidents, the sources said.
Economy Minister Peter Altmaier said he would attend an extraordinary meeting of the German parliament's finance committee on the Wirecard <WDIG.DE> scandal on Wednesday next week and provide full information. Finance Minister Olaf Scholz is also expected to attend. Scholz is facing calls from rival parties to account for the regulatory failures that led to the collapse of Wirecard after it emerged he knew of concerns about the company 18 months ago.
(Bloomberg) -- Angela Merkel promoted Wirecard AG during a past state visit to China, the latest revelation about the government’s association with the fallen German tech darling.Opposition lawmakers are threatening to call for a parliamentary investigation as they press Merkel’s administration over how it pursued fraud allegations against a member of Germany’s benchmark DAX index.Underscoring the impact of the scandal, the finance committee in Germany’s lower house of parliament plans to interrupt the summer recess to hold a special session on July 29 to discuss Wirecard.Finance Minister Olaf Scholz and Economy Minister Peter Altmaier have been invited, as well as officials from the government’s Financial Reporting Enforcement Panel, according to Daniel Bayaz, a lawmaker from the Green party.‘Last Chance’“The government needs to end its piecemeal approach and finally put everything on the table,” Bayaz said via email, calling next week’s hearing the “last chance” for the government to avoid a parliamentary investigation.Wirecard became a national disgrace when it said last month that a quarter of its balance sheet probably doesn’t exist. That set off a blame game between banks, auditors and public authorities and revealed large gaps in the country’s accounting oversight.Questions have also been raised about what government officials knew about Wirecard’s problems and when they were informed about them. Scholz was aware of suspicions of market manipulation at the digital payments company in February 2019, almost a year and a half before it collapsed.Merkel has kept the scandal at arm’s length, but now risks being drawn in.“During her discussions in China, the chancellor mentioned Wirecard along with topics affecting other companies,” Merkel’s deputy spokeswoman Ulrike Demmer said Monday at a regular government press conference in Berlin, noting that advocating for German companies is standard practice during such trips.“The chancellor definitely wasn’t aware of irregularities at Wirecard at the time,” she added, without specifying the time frame.(Updates with details of planned committee hearing)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Former Wirecard <WDIG.DE> chief operating officer Jan Marsalek travelled to Minsk soon after he was suspended and may still be in Belarus or Russia, a German magazine reported on Saturday. Marsalek, a central figure in the collapse of the German payments company, remains at large but his whereabouts have been a mystery. Marsalek arrived at Minsk airport at 2 minutes past midnight on June 19, Der Spiegel reported.
Germany's Social Democrat Finance Minister Olaf Scholz is facing calls from rival parties to account for the regulatory failures that led to the collapse of Wirecard after it emerged he knew of concerns about the company 18 months ago. Scholz, seen as the party's best hope to succeed conservative Chancellor Angela Merkel next year, was informed in February 2019 that investigators were looking in "all directions" when regulators banned short-selling of Wirecard's shares, according to a parliamentary report seen by Reuters. While there is no suggestion that Scholz knew of any malpractice, rival parties have suggested the Social Democrats' (SPD) most prominent politician bears responsibility for regulators' failure to spot problems.
Glancy Prongay & Murray Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Wirecard AG (WCAGY, WRCDF)
(Bloomberg) -- German Finance Minister Olaf Scholz was aware of potential market manipulation at Wirecard AG almost a year and a half before the company collapsed, putting pressure on a key figure in Angela Merkel’s government.Financial watchdog BaFin informed Scholz in February 2019 about the case “because of the suspicion of a violation against the prohibition of market manipulation,” according to a report by the Finance Ministry seen by Bloomberg.His early knowledge of the allegations swirling around Wirecard increases scrutiny on the highest-ranking Social Democrat in Merkel’s coalition and lays bare the delicate political dynamics just over a year before the next election.Presented to the heads of the parliamentary finance committee on Thursday evening, the report creates a new opening for critics who accuse German authorities of being too lax by failing to pursue fraud allegations of a company that aspired to be a leading light in Europe’s tech industry.The minister was told that BaFin would “investigate in all directions,” said the document, which was reported earlier by German media.While Scholz has denied any direct involvement in the Wirecard scandal, he has struggled to insulate himself from the issue. His deputy, Joerg Kukies, confirmed on Wednesday that he met the digital payments company’s then-Chief Executive Officer Markus Braun twice at the end of last year, including once on the manager’s birthday.Scholz’s ProblemMerkel kept the scandal at arm’s length, saying the responsibility to clear up the issue lies with Scholz.“What information the Finance Ministry possessed at what time will be disclosed by the ministry to the public, and the chancellor sees that as good and correct,” Martina Fietz, Merkel’s deputy spokeswoman, said Friday during a regular government press conference.She stopped short of stating that Scholz has the German leader’s full support. “The chancellor works faithfully with all members of the cabinet,” Fietz said.Despite the mounting pressure, Merkel would be hard pressed to take action against her vice chancellor without bringing down the coalition, an unlikely scenario in the midst of a global pandemic and during Germany’s six-month presidency of the European Union.Political SupportWirecard, a member of Germany’s benchmark DAX index, became a national disgrace when it said last month that a quarter of its balance sheet probably doesn’t exist. That set off a blame game between banks, auditors and public authorities and revealed large gaps in the country’s oversight of non-financial companies.In a closed-door meeting of the Bundestag’s finance committee late Thursday, Deputy Finance Minister Kukies said he was unaware that it was Braun’s 50th birthday when he met the former CEO on the sidelines of a banking conference in Munich last November, according to minutes of the session seen by Bloomberg.Kukies said he discussed a KPMG audit, which Braun had looked forward to as “clearance.” The ministry official also said that Scholz had shown great interest in the Wirecard case and had repeatedly asked him for updates.The opposition has called for a special meeting of the finance committee during the parliamentary summer break because it sees many questions still unanswered.‘Highly Problematic’“Politically it’s highly problematic that the finance minister got involved with the case at such an early stage,” said Danyal Bayaz, a lawmaker with the Green party. “Scholz had Wirecard on his radar, he had an interest, but this interest apparently never became big enough to prompt him to take action.” Any decision over Scholz’s fate would rather lie with the SPD, whose members last year rejected his bid to lead the party in favor of a duo who voiced more support for policies such as a wealth tax, a higher minimum wage and public spending.Still, voter backing of the SPD remains mired at historic lows, and the party has begun to maneuver in support of Scholz’s bid to run for the chancellorship. That fragile balance would be upended if the politician’s standing was challenged.The Finance Ministry waved off suggestions that Scholz didn’t act appropriately. German regulators pursued accusations against Wirecard over the years and the ministry was regularly informed about the state of the various probes, Finance Ministry spokesman Dennis Kolberg said at the government briefing.Reform PushThe ministry is “actively” looking to overhaul accounting oversight in the aftermath of Wirecard’s collapse and will present a plan “as quickly as possible,” Kolberg said. BaFin, which is overseen by the Finance Ministry, has come under criticism for appearing to focus more on targeting investors who alleged irregularities at Wirecard and made bets against the stock, rather than the company itself.The regulator said in March last year that it was investigating both sides. BaFin President Felix Hufeld said last month that his institution is among those parties responsible for the failure to catch what he has called “massive fraud” at the company. Still, he defended BaFin’s actions against so-called short sellers as being a legal obligation.Despite outrage over the shortcomings, political opponents have stopped short of calling for Scholz to step down.“The sloppiness when it comes to controlling billion-dollar companies is simply inconceivable,” Bernd Riexinger, head of the Left party, said in an emailed statement. “Scholz urgently needs to explain why suspicions of irregularities at Wirecard -- but also the problems with the oversight regime -- were ignored in his ministry for so long.”(Updates with details from finance committee meeting)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
In the wake of the Wirecard accounting scandal, exchange operator Deutsche Boerse said on Friday it was proposing rules to enable it to quickly expel companies from the leading DAX index if those firms file for insolvency. The ruling, if adopted, could mean that Wirecard would leave the DAX index in August, rather than during a regular review of the index makeup in September. Wirecard was promoted to the DAX index of 30 leading companies in 2018, displacing Commerzbank, as the fortunes of a rising technology star underscored the declining fortunes of the nation's top banks.
The former head of a key subsidiary of Wirecard, who was arrested earlier this month, has admitted wrongdoing to prosecutors for his role in a multi-billion-euros fraud, his lawyer said on Thursday. It is the first known confession of wrongdoing in the collapse of one of Germany's biggest companies. The unidentified jailed executive was the chief executive officer of Dubai-based Cardsystems Middle East.