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Sadly can't read the article as I don't have a subscription but have followed this in the FT. Germany has an ultra-protectionist political culture for pet Germ

Sadly can't read the article as I don't have a subscription but have followed this in the FT. Germany has an ultra-protectionist political culture for pet German companies. Wirecard was one such pet company but there are many others who have benefited from implicit state support in the form of lowered standards and private favouritism: Deutsche, VW, Siemens, etc. Wirecard even holds a banking license so should be subject to quite a lot of oversight from the regulator but the head of BaFin ("Germany's SEC" as the headline states) makes the risible excuse that he didn't apply proper oversight to them because they are arguably a "technology company". Disappointingly there is very little doing. The pan-EU regulator, ESMA, basically is not equipped to properly investigate and censure BaFin - they're really just a standards body similar to the IETF or ANSI. No I can't imagine much will change.

k__ 6y ago
My theory is, that the German state sees the companies as work creation schemes. Some of the smartest people work at big corps, but most people there are just running around burning money, but at least these people don't count as "unemployed".
- jacquesm 6y ago
  Companies are work creation schemes. Some government even set up investment vehicles for the sole purpose of creating jobs because that's cheaper than using the same money to support people directly. It doesn't always work out but there are examples of this succeeding beyond anybody's wildest expectation.
sbmthakur 6y ago
This is a nice summary for those who either don't have access to the FT coverage or are out of the loop: When €2 Billion went missing at Wirecard: https://finshots.in/archive/wirecard-accounting-scandal/ https://finshots.in/archive/wirecard-accounting-scandal/
- kmlx 6y ago
  here's the ft link containing all their wirecard coverage: https://www.ft.com/wirecard https://www.ft.com/wirecard i think some articles there are free to read. for example: https://www.ft.com/content/284fb1ad-ddc0-45df-a075-0709b36868db https://www.ft.com/content/284fb1ad-ddc0-45df-a075-0709b3686...
- oh_sigh 6y ago
  "Went missing" is a weird way to put it, because it never existed in the first place. If I convince everyone I have a Rolls Royce Sweptail in my garage(even though I don't), but then someone opens the garage and says there is no Sweptail in there, I don't think anyone would describe the Sweptail as going missing - merely that its existence in my garage was a lie.
hobofan 6y ago
> BaFin ("Germany's SEC" as the headline states) makes the risible excuse that he didn't apply proper oversight to them because they are arguably a "technology company" Given that they've been deeply involved in regulating cryptocurrencies in the last years, that's a bullshit excuse if I've ever seen one.
- calpaterson 6y ago
  Not least because while they claim they weren't doing proper oversight of Wirecard they still somehow managed to find time to litigate against various market participants and newspapers trying to blow the whistle (including the FT), banned short selling, etc.
this_user 6y ago
Wirecard as a whole does not hold a banking license, only their banking subsidiary does. They were actually properly regulated by the BaFin, but everything else had much more loose oversight.
- calpaterson 6y ago
  They were absolutely not properly regulated by BaFin. For starters the bank released false accounts to the public - as Wirecard Bank is 100% owned by Wirecard it's accounts aren't broken down from the (fraudulent) Wirecard accounts under the rules for consolidated subsidiaries. I think this is a big problem for a regulated financial institution. Secondly, Marcus Braun (Wirecard Chief Exec) managed to take an unauthorised director's loan from Wirecard Bank equivalent to 1/5 of the banks equity capital. He eventually relented and repaid the money but not BaFin does not seem to have gotten involved. Surely this should have at least rung alarm bells!! Apparently not, BaFin continued to sleep on the matter. Finally, Wirecard bank has now collapsed in a disorderly fashion with depositors unable to access their deposits for a period, foreign regulators freezing funds to defend depositors, etc. Wirecard Bank is a very small bank. If BaFin is fluffing it up this badly on the easy cases, what is going to happen when a big bank goes bust? There were rumours in 2017 that Deutsche was going to go insolvent - how much confidence to you have that BaFin would manage that process well? Or would we find also that 50% of their balance sheet does not exist?
- wjnc 6y ago
  In my experience this is a truism. Licenses almost never are held by the "top" legal entity in a firm, but fall to subsidiaries. The thing is that oversight not always carries over the boundaries of legal entities. Perhaps dividend arrangement do, but if other parts of the firm are in (regulatory) different markets it often ends the oversight of the regulator.
fergie 6y ago
Mirror: https://archive.md/TTZ1H https://archive.md/TTZ1H
thespiceisloco 6y ago
Look around you.
- thespiceisloco 6y ago
  Panic.
felixfbecker 6y ago
Deutsche what? Deutsche Bahn? Deutsche Bank? Deutsche Telekom? Deutsche Post? All of them? Deutsche just means “German”

k__ 6y ago

My theory is, that the German state sees the companies as work creation schemes. Some of the smartest people work at big corps, but most people there are just running around burning money, but at least these people don't count as "unemployed".

jacquesm 6y ago
Companies are work creation schemes. Some government even set up investment vehicles for the sole purpose of creating jobs because that's cheaper than using the same money to support people directly. It doesn't always work out but there are examples of this succeeding beyond anybody's wildest expectation.

sbmthakur 6y ago

This is a nice summary for those who either don't have access to the FT coverage or are out of the loop: When €2 Billion went missing at Wirecard: https://finshots.in/archive/wirecard-accounting-scandal/ https://finshots.in/archive/wirecard-accounting-scandal/

kmlx 6y ago
here's the ft link containing all their wirecard coverage: https://www.ft.com/wirecard https://www.ft.com/wirecard i think some articles there are free to read. for example: https://www.ft.com/content/284fb1ad-ddc0-45df-a075-0709b36868db https://www.ft.com/content/284fb1ad-ddc0-45df-a075-0709b3686...
oh_sigh 6y ago
"Went missing" is a weird way to put it, because it never existed in the first place. If I convince everyone I have a Rolls Royce Sweptail in my garage(even though I don't), but then someone opens the garage and says there is no Sweptail in there, I don't think anyone would describe the Sweptail as going missing - merely that its existence in my garage was a lie.

hobofan 6y ago

> BaFin ("Germany's SEC" as the headline states) makes the risible excuse that he didn't apply proper oversight to them because they are arguably a "technology company" Given that they've been deeply involved in regulating cryptocurrencies in the last years, that's a bullshit excuse if I've ever seen one.

calpaterson 6y ago
Not least because while they claim they weren't doing proper oversight of Wirecard they still somehow managed to find time to litigate against various market participants and newspapers trying to blow the whistle (including the FT), banned short selling, etc.

this_user 6y ago

Wirecard as a whole does not hold a banking license, only their banking subsidiary does. They were actually properly regulated by the BaFin, but everything else had much more loose oversight.

calpaterson 6y ago
They were absolutely not properly regulated by BaFin. For starters the bank released false accounts to the public - as Wirecard Bank is 100% owned by Wirecard it's accounts aren't broken down from the (fraudulent) Wirecard accounts under the rules for consolidated subsidiaries. I think this is a big problem for a regulated financial institution. Secondly, Marcus Braun (Wirecard Chief Exec) managed to take an unauthorised director's loan from Wirecard Bank equivalent to 1/5 of the banks equity capital. He eventually relented and repaid the money but not BaFin does not seem to have gotten involved. Surely this should have at least rung alarm bells!! Apparently not, BaFin continued to sleep on the matter. Finally, Wirecard bank has now collapsed in a disorderly fashion with depositors unable to access their deposits for a period, foreign regulators freezing funds to defend depositors, etc. Wirecard Bank is a very small bank. If BaFin is fluffing it up this badly on the easy cases, what is going to happen when a big bank goes bust? There were rumours in 2017 that Deutsche was going to go insolvent - how much confidence to you have that BaFin would manage that process well? Or would we find also that 50% of their balance sheet does not exist?
wjnc 6y ago
In my experience this is a truism. Licenses almost never are held by the "top" legal entity in a firm, but fall to subsidiaries. The thing is that oversight not always carries over the boundaries of legal entities. Perhaps dividend arrangement do, but if other parts of the firm are in (regulatory) different markets it often ends the oversight of the regulator.

fergie 6y ago

Mirror: https://archive.md/TTZ1H https://archive.md/TTZ1H

thespiceisloco 6y ago

Look around you.

thespiceisloco 6y ago
Panic.

felixfbecker 6y ago

Deutsche what? Deutsche Bahn? Deutsche Bank? Deutsche Telekom? Deutsche Post? All of them? Deutsche just means “German”