Bafin boss Hufeld: waiting for reformsPhoto:
Frank Rumpenhorst / DPA
The German financial regulator Bafin is increasingly on the defensive in the Wirecard scandal. Authorities chief Felix Hufeld, in particular, has been accused in three cases of not telling the truth when appearing before the Bundestag Finance Committee.
Hufeld's problem number 1: Trouble with Europe
The latest problem of the Bafin boss comes from Frankfurt, more precisely from the European Central Bank (ECB). Hufeld has just rejected Hufeld's statement that the European banking supervision - based at the ECB - was jointly responsible for the incomplete control of the now collapsed scandalous company Wirecard.
What exactly is it about? The Bafin had justified its rather passive behavior towards Wirecard in the past with the fact that the company was classified as a technology and not as a financial holding and therefore only had direct access to Wirecard's banking subsidiary. This classification was supported by the Bundesbank and the European Banking Authority. Hufeld said in a questionnaire to the finance committee that they were "unanimously of the opinion that Wirecard was not a financial holding company." However, since the events surrounding Wirecard had developed very dynamically, he later initiated another check.
Andrea Enria, head of the ECB banking outlook, now contradicts: In a letter of reply dated August 5 to a request from EU parliamentarian Martin Schirdewan (Die Linke), he stated that his authority "played no role in the assessment of whether Wirecard should be classified as a financial holding company." is ". This decision rests solely with the national supervisory authorities, in this case the Bafin.
Bafin tries to explain the matter: Hufeld's statements in the finance committee do not contradict Enria's letter, "that the classification of whether a company qualifies as a financial holding is national supervisory responsibility of Bafin and the Bundesbank". The reason: In the course of a decision to be reported by the ECB on a planned reorganization of Wirecard, the European supervisors implicitly supported the assessment that the company was not a financial holding company.
Hufeld's problem number 2: The "accounting police"
The statement on the role of European supervision was not Hufeld's first communication misstep in the Wirecard scandal. Previously, in two other cases, he had already given the impression that the responsibility for the lax attitude towards Wirecard was being kept away from the Bafin and passed on to other authorities. And not always being too specific about the truth. One case concerns the so-called accounting police. This is the colloquial, but rather misleading, term used to describe the German Audit Office for Accounting (DPR).
What exactly is it about? For corporations like Wirecard, which are not subject to the direct supervision of Bafin, the law provides for a two-stage procedure if there is suspicion of irregularities in the balance sheet: First, the FREP is involved. According to the law, the Bafin may only intervene in this process and initiate the investigation if there are "serious doubts" about the correct procedure at the DPR.
Hufeld believes that there were no such doubts. "Reports of irregularities at Wirecard AG do not automatically give rise to serious doubts about whether the FREP is carrying out a proper check," explains his press office.
The FREP has neither sufficient resources nor sufficient competencies. It is a privately organized association with a budget of six million euros and just 14 balance sheet controllers, each of whom reviews around half a dozen consolidated balance sheets per year. And by law, it is dependent on cooperation with the company's management. If there is a suspicion that this very management is manipulating the balance sheets, an examination by the FREP "makes little sense", according to a statement by a working group of several university professors on accounting law. In such a case, the law could be interpreted in such a way that "direct action by the Bafin is made possible".
Instead, Hufeld put the responsibility on the DPR. On July 1, he told the Finance Committee that he had not yet received the test report on Wirecard from the FREP - but omitted the fact that the FREP had already sent two interim reports on request, on May 14 and June 24.
In retrospect, Bafin also has an explanation for this: In the first interim report, the DPR made it clear that "further information should be obtained from Wirecard AG". The second had "indeed contained the tenor of the planned preliminary determination of errors", but without justification. The actual final report was only received by the Bafin according to Hufeld's statements in the finance committee - and later than requested by the Bafin.
"We kept Bafin well informed at all times," says DPR boss Edgar Ernst. "Had that not been the case, the Bafin could have intervened." You can also take action yourself on the basis of interim reports.
Hufeld's problem number 3: Singapore
The matter with the DPR might have caused less outrage if it weren't for the matter with Singapore, Hufeld's third problem: Hufeld had explained to the finance committee that the Bafin had asked for help with the supervision of Wirecard there. They referred to the police - and from there they are waiting "until today for an answer".
SPIEGEL research has shown that this was not true - whereupon the Bafin had to capture the statements of its president and admit that it had been in regular contact with the authorities in Singapore since the beginning of 2019. They also provided information.
Singapore is of central importance in the Wirecard scandal. Wirecard organized the Asian business from the city-state. Above all, the supposed business with so-called third-party partners took place there, who are said to have been responsible for the lion's share of sales and profits - in truth, however, large parts of this business apparently did not exist.
Hufeld defends himself stoically
Hufeld's repeated attempts to push aside responsibility for lax supervision of Wirecard are now fueling a discussion about his role. "Contrary to his claims, Felix Hufeld had the authority to investigate the Wirecard case at an early stage. But he didn't do it," says Florian Toncar, financial policy spokesman for the FDP parliamentary group in the Bundestag. Fabio De Masi, financial expert on the left, even calls for Hufeld's replacement: "Either Mr. Hufeld doesn't know what's going on in his own authority or he is untruthful." In both cases it is no longer acceptable. "The finance minister must finally act and take action at the head of financial supervision."
Hufeld stoically defends himself against all allegations, including the one that he made the topic a top priority too late. "Wirecard has been a top priority for years," he says. "We have dealt with it a number of times in the board of directors. In the case of all irregularities, we issued reminders or took measures. The Federal Ministry of Finance supported us."
Hufeld is apparently building on reforms that Federal Finance Minister Scholz has already announced - and which, among other things, should give the Bafin more rights of intervention. "I warn against assuming that we can rule out scandals like this in the future," he also says. "There is no perfect protection against large-scale fraud and criminal activity."
The search for a suitable successor to Hufeld will be difficult in any case. Internal candidates are also partly burdened by the Wirecard affair and would hardly stand for a credible new beginning. A new, high-caliber external boss is unlikely to be found until it is clear exactly how financial supervision will be reformed.Icon: The mirror