One of the biggest financial scandals in German history, the Wirecard affair went into its next chapter last Friday on April 23rd, with German Chancellor Angela Merkel testifying before the Bundestag about her decision to lobby on behalf of the company. Set off by the revelation in June last year that the Munich-based payment platform Wirecard had misreported its revenue and was missing €1.9 billion in funds, the former CEO of the company, Austrian entrepreneur Markus Braun, was arrested on charges of fraud, market manipulation and money-laundering while former COO Jan Marsalek evaded capture and remains at large. Embarrassed by the fact that the now-defunct Wirecard enjoyed stellar ratings and raised no alarms from fiscal authorities until the very end, the German Bundestag launched an extensive inquiry into how the former investor darling’s financial misdeeds had managed to go undetected for so long.
The chancellor was the fourth senior government official to be questioned by the parliamentary committee since the investigation started on October 1st 2020. Asked specifically about her conversation with Chinese state officials over Wirecard’s planned acquisition of the Chinese company AllScore, Merkel called her lobbying efforts a “normal operation,” adding that the government regularly lobbied on behalf of German companies abroad. “Wirecard AG didn’t receive any special treatment,” the Chancellor stated.
Looking back, it seems like the state visit placed the interests of Wirecard front and center, but “this is far from the truth,” Merkel said, stressing that her talks with Chinese premier Xi Jinping concerned a plethora of political issues and that representatives from Wirecard weren’t even part of the business delegation.
“Despite the press reports, there was no reason to assume there were serious irregularities at Wirecard at the time,” Merkel concluded.
A key point of contention was a phone conversation between Merkel and her former Defense Minister, Karl-Theodor zu Guttenberg, who worked as a lobbyist for Wirecard in 2019: Merkel confirmed that she indeed spoke with Guttenberg for 45 minutes shortly before her visit to China, but couldn’t recall if Wirecard had been mentioned. “For me, it is normal to accept requests for conversations from former members of my administration,” Merkel added.
A day before Merkel’s deposition, Finance Minister and head of BaFin (Germany’s financial oversight authority), Olaf Scholz, gave his own statement before the Bundestag. The Social Democratic Party’s candidate for chancellor, he announced that BaFin has been working tirelessly to strengthen its powers and implement reforms following last year’s events.
Several opposition members on the committee were dissatisfied with the chancellor’s version of events, with Left Party member Fabio De Masi stating that Merkel’s testimony left “many open questions.” Danyal Bayaz of the German Green Party told Reuters that the fact that some allegations against Wirecard were already public at the time of Merkel’s visit needed to be thoroughly assessed. Florian Toncar of the pro-business Free Democratic Party called the chancellor’s actions “a political mistake,” adding “I think not deliberately, not intentionally, but in fact, the chancellor effectively supported the continuation of the balance sheet manipulation.”
With the Wirecard investigation currently encompassing over 300 hours of hearings, 98 deponents and hundreds of thousands of documents, the committee is scheduled to submit its final report before the Bundestag goes into summer recess in July.