The German economy is predicted radical changes because of the scandal

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CNBC interviewed experts predicted the German economy, a radical change because of the scandal with the reporting of the payment system of Wirecard. The company has submitted the claim about own bankruptcy, which will now be heard in court.

About the problems with the financial statements Wirecard became known in the spring after a series of publications in business press. During the investigation, reporters found out that the company falsified documents, including that provided by law regulators.

In late June, suspicions were confirmed. Then it became known that on the balance sheet of Wirecard is not enough 1.9 billion euros. Their theft was charged with many years the head of the company Marcus brown, who resigned amid the scandal. Now he is released from custody on bail pending trial.

As of the publication Wirecard revealing information to some shareholders and creditors of the company, including hedge Fund TCI, urged to exclude brown from the operational management. However, this did not happen. Now they are talking about the need to change the rules and requirements for corporate governance in Germany. Wirecard liabilities to creditors amount to € 3.5 billion.

According to German law, each joint stock company should be two governing bodies: the Board of Directors (or Supervisory Board) and the Board. The first is obliged to intervene and overrule the decisions of the Board, if in doubt as to their effectiveness for the company and its shareholders. However, in the case of Wirecard this did not happen.

Economists also have questions to the national financial regulator BaFin and audit firm EY, not noticing the “disappearance” of large sums from the balance of Wirecard. Experts insist that the system of control and regulation needs to change, even in spite of recent reform.

Some compare Wirecard with the American energy company Enron, caught falsifying statements in 2001. The investigation against her led to the bankruptcy and prison terms for executives.

Wirecard until recently was part of the German index of blue chip DAX is composed of stocks of 30 companies. The quotes of the payment system have fallen by 98 percent since the beginning of the scandal.

Video, photo All from Russia.

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