FILE PHOTO: German Finance Minister Olaf Scholz gives a signal when he speaks during a press conference, amid a coronavirus outbreak (COVID-19), in Berlin, Germany, June 17, 2020. REUTERS / Annegret Hilse / Photo File
BERLIN (Reuters) – German Social Democratic Finance Minister Olaf Scholz faces a call from an opponent to explain the regulatory failure that led to the collapse of the Wirecard after it was discovered that he learned of concerns about the company 18 months ago.
The payment services company filed for bankruptcy last month after revealing a hole of 1.9 billion euros ($ 2.2 billion) in its account alleged by auditors for global accounting fraud.
Scholz, who is seen as the party’s best hope to replace conservative Chancellor Angela Merkel next year, was informed in February 2019 that investigators were looking for “all directions” when the regulator banned short sales of Wirecard shares, according to a parliamentary report seen by Reuters.
While there is no suggestion that Scholz is aware of malpractice, rival parties have suggested the most prominent Social Democratic (SPD) politicians assume responsibility for the regulator’s failure to find a problem.
“The fact that Olaf Scholz was told from the start of 2019 about the Wirecard case strengthens the sense of failure of collective responsibility,” said Danyal Bayaz, a financial spokesman for the Green Party, who has moved to second place in the poll by eating into the SPD voter base.
Democrat Christian Merkel, in a coalition with the SPD, also urged Scholz to stop “looking away” and focus on the alleged failure of surveillance by BaFin, the market regulator under Scholz’s responsibility.
Complaints so far have had little impact on Scholz, who is among the most popular politicians in Germany. But they can still hurt their beleaguered party, which has few leadership candidates after a series of election setbacks.
For now, the party remains committed to their main expectations, with legislators accusing others of slinging mud.
“I don’t see the reason why the Wirecard scandal is dangerous for Olaf Scholz,” SPD legislator Jens Zimmermann said. “He must follow what BaFin said to him.”
Writing by Thomas Escritt; Editing by Mark Potter