German Chancellor Angela Merkel on Friday defended her efforts to promote scandal-hit payments provider Wirecard during a China trip in 2019.
She said that there were no indications of “grave irregularities” at the time.
Speaking before an investigative parliamentary committee probing the shock collapse of Wirecard, Merkel denied giving any special treatment to the former German star company.
“The Wirecard AG did not receive any preferential treatment during the trip,’’ she said.
According to Merkel, the goals of Wirecard at the time matched those of the government and it was normal for the chancellor to promote the interests of German business during bilateral talks.
“Despite the press reports at the time, there was no reason to assume there were grave irregularities at Wirecard.’’
Wirecard, which had been listed on Germany’s DAX index of leading companies, admitted in June last year that 1.9 billion euros ($2.3 billion) in assets likely did not exist.
This in turn prompted a plunge in the company’s shares, bankruptcy and the arrest of former executives.
During the trip to China in September 2019, Merkel spoke with the Beijing leadership about the planned takeover of Chinese firm AllScore Financial by Wirecard.
This topic had been part of Germany’s efforts to gain better access to Chinese markets, Merkel said.
While in retrospect it seemed the trip was only about Wirecard, it was “far from it”, Merkel said, adding that she had discussed many political topics with Chinese President Xi Jinping.
Merkel confirmed that before her trip she had met with Karl-Theodor zu Guttenberg, a lobbyist for Wirecard, who previously served as minister of defence and economics.
But she said she could not recall if Wirecard was mentioned.
She had referred zu Guttenberg to her economic advisor, Lars-Hendrik Roeller, at the time.
Merkel defended Roeller, whose wife mediated between Wirecard and a Chinese firm, saying she had no occasion not to trust him.
Ultimately, Merkel said that she – “I as chancellor” – bears the responsibility and everything has to be done to avoid that something similar happens in the future.
She pointed to planned reforms of Germany’s financial watchdog BaFin to increase oversight.
The prosecution believes that Wirecard had been cooking its books since at least 2015.
Wirecard’s auditor, EY, however, approved them year after year, prompting questions why the financial irregularities were never noticed.
More broadly, the revelations have cast doubts over the effectiveness of financial oversight authorities in Europe’s biggest economy.
Finance Minister Scholz, whose ministry oversees the watchdog BaFin, was also grilled by the parliamentary committee on Thursday.
While Scholz admitted reform was needed, he said “the responsibility for this large-scale fraud does not lie with the German government’’, pointing the finger at the auditors.