(Bloomberg) — German lawmakers plan to grill officials from Angela Merkel’s office over Wirecard AG, as the political fallout from the scandal threatens to ensnare the chancellor and some of her closest allies.
After a special hearing in Berlin Wednesday that lasted eight hours, members of the lower house of parliament’s finance committee said they will need answers from the chancellery before deciding on a deeper investigation. Finance Minister Olaf Scholz, the main target of criticism, defended his handling of the case and called for tighter financial oversight.
“We will not get a complete clarification because the chancellery’s chair is empty today,” said Fabio De Masi, a member of the committee from the Left party. Lisa Paus from the Greens said that the committee intends to invite Merkel’s economic adviser, Lars-Hendrik Roeller, and possibly others, to testify, and noted that the chancellery continued to promote Wirecard “even when the allegations were already known.”
“We want a complete explanation,” Paus said Thursday in an interview with broadcaster ZDF.
Scholz, who testified at the hearing together with Economy Minister Peter Altmaier, is under fire over the government’s failure to pursue warnings about the payment company’s accounting practices. While the spotlight of a more rigorous parliamentary investigation may only be delayed, it’s not a given in Germany’s complicated political landscape.
Just the Beginning
Florian Toncar, a member of the Free Democrats, said he planned to propose the creation of an investigative committee to the Left party and the Greens — together they would have enough votes. But the far-right Alternative for Germany also supports the effort, which could create the appearance of an alliance that might put off many voters.
“The chances that such a committee is coming have risen a lot since yesterday,” Danyal Bayaz, a lawmaker with the Greens, said in an interview with Bloomberg TV, adding that the backing of the AfD isn’t a concern. “We’re at the beginning and not the end of this inquiry.”
If a probe is called, it could last well into 2021 and overshadow the early stages of next year’s election campaign.
The Wirecard debacle threatens to undermine Scholz’s bid to lead the Social Democrats in a run at the chancellery. He has the most government experience of any contender, including hopefuls from Merkel’s Christian Democrats.
Reforms and Repairs
After the closed-door hearing, Scholz said Germany needed to strengthen its financial enforcement and called for the creation of a European equivalent of the U.S. Securities and Exchange Commission.
“We need reforms,” he said. “There must be consequences in terms of legislation and repairs.”
He also spoke in favor of a faster rotation of auditors compared with the current 10 years. He suggested four years to lawmakers, according to a person familiar with the discussions. That responsibility lies with Economy Minister Altmaier, who’s a member of the CDU.
“Every minister is reviewing the procedures under his responsibility,” Altmaier told reporters, adding that rotating auditors need to be seriously considered. “Scholz needs to hold discussions very quickly about strengthening” Germany’s financial watchdog, BaFin.
Scholz oversees the regulator and had to explain why his officials didn’t detect irregularities. He has come under additional pressure because his deputy Joerg Kukies, who regularly briefed his boss about developments of Wirecard probes, had at least two meetings with Markus Braun, the former Wirecard chief executive officer who has been arrested.
Frank Schaeffler, a lawmaker from the Free Democrats, called on Kukies to step down, according to an interview in Bild newspaper.
Mounting pressure prompted Merkel’s office to take the unusual step of unveiling a time line of interactions with Wirecard. It showed the chancellery maintained regular contacts with the company.
Merkel promoted Wirecard’s efforts to gain a Chinese license during a state visit in September 2019. Her office was informed of inquiries into allegations of market manipulation just prior to the trip but denied that she was aware of the possibility of “severe irregularities” at the time.
Wirecard, a member of Germany’s benchmark DAX index, became a national disgrace after acknowledging that about quarter of its balance sheet probably doesn’t exist.
Before and after Wednesday’s gathering in the glass-domed Reichstag in Berlin, Scholz went on the offensive, appearing on national television to promote his proposals for strengthening Germany’s financial oversight.
“We have done what was legally prescribed,” Scholz told ARD late Wednesday in his third TV interview of the day, bluntly rejecting the suggestion that his officials were blinded by the prospect of a German fintech company being successful on the international stage.
(Updates with comments from lawmaker in seventh paragraph)
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