German regulators were deficient in how they supervised payments company Wirecard and were at risk of being overly influenced by the Finance Ministry, the European Unions markets watchdog said on Tuesday.
Wirecards former Chief Executive Markus Braun and other executives have been held on suspicion of running a criminal racket that defrauded creditors of 3.2 billion euros 3.73 billion in Germanys biggest postwar corporate fraud.
Those accused, including Braun, deny any wrongdoing.
The European Securities and Markets Authority ESMA began a fasttrack review in July into how Germanys markets regulator BaFin and the countrys accounting watchdog the Financial Reporting Enforcement Panel FREP enforced EU transparency rules governing company information for markets and investors.
ESMA said in its 190page review that it found a number of deficiencies, inefficiencies and legal and procedural impediments relating to BaFins independence from issuers and the Finance Ministry.
For BaFin … there is a heightened risk of influence by the Ministry of Finance given the frequency and detail of reporting to the MoF in the Wirecard case, in some cases before actions were taken, the ESMA report said.
ESMA was asked by the European Commission to undertake the review, whose findings the EU executive will use to determine if there is a need for more centralised EU supervision of markets to stop such scandals from happening again.
The Wirecard case has once again highlighted that…