(Bloomberg) -- The European Central Bank denied any involvement in deciding that Wirecard AG (OTC:WCAGY) wasn’t a financial holding company, a crucial determination that gave authorities limited powers in scrutinizing the firm ahead of its spectacular collapse.
The decision was instead the sole responsibility of German supervisor BaFin, according to Andrea Enria, the head of the ECB’s supervisory arm. In a letter to a German EU lawmaker, Martin Schirdewan, he said his institution “did not play a role in assessing whether Wirecard AG was a financial holding company from a prudential perspective,” adding that this was the “sole competence” of national authorities -- in this case BaFin.
German lawmakers have said that the failure to classify Wirecard as a financial holding was a key shortcoming of supervisors, as such an assessment would have allowed for much stricter accounting controls. BaFin President Felix Hufeld told the parliament in Berlin that “all previous decisions were taken in consensus with the involved institutions, the German Bundesbank and the ECB,” a spokeswoman said after he gave testimony last month.
Even with ample warning, German authorities failed to catch accounting issues at the digital-payments company, whose collapse has shaken confidence in the country’s finance industry. Much of the criticism has centered on BaFin, which has acknowledged that it’s one of the institutions that fell short, while defending its actions.
Hufeld has already faced accusations that he gave false information regarding BaFin’s contacts with authorities in Singapore over Wirecard, though a spokeswoman said he was merely “imprecise” when he said which authority BaFin had contacted and has since clarified that in conversations with lawmakers.
Enria also said that entities within the Wirecard group “neither qualified as a payment system nor as a payment scheme and thus were not subject to payments oversight” by the ECB.
The parliamentary finance committee will hold a special hearing into the Wirecard scandal on Aug. 31 and Sept. 1 with representatives from the Chancellery, the Justice Ministry, BaFin, and the Bundesbank.
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