German audit watchdog chief faces probe over Wirecard share trading
Germany is to probe the head of the country’s audit watchdog after he admitted to buying and selling shares in Wirecard while his own institution was investigating the fraudulent payments company’s auditor.
Ralf Bose, a former senior partner at Big Four auditor KPMG, who has headed Apas since 2016, told the parliamentary inquiry into the accounting scandal on Thursday evening that he purchased Wirecard shares in April and sold them – at a loss – the following month. At that time, Apas was in confidential talks with Germany’s financial regulator BaFin over Wirecard.
Calling the admission “disconcerting”, German economy minister Peter Altmaier said Mr Bose’s share deals would be investigated. “We will discuss the matter with the people involved,” he told reporters on Friday.
“This smacks of insider trading,” said Cansel Kiziltepe, the Social Democrat MP who asked Mr Bose about his share deals at the committee hearing.
Florian Toncar, an MP for the liberal Free Democrats, called for Mr Bose’s resignation: “From my point of view, he cannot remain in office.”
Mr Bose, who declined to disclose the size of his investment in the now-bankrupt group, did not immediately respond to requests for comment, nor did BaFin, which would be responsible for investigating potential insider trading.
Apas has been criticised for not acting earlier over allegations of accounting fraud at Wirecard. It had opened a preliminary probe into EY’s work at Wirecard in October 2019, which was turned into a fully fledged investigation only in early May 2020.
In late September this year, Apas filed a criminal complaint against three EY partners who audited Wirecard, accusing them of a potential violation of professional duties and criminal acts.
Apas is the second German government body facing questions over staff trading in Wirecard shares. BaFin in October banned employees from trading shares and other securities of companies that it oversees.
BaFin in 2019 imposed a two-month short-selling ban for Wirecard shares and filed a criminal complaint against two Financial Times journalists who reported about fraud allegations against the company.
Naif Kanwan, executive director for enforcement and market monitoring at Apas, told MPs on Thursday that those moves by Bafin “influenced” how Apas staff thought about the allegations. “My impression was: somebody is on the case, has been looking at the allegations and came to certain conclusions,” he said.
After Mr Bose’s revelations, Mr Toncar said that this was just “unbelievable”. “Every time when you think it cannot get worse, Wirecard is proving the opposite,” he added.
Mr Bose told MPs that he bought Wirecard shares on April 28, the day when a devastating KPMG report was published and sent Wirecard shares down 26 per cent.
Mr Bose sold the shares at a loss on May 20, he said. This was the day when Apas and BaFin exchanged their views on the findings of the KPMG report. The head of Apas said he sold his shares before the meeting.
Asked why he decided to invest in Wirecard after the KPMG report, which had failed to verify that large parts of Wirecard’s business in Asia existed, Mr Bose said he believed in the business model of the payments company.
Danyal Bayaz, an MP for the Greens, said that Mr Bose “did not understand the implications of the KPMG report” and accused him of “showing an appalling ignorance with regard to an obvious conflict of interest”.