Stakeholder/Governance What went wrong?
mechanism
Audit Committee Wirecard did not establish an Audit
Committee until 2019. Without this
independent committee the
management board is not held
accountable for their action
financially. There is no one to check
the financials, transactions of the
company.
Auditor EY was negligent when performing
the audit of Wirecard. EY allegedly
failed to request critical account
information from a bank in
Singapore for at least three years,
where, according to Wirecard, up to
$1 billion in the company's cash was
managed. EY trusted on documents
and screenshots of a third party and
from Wirecard itself. This type of
negligence brings about the
suspicion that auditors at EY were in
on the fraud.
BaFin Bafin is held accountable for
inadequate oversight and
negligence. Many hedge funds have
criticized Germany’s financial
regulator, BaFin, for temporarily
banning short-selling in Wirecard
stock and for filing a criminal
complaint against two FT journalists
who reported the whistleblower
allegations about the company. In
2016 Bafin already got a dossier of
allegations related to money
laundering related to Wirecard.
Furthermore the FT already
investigated Wirecard and the
How to re-design?
When going public
immediately create a
independent Audit
Committee with suitably
qualified individuals to
check and monitor the
financial actions of the
management board and
company. The name of the
financial expert should be
disclosed. The Audit
Committee should
communicate regularly with
the auditor, without the
presence of the
Management Board,
whereby this exclusion
should be set forth in the
Audit Committee’s
procedural rules.
This could have been
prevented if the auditor was
not so negligent. Even if you
100% trust a company
always double check leads,
suspicious transactions.
Perform a thorough and
good audit.
This is due to negligence of
the regulator. It should have
worked more diligently and
should have followed up
lead and red flags pointed
out many times. More
stringent controls and
putting up more restrictions
aren’t necessarily good
since trying to control and
monitor too much is
bringing about negative
effects, but doing you job
more thoroughly.
 situation was not right.
Supervisory board Until 2016 the Supervisory Board
consisted of only three persons, five
until 2018 and only six from 2019.
This is very small for a company
that big and neglected to scrutinize
the conduct. The name of the so-
called financial expert member the
Supervisory Board was not
disclosed.
Multi-stakeholder approach From the looks of it Wirecard, from
the start, was focused on growth
and creating shareholder value. This
too does not necessarily has to be a
bad thing but when you are
overdoing it, it can become a bad
thing. You loose sight of other
important aspects of the business.
Furthermore, like what happened
can become fraudulent.
Markus Braun/management Markus Braun, took over the reign
of Wirecard in 2002. And already
started shady by taking over the
listing of a defunct call center
group, a route that avoids the
scrutiny of an initial public offering.
This shady behavior continued. If
the management team was
monitored better and was
accountable for their action this
would have a lower probability to
happen. They had too much
freedom and focus on growth and
misconduct.
This should have been 12 at
the minimum for such a
large company. The
supervisory board is in place
to prevent such action made
by the management board.
The oversight should have
been better. Transparency is
important.
Implement a multi-
stakeholder approach to
weigh in all factors making
business decisions. Growth
will probably be slower but
you build a more steady
company and factoring in all
stakeholders fraudulent
behavior will be less.
Stronger monitor by e.g.
supervisory board would
mitigate this. An
independent Audit
Committee would mitigate
this as well. Furthermore, a
transparent culture in the
company.