In the end, the collapse lasted only seven days. Wirecard admitted last week that about a quarter of its assets – € 1.9 billion ($ 2.1 billion) in cash – probably never existed. CEO Markus Braun resigned and was quickly arrested on suspicion of artificially inflating the firm’s balance sheet and sales through fake transactions. Wirecard filed for bankruptcy on Thursday.

Released on bail, Braun repeatedly refused to go wrong, arguing that Wirecard was a victim of a highly sophisticated fraud. However, instead of being reviewed by the authorities, the picture of an auditing board that does not act as the control of an award-winning technology company and a general manager, many of whom are considered visionaries, is revealed. Accounting firm EY accelerated Wirecard’s collapse after more than a decade after auditing the company, refusing to give up its final results for 2019.

“You have a lot of evidence of sinners, overlookers, all kinds of criminal parties,” said Christian Strenger, academic director of the Corporate Governance Center of HHL Leipzig Business Institute.

Wirecard is the first member of Frankfurt’s outstanding DAX stock index to file for bankruptcy. But the explosion has followed a series of scandals that have embarrassed the German government, its regulators and the business world over the past five years, raising questions about the power of corporate governance and financial regulation in the world’s fourth largest economy.

The epidemic at the Tönnies factory highlighted the poor working and living conditions faced by foreign workers in the industry, and the German government responded by promising to prohibit the use of subcontractors and double the fines during working hours.

Firms operate in different industries, but outside the Tönnies Group, they are listed publicly and are managed by a board of directors responsible for day-to-day operations and supervised by a supervisory board that includes employee representatives. Critics say that oversight deteriorates when the boards are very comfortable, which can happen when senior executives go into supervisory positions. Investors complain that their interests are often subject to other issues, such as policy or internal dynamics.

Strenger said that German corporate governance has improved significantly in recent years, but the shortcomings of executives and managers are still very common. As Wirecard did, it would be relatively simple to establish additional measures, such as changing stock market rules, to prevent companies from delaying their financial results.

The German government is paying much attention now. Finance minister Olaf Scholz, describing the Wirecard scandal as “extremely worrying”, said the country should act quickly to improve surveillance. “Critical questions arise about the audit of the company, especially in relation to accounting and balance sheet control. Scholz said. Auditors and audit bodies do not seem effective here.”

The German Federal Financial Supervisory Authority or BaFin is actively investigating whether Wirecard violates the rules against market manipulation. However, the regulator is undergoing an intense scrutiny with critics who argue that Wirecard should do a better job controlling the banking unit, even if a larger firm no longer has direct oversight.

Observers also want to know why BaFin issued a temporary ban in 2019 that prevented investors from selling Wirecard shares in anticipation of price drops, and why it filed a criminal complaint against journalists in the Financial Times. Accounting and management disorders in the company. BaFin’s chief Felix Hufeld announced that the scandal was “a complete disaster” earlier this week.

The European Commission has asked the best market auditor to conduct a preliminary investigation of BaFin. Valdis Dombrovskis, the EU official responsible for financial services policy, told the Financial Times that the bloc should be ready to launch an official investigation if necessary.

“We must clarify what went wrong,” he said.

EY, who filed a criminal complaint with the German shareholders’ association SdK, said on Friday that Wirecard’s collapse was the result of “a complex and sophisticated fraud involving multiple parties across the world in different institutions with the purpose of deliberate deception.”

“Comprehensive frauds designed to deceive investors and the public often involve extensive efforts to create a false documentary trail.” “Professional standards recognize that even the most robust and extended audit procedures may not reveal collective fraud.”

– Chris Liakos, Eoin McSweeney and Stephanie Halasz contributed to reporting.