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The collapse of Wirecard revealed a gap in the heart of Germany, Inc.

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The collapse of Wirecard revealed a gap in the heart of Germany, Inc.
Journalists, whistleblowers and skeptical investors have all been questioning Wirecard accounting for years, but executives can dismiss their expectations. Wirecard (WCAGY) received protection from the country’s banking regulator, who pushed back forcefully against critical hedge funds and investigative journalists, but failed to find anything wrong at the company.

In the end, the destruction only took seven days. Wirecard admitted last week that around a quarter of his assets – € 1.9 billion ($ 2.1 billion) in cash – might never have existed. CEO Markus Braun resigned and was quickly arrested on suspicion of inflating the company’s balance sheet and sales through fraudulent transactions. Wirecard filed for bankruptcy on Thursday.

Braun, who had been released on bail, consistently denied making mistakes, instead stating that Wirecard was a victim of highly sophisticated fraud. But a picture of a valuable technology company was encouraged by the authorities rather than researched, and a supervisory board that failed to act as a check on the chief executive was widely regarded as a visionary. The accounting firm EY accelerated the downfall of Wirecard by refusing to sign the final results for 2019, after more than a decade of auditing the company.

“You have a lot of evidence of sinners, observers, of all kinds of guilty parties,” said Christian Strenger, academic director of the Corporate Governance Center at the HHL Leipzig Graduate School of Management.

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

Volkswagen (VLKAF), the world’s biggest carmaker and German manufacturing champion, admitted in 2015 that millions of diesel vehicles had been equipped with software to cheat on emissions tests. German bank (DB), the country’s largest lender, has paid tens of billions of dollars in fines related to the sale of toxic mortgage assets, interest rate manipulation, and Russian money laundering schemes.
Two more German corporate snafus have produced global headlines this week: more than 1,500 workers tested positive for corona virus in factories owned by meat processing giant Tönnies Group, forcing local officials to re-apply locking to more than half a million people in the surrounding area; and Bayer (BAYRY) agreed to pay more than $ 10 billion to settle claims that Roundup, a product it owns thanks to the acquisition of Monsanto, caused cancer.

The outbreak at the Tönnies factory highlighted the poor working and living conditions faced by foreign workers in this industry, and the German government responded by promising to ban the use of subcontractors and double the fines for violating regulations on working hours.

Bayer settlement comes after investors voiced deep concern about the acquisition of Monsanto, and questioning whether management has understood legal risks correctly. Bayer’s shares have lost about one third of its value since the purchase of Monsanto was announced in September 2016.
Giant meat packing company in the heart of Germany's new coronavirus hotspot

The company operates in various industries, but with the exception of the Tönnies Group, they are publicly listed and run by a management board with responsibilities for day-to-day operations and overseen by a supervisory board that includes workers’ representatives. Critics say surveillance breaks down when boards become too comfortable, which can occur when top executives move into supervisory positions. Investors complain that their interests are too often overtaken by other considerations, such as politics or the company’s internal dynamics.

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Strenger said that German corporate governance has improved significantly in recent decades, but shortages by executives and directors are still too common. Additional protection would be relatively easy to install, he said, such as changing stock market rules to prevent companies from delaying their financial results, as Wirecard did.

“We have made good progress … but there is still room for human error, or to try to believe in people who appear in convincing ways. [Wirecard] traded among analysts and investors as the next SAP (SAP), and who doesn’t want to join in? “he said, referring to the software giant which is also listed on DAX.
Former Wirecard CEO Markus Braun is considered by many to be a technology visionary.
The collapse of the Wirecard made waves far beyond Germany. Panic searches for lost funds reached the Philippines, where the central bank denied that money had entered the country’s financial system. US card issuer MasterCard (MA) and Visa (V) is considering whether it will allow Wirecard to continue processing payments on their network, according to Bloomberg, and the British regulator has moved to protect Wirecard client funds.

The German government is now paying close attention. Finance Minister Olaf Scholz described the Wirecard scandal as “very worrying,” saying the country must act quickly to increase oversight. “Critical questions arise over corporate oversight, especially with regard to accounting and balance sheet control. Auditors and regulatory bodies appear to be ineffective here,” Scholz said in a statement.

The German Federal Financial Supervisory Authority, or BaFin, is actively investigating whether Wirecard violates rules against market manipulation. But regulators are now under close scrutiny, with critics who argue that it should do a better job of overseeing the Wirecard banking unit, even if it does not have direct supervision of a larger company.

Mastercard and Visa are reportedly reconsidering their relationship with Wirecard after an accounting scandal

Observers also want to know why BaFin issued a temporary ban in 2019 that prevented investors from borrowing Wirecard shares to sell them in anticipation of falling prices, and why BaFin filed criminal complaints against journalists in the Financial Times, which published a series of open accounting articles and management irregularities in the company . BaFin chief Felix Hufeld described the scandal earlier this week as a “total disaster.”

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The European Commission has asked its main market watchdog to conduct an initial BaFin investigation. Valdis Dombrovskis, European Union official in charge of financial services policy, told the Financial Times that the bloc must be ready to launch an official inquiry if necessary.

“We need to clarify what’s wrong,” he said.

EY, who has faced criminal complaints from the German shareholders’ association SdK, said Friday that the collapse of the Wirecard was the result of “complicated and sophisticated fraud, involving many parties around the world in different institutions, with the purpose of deliberate fraud.”

“Collusive fraud designed to deceive investors and the public often involves extensive efforts to create false documentary traces,” the auditor added in a statement. “Professional standards recognize that even the most powerful and expanded audit procedures may not reveal collusive fraud.”

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

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Marseille in California. ″Where the Portuguese is, there is Portugal″

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Marseille in California.  ″Where the Portuguese is, there is Portugal″

“You are the future,” President Marcelo Rebelo de Souza told a three-year-old girl dressed in traditional Portuguese clothing who came out to greet him on the podium where he spoke at Artesia Portuguese Salon. The city, located on the outskirts of Los Angeles, has not hosted the President of the Portuguese Republic since 1989. This weekend, he did it with pomp and the setting of an ornate Portuguese-American community bursting with pride.

“We have never lost the honor and responsibility of being representatives of this beautiful flag,” said Jimmy Enes, a member of Artesia DES, a Portuguese descendant, in a welcoming speech delivered in perfect Portuguese. “When we are asked who we are, we always answer”i am portuguese“and not”Portuguese-American“or ‘Portuguese American’,” he said. “That’s why we’re trying step by step to protect our heritage on the outskirts of Los Angeles, one of the greatest cities in the world.”

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Cristiano Ronaldo is injured by the Portuguese national team and thanks the fans for their support

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Cristiano Ronaldo is injured by the Portuguese national team and thanks the fans for their support



Cristiano Ronaldo got a cut on his nose and needed a bandage (Photo: MICHAL CIZEK / AFP)

Photo: Lance!

Gratitude. It seems that the attacker Cristiano Ronaldo shared his social media with Portuguese fans after a clash with Czech goalkeeper Vaclik. In the auction, the assailant received a cut on his face and needed a bandage to stop the bleeding.

“Great game, important team win! We remain focused on our goal. Thanks to the Portuguese public for the fantastic support,” the striker wrote on his Instagram account.

The match was marked by a great performance Portugal national team, who beat the Czech Republic 4-0 to take the lead in Nations League Group 2 with ten points with one matchday to go in the group stage of the tournament. Cristiano Ronaldo ended up losing to his team.

After the match, the leader of the Portuguese national team appreciated the result achieved on the road. “It was a very important victory and all teammates should be congratulated on the result,” commented the 37-year-old striker.

With three wins, one draw and one defeat, the Portuguese team has the best attack in their group with eleven goals scored and a net difference of nine. The team is one draw away from qualifying for the tournament series. The next match against Spain is next Tuesday in the city of Braga.

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Thomas Gouveia remains the best Portuguese in the Swiss Challenge

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Thomas Gouveia remains the best Portuguese in the Swiss Challenge

Writing with Lusa

Tournament of the second European circuit.

Thomas Gouveia solidified his status as the best Portuguese in the Swiss Challenge this Saturday by finishing the penultimate day of the second European round robin in a group of 31st placed golfers.

Thomas Gouveia hit the card with 73 shots, one over par on the course, after two birdies (one under par hole) and three bogeys (one over), after making 71 shots in the previous two days for a total of 215.

Thomas Bessa needed 75 hits, three over par and tied for scarecrows, he finished 48th with 218 total, five short of Vitor Lopez, 60th with 223, after today needs 78, with just one bird . to fit five scarecrows and a double scarecrow.

The Swiss Challenge, which concludes on Sunday in Folgensburg, France, is still led by France’s Chung Veon Ko with a total of 206 shots, one short of Denmark’s Martin Simonsen in second place.

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