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.

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.

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.

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.

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.

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.”

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.