“The last place we expected something like this to happen was Germany,” Peter Altmaier, the German economy minister, said this week.
The spectacular fall from grace of Wirecard, the online payments giant that was the great white hope of Germany’s digital economy, has sent the the country’s financial establishment into deep despair.
Markus Braun, the former chief executive once hailed for turning the company around, faces charges that carry a prison term of up to seven years.
German regulators have admitted the whole affair is a “complete disaster”, and Spiegel magazine this week described it as the country’s version of the Enron scandal.
Yet despite Mr Altmaier’s protestations, the warning signs were there long before Wirecard admitted €1.9bn (1.7bn) of its balance sheet probably never existed — but the German regulators chose to turn a blind eye.
And far from being unthinkable in Germany, the Wirecard debacle is just the latest in a series of scandals that have turned the country’s reputation for financial probity and sound business dealings into a distant memory.
The signs were there as early as January last year, when the Financial Times published the first in a series of reports alleging financial irregularities in Wirecard’s Asian dealings.
Wirecard’s share price dropped 21pc, but rather than take the allegations seriously, the BaFin, Germany’s financial regulator, chose to launch an investigation against FT journalists on suspicion of market manipulation. The FT dismissed the allegations as “baseless and false”. “It is a smokescreen obscuring the serious allegations that were revealed by the FT,” it said at the time.
And instead of checking Wirecard’s balance sheet, the BaFin decided to protect the company by ordering a ban on short-selling its stock.