Connect with us


Prosecutors delayed arrest warrant for Wirecard’s Jan Marsalek



Criminal prosecutors in Munich decided not to request an arrest warrant against Jan Marsalek and other executives on the day Wirecard disclosed that €1.9bn of cash was missing. They argued that the potential crime was not serious enough to justify immediate police custody, people briefed on the investigation told the Financial Times.

One day after Wirecard on June 18 last year announced the cash hole in Asian operations overseen by Mr Marsalek, the then-suspended chief operating officer absconded to the Belarusian capital Minsk, where all trace of him was lost.

A week later, Wirecard collapsed into insolvency in one of Europe’s biggest postwar accounting frauds that is sending shockwaves through Germany’s financial industry and political establishment.

Munich’s chief prosecutor Hildegard Bäumler-Hösl, who is in charge of the Wirecard investigation, will face questions from MPs in a parliamentary hearing in Berlin on Friday afternoon.

Munich prosecutors also decided against an immediate raid of Wirecard’s headquarters on June 18, the people said. After discussing the logistics with local police, they postponed this by two weeks due to a lack of resources. The premises were eventually raided on July 1.

As well as the prosecutors in Munich, several other institutions face questions over errors of judgment in the Wirecard case. Wirecard’s auditor EY, Germany’s financial regulator BaFin, financial reporting watchdog FREP and German auditor oversight body Apas, as well as anti-money laundering authority FIU, are all under pressure for acting late and indecisively.

BaFin and prosecutors long focused on investigating short sellers and journalists rather than Wirecard executives. A criminal investigation against two FT reporters following accusations of market manipulation was finally dropped several months after Wirecard went bust. From February to April 2019, BaFin also imposed a controversial ban on the short selling of Wirecard shares.

“It would be tragic if Mr Marsalek eluded investigators because they underestimated the magnitude of the criminal case even on June 18,” Florian Toncar, a former Freshfields lawyer who is now an MP for the pro-business Free Democrats, told the FT. He added that neither BaFin nor authorities in Wirecard’s home region, Bavaria, cracked down on the fraudulent company in time.

Markus Braun, Wirecard’s former chief executive, testifies in front of the Bundestag commission investigating the payments group’s collapse last year © Filip Singer/Pool/Getty

People familiar with the details of the case said that when Munich prosecutors opened an investigation into the missing cash on June 18, they initially did not suspect that felonies such as aggravated fraud or embezzlement might have been committed by Wirecard executives.

Instead, investigators only looked into a potential misrepresentation of Wirecard’s financial affairs. Under German commercial law, this is an offence punishable with up to three years in prison. On June 18, prosecutors argued that this maximum sentence was too low to justify arrests.

Mr Marsalek is now on Interpol’s “most wanted” list. Investigators suspect the company was looted in the months before its collapse.

Wirecard’s former chief executive Markus Braun, who had travelled to his Austrian home city, Vienna, after resigning at Wirecard on June 19, voluntarily returned to Munich and gave himself up to police.

Fabio De Masi, an MP for the leftwing Die Linke party, told the FT that, in his view, prosecutors acted far too timidly. “When €1.9bn in cash is missing, and the prosecutors are leaning towards the assessment that the executive board acted criminally, one needs to crack down immediately. Every shoplifter receives tougher treatment.”

A spokesperson for the Munich prosecutors declined to comment on specific questions, but said that “Ms Bäumler-Hösl on Friday will surely be able to clear up these misunderstandings” when she answers questions from MPs.

A lawyer for Mr Marsalek did not respond to a request for comment.

Documents seen by the FT show that BaFin’s decision on the short selling ban was based on flimsy oral evidence from Mr Marsalek and a lawyer working for Wirecard. BaFin declined to comment.

In February 2019, the lawyer told Munich prosecutors that “one or several Bloomberg employees” in previous days had called the company, demanding a payment of €6m.

These people allegedly threatened that otherwise Bloomberg would “take up an offer from the FT” and join the British news organisation in its “negative reporting”, as FT employees had offered “significant financial benefits” to the Bloomberg staff.

BaFin and the Munich prosecutors apparently considered this credible, and within three days the regulator imposed the two-month short selling ban, brushing away concerns about it expressed by the Bundesbank.

A Bloomberg spokesperson told the FT there was no evidence that this incident as described by Wirecard ever happened: “This suggestion would be laughable if it weren’t so offensive.”

A spokesperson for the FT said that Wirecard’s allegations that any of its journalists colluded with short sellers or reporters elsewhere were “completely false” and have been refuted.

Danyal Bayaz, an MP for the Greens, accused Munich prosecutors and BaFin of falling into a “siege mentality” as “Jan Marsalek only needed to tell a few bizarre stories about purportedly mean journalists and hedge funds” to prompt the short selling ban. “BaFin had already been keen to believe this fairy tale,” he said.

In recent months BaFin president Felix Hufeld has repeatedly defended the short selling ban, pointing out that based on similar information, he would take the same decision again.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


US suspends tariffs on UK exports in Airbus-Boeing trade dispute




The US will temporarily lift punitive tariffs on £550m worth of UK exports such as Scotch whisky and Stilton cheese, imposed as part of a row with the EU over subsidies to Boeing and Airbus, in an attempt to de-escalate one of the longest trade disputes in modern history.

The move follows the UK’s unilateral decision to suspend tariffs against the US from January 1, which took both Brussels and Airbus by surprise. Brussels has disputed that the UK had the right to act unilaterally in a trade dispute between the EU and the US when it has left the bloc.

Liz Truss, UK international trade secretary, said she was delighted that US president Joe Biden had agreed to suspend tariffs on UK goods for four months. The move would help to improve transatlantic relations, she said.

The US trade representative’s office confirmed that it would temporarily suspend the tariffs, to allow time to negotiate on settling the aircraft dispute.

The Johnson government has come under heavy fire over the tariffs in particular from the Scotch whisky industry, whose exports to the US plunged 30 per cent last year.

“The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenmorangie, the more money those producers will have to invest in their businesses, their staff and futures,” Truss said. “Trade equals jobs.”

The US-EU aircraft subsidies dispute is one of the longest-running cases in the World Trade Organization’s history, reflecting the importance of the industry to each side and the intense competition between Boeing and Airbus.

The battle dates back to 2004, the year after Airbus first overtook its US rival in terms of deliveries. Both sides have been found guilty of providing billions in illegal subsidies to their aircraft makers.

Brussels was last year given the green light by the WTO to impose tariffs of up to 25 per cent on $4bn worth of US products, after Washington announced duties on $7.5bn worth of European imports. 

Both Boeing and Airbus welcomed any move that could help to bring the two sides together. “We welcome USTR’s (US Trade Representative) decision to suspend tariffs for allowing negotiations to take place,” Airbus said in a statement. “Airbus supports all necessary actions to create a level-playing field and continues to support a negotiated settlement of this longstanding dispute to avoid lose-lose tariffs.”

Boeing said: “We commend this action by the US and UK governments creating an opportunity for serious negotiations to resolve the WTO aircraft dispute. A negotiated settlement will allow the industry to move forward with a genuinely global level playing field for aviation.”

However, Britain’s departure from the EU has raised questions about how effective any UK-US suspension can be. With no precedent to follow, trade lawyers have said it is unclear whether the UK still had a right to impose or suspend tariffs that were granted to the EU. 

Whitehall officials insisted the UK had the right to revoke retaliatory tariffs. One individual close to the process said: “This whole issue shows the benefit of being an independent trading nation . . . if we can get this done, it paves the way to a deeper trading relationship with the US and will help free trade deal negotiations.”

Despite this, there appear to be very few signs of progress in the trade talks between the US and UK. In January, White House press secretary Jen Psaki indicated that securing a deal would not be a priority for the Biden administration.

Last month, Biden’s nominated top trade adviser Katherine Tai told senators that she would “review the progress” of the talks that had taken place between the two sides over the previous two and a half years.

Both the EU and the US have long argued for a resolution to the dispute, but have remained far apart on the terms of any agreement on how to fund new aircraft development. 

After Biden’s election as US president, there was a feeling in Europe that a deal could be within reach. There has been growing speculation that talks were progressing.

However, in late December, the US further raised tariffs on European goods, specifically targeting French and German products.

The EU has said it is in intensive talks with the US in a bid to quickly secure a deal to remove punitive tariffs. 

“We have proposed that both sides agree to suspend tariffs for six months,” a European Commission spokesperson said. “This will help restore confidence and trust, and thus give us the space to come to a comprehensive and durable negotiated solution.”

A US administration official said that while he could not indicate whether there were plans to imminently remove the EU tariffs, the Biden team was continuing to review the dispute. “The goal is to resolve the dispute and create a level playing field,” the official said. 

Both Brussels and Washington are keenly aware that the rules need to be set before China becomes a significant competitor to Boeing and Airbus.

China is expected to be the fastest-growing market for commercial aircraft over the coming decades and Beijing has made it a strategic priority to break the global duopoly in an attempt to claim some of that market for Chinese industry. Later this year, China’s Comac is expected to have fully certified its first major commercial aircraft, the C919 single aisle.

Source link

Continue Reading


FC Barcelona and Real Madrid will be forced to pay back illegal state aid




FC Barcelona and Real Madrid will be forced to pay back millions of euros in illegal state aid after the EU’s highest court ruled Brussels was right to declare that beneficial tax arrangements they enjoyed for a quarter of a century were illegal.

The decision by the European Court of Justice upholds previous rulings by the European Commission and comes as Barcelona, the world’s highest-earning football club, is enduring one of the biggest crises in its history. 

This week police arrested the club’s former president, its current chief executive and its general counsel, in connection with a separate legal case ahead of a vote on Sunday to decide its next president. Barcelona, which recorded a loss of €100m last year, also has to contend with a debt pile of more than €1bn.

In 2016 Margrethe Vestager, the EU’s competition chief supremo, ordered four Spanish football clubs to pay back tens of millions of euros received since the 1990s in the form of sweetheart property deals, tax breaks and soft loans.

FC Barcelona subsequently contested the decision before the General Court, the EU’s second-highest tribunal, which annulled the commission’s judgment. However, after a final appeal from Brussels the ECJ ruled in favour of the EU.

In its decision on Thursday — which is final — the ECJ deemed the tax scheme “liable to favour clubs operating as non-profit entities over clubs operating in the form of public limited sports companies”, holding that it could therefore qualify as illegal state aid under EU rules.

The General Court had previously annulled Brussels’ decision over what it said was lack of sufficient evidence that the tax arrangements offered to the four football clubs, which also include CA Osasuna and Athletic Bilbao, were illegal.

But the commission had questioned the court’s “heavy burden of proof” on regulators in its appeal, arguing that a lower tax rate was obviously more favourable than a higher one.

The ECJ argued that the difficulty in assessing the extent of state aid — because of the complexity of tax deductions — did not preclude the commission from banning government practices that it considered gave sports clubs unfair advantages. 

It said: “The impossibility of determining, at the time of the adoption of an aid scheme, the exact amount, per tax year, of the advantage actually conferred on each of its beneficiaries, cannot prevent the commission from finding that scheme was capable, from that moment, of conferring an advantage on those beneficiaries.”

The Spanish government said on Thursday it had “absolute respect” for the court’s decision. FC Barcelona and Real Madrid did not immediately respond to requests for comment.

The judgment will be seen as a big win for regulators in Brussels who have for years been trying to stop highly successful commercial clubs from freeriding on the back of taxpayers.

The European Commission said on Thursday it noted “the judgment by the Court of Justice to follow the Commission’s arguments”.

Thursday’s ruling is the second time Brussels has won an appeal of its state aid decisions in recent weeks. Last month judges at the General Court rejected a legal challenge by budget airline Ryanair to state aid given to rivals on discriminatory grounds.

At present Barcelona is dealing with the fallout of what the Spanish media dubs Barçagate — allegations, denied by the club, that it corruptly hired outside groups to defame former president Josep Maria Bartomeu’s adversaries on Facebook.

Bartomeu was temporarily detained by the Catalan police earlier this week. He, the club, and other individuals in the case, which is being investigated by a Barcelona court, have all denied any wrongdoing.

Source link

Continue Reading


Italy raises €8.5bn in Europe’s biggest-ever green bond debut




Investors flocked to Italy’s inaugural environment-focused government bond offering on Wednesday, allowing the country to raise more than €8bn.

The banks running the issuance chalked up around €80bn in orders for €8.5bn of debt. It was the biggest debut sovereign green bond from a European issuer to date, according to Intesa Sanpaolo, which worked on the deal.

Other recent Italian bond sales have also attracted strong demand, after former European Central Bank president Mario Draghi became prime minister last month.

Demand for the debt highlights the popularity of green bonds, which provide funding for environmental projects and require borrowers to report to investors on how the funds are used. 

Tanguy Claquin, head of sustainable banking at Crédit Agricole, which was a co-manager on the transaction, said the sale was met with “very strong support” from investors, particularly those that are required to consider environmental factors in their portfolios.

The bond, which matures in 2045, was issued with a yield of 1.547 per cent. The underwriters were able to reduce the premium against a normal Italian government bond maturing in 2041 to 0.12 percentage points, a slimmer premium than the 0.15 points initially mooted.

Italy follows several European countries, including Poland, Ireland, Sweden and the Netherlands, into the green debt market. France has issued 11 green bonds since 2017, totalling $30.6bn according to Moody’s Investors Service. Germany joined the market last year with two green Bunds. In its budget on Wednesday, the UK announced plans to sell at least £15bn of green bonds in two offerings this year. 

Italy is the first riskier southern-European government to tap the green market. The spreads on Italian debt relative to the eurozone benchmark German bonds fell to a six-year low of less than 0.9 percentage points in early February in a sign of investors confidence in Draghi’s leadership of the EU’s third-largest economy. The spread widened during last week’s volatile bond market trading but remains low by recent standards.

Spain plans to follow Italy with a green bond offering in the second half of 2021. Analysts expect an initial €5-10bn sale at a 20-year maturity. Johann Plé, senior portfolio manager at AXA Investment Managers said the demand for Italy’s sale “should reinforce the willingness of Spain and others to follow suit.”

Plé said the price investors paid for the Italian green bond “remained fair” and that this “highlights that strong demand does not necessarily mean investors have to pay a larger premium”.

Green bonds often command higher prices, and therefore lower yields, than their conventional equivalents from the same issuer. The German green Bund currently trades with a “greenium” around 0.04 to 0.05 percentage points, roughly double the gap when it was initially issued, according to UniCredit analysis, while French government green debt is roughly 0.01 percentage points lower in yield than conventional bonds.

Italy’s pitch on the environmental impact and reporting of its green projects drew positive reactions from some investors. Saida Eggerstedt, head of sustainable credit at Schroders, which invested in the bond, said the details provided on projects including low-carbon transport, power generation, and biodiversity were “really impressive”.

Source link

Continue Reading