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Thursday 25 June 2020

Wirecard - German corruption comes to bursting point

There's a magnificent lightning storm outside and thunder is roiling in the valley, I have a packed and frantic day ahead anyway and last night at about 9pm to cap it all the crew who had been working since dawn to get the hay in were standing abjectly at my front door. When wrapping the vast hay-balls in the flat field above my back meadow, one of the bales had taken off down the hill and smashed a corner off my barn roof. OK. I'll deal with that as dawn comes. But with regard to the Wirecard fraud story, I hope you'll forgive me for re-posting a 2019 post -

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30th April 2019
The stench of corruption from Germany's businesses

Back in April 2018 we ran a fairly lengthy piece on German corruption. The German government had in effect encouraged widespread business corruption with law changes that made it easy to get away with - and for the past decade, it has been pervasive, deep and substantial. We quoted a report that found
A staggering 43 percent of German business executives polled by EY (formerly Ernst & Young) think bribery and corruption are fairly commonplace in Europe's economic powerhouse. That's a big jump from just 26 percent in 2015.
So who cares if most of German business is bent, the nation's judicial system ranks with Greece in terms of probity, shareholder protection is amongst the lowest in the developed world and there is little creditor protection? Who cares that courts and lawyers are beyond the reach of most victims, who must passively take the hits from German corrupt dealing?  Well, we wrote
This deep and endogenous German economic corruption will not play well in the rest of Europe. The UK, the Netherlands and the Scandinavian nations, with low levels of corruption and high scoring of commercial rectitude and probity, will be feeling fouled by contact with German corruption - and will now be adding up the commercial losses that German crookedness has cost them. The southern nations will be aggrieved that they have been bullied, coerced and hectored by a deeply crooked nation wearing a false disguise of moral superiority. And eastern nations such as Poland and Bulgaria, countries Germany has robbed of billions of Euros in corrupt complicity with Gazprom, will be looking at concrete measures to get their money back.
Yesterday Matthew Lynn broke yet another tale of German corruption in the Telegraph. The latest scandal is fraud at Wirecard - a rapidly ascending start-up that replaced the moribund Commerzbank in Germany's DAX index. The Telegraph and the FT are reluctant to be too specific; one suspects m'learned friends are hovering, and even the linked piece in the Anti-Corruption Digest is careful. Lynn writes
We have an image of Germany as a very law-abiding country, and on one level that is certainly true. The streets are safe, and no one can pay a bribe to get out of a parking fine.... yet right at the top of the country’s biggest companies it is starting to look painfully obvious there is an honesty issue.

The Germans are fond of portraying themselves as the exemplars of responsible, socially conscious capitalism. In truth, however, the hypocrisy is starting to become nauseating. There is clearly something rotten within Germany’s business culture – and even worse, no one seems to want to do anything about it.
It is the sort of casual, 'who cares?' corruption that saw Martin Selmayr's crooked appointment to EU capo shrugged off and Germany's biggest industrial names reduced to international gutter reputations no better than bootlegging prohibition gangsters.

So don't be surprised that when the downturn begins to bite, the entire German commercial edifice comes tumbling down - and the German economy proves as much of a paper tiger as did Soviet military might in 1989.
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Ends

Siemens, VW, DB and all the other past disgraces and now Wirecard. But why has it taken 14 months since Matthew Lynn broke the story (carefully) in the 'graph? Germany's business culture stinks like week-old Mackerel, and the Autumn will see an overflowing of the German bent business cesspit as the Covid recession bites far deeper than the bubble-bursting I was expecting when I penned that piece. You'll need your facemasks - the stench will reach every corner of Europe.

13 comments:

Anonymous said...

Yes, corruption needs rooting out wherever.

Now, about Richard Desmond's Westferry printworks development, refused planning permission, refused on appeal by the Inspectorate, but overruled by minister Jenwick after a donation to Tory funds by Desmond?

Sweet as a rose, eh, Raedwald?

Poisonedchalice said...

Anon @ 07:26

Quite right. The way for Boris to retain his popularity amongst the working class is to deal quickly with Jenwick, and if found guilty, boot him out.

That would impress people. Otherwise he becomes just another crooked one-trick pony.

Raedwald said...

Agree. Jenwick should resign if he wants to stay in the party.

Span Ows said...

The makers of popcorn over the last 10 years have gone from strength to strength. They'll all be beuiyonaires.

DiscoveredJoys said...

I always maintained that the EU was run for the interests of big business, a latter-day Hanseatic League.

No wonder Remainers were suckered in to support the EU. Once the dam starts leaking it's only a matter of time before the leaks are too numerous to stop. I'm just surprised that it hasn't become more evident sooner.

Charles said...

I had dealings with German companies selling mining equipment in Namibia in the 1980s and what Raedwald writes sounds about right to me. There were rumours over the German contract to provide submarines to the Greek navy. With regard to Jenwick’s behaviour reminds me of the many London planning applications, blocked at local level and then approved by Johnson when he was mayor. I am sure that they were all as pure as driven snow.

patently said...

Wasn't it a German court that let Bernie Ecclestone walk away from a corruption charge by making a substantial payment into the Court? Made me smile at the time.

Nick Drew said...

I've related this elsewhere before ...

Some years ago my company made a big sale to a household-name Bavarian firm (no, not BMW). We were well into implementation when they called us in and said they were unilaterally cancelling the contract - for which they had no legal pretext (and didn't claim to, anyway).
We had used a competent German agent and a good German law firm, and the contract wasn't complex. We checked with them, and they assured us it was sound. So back we went, demanding to be compensated accordingly: Bavarian law is clear enough.

They snorted. What are you going to do? Go to the Munich commercial court, against a Munich firm? We'll see you there anyhow, because we are lodging an action against you for wasting our time and money!
Back to our lawyer; who shrugged, and said: it's Bavaria, what do you expect?

We did in fact get a token amount of compo in the end, but we were well out of pocket, and had to unwind some already-booked revenue

Didn't go back, though ...

Nessimmersion said...

This touches on 2 not unrelated points you've covered before Raedwald.
1) Advantage London- English law courts though not pristine have an enviable worldwide reputation for probity, so this sort of affair should be advertised far and wide as to why the city is better for commercial contracts.
2) Murkan courts also have previous in weighting the scales towards the domestic companies, see BP for further details. Again long term advantage to London as companies bidding for international work can be prudent in not wanting Murkan courts to have oversight.

Sebastian Weetabix said...

Latest German automotive sector purchasing innovation is to calculate a “project value” for the next (say) 10 years or so. They invite you to quote, which generates the “value” number. They then invite to the supplier to make an upfront cash ‘contribution’ to “reduce the total project value in order to make the offer more compelling”. Naturally they won’t commit to contractual volumes or anything like that.

I’m just a naive old English speaker, but I thought they had a fucking nerve and innocently remarked “I’m not sure that is legal under European law”. The German purchaser at least had the decency to blush and wriggle In her seat. I informed her we wouldn’t be playing and if they can find a supplier stupid to go along with that sort of shit, have at it. And have a back up in place because your supplier will go bust.

Anonymous said...

@Nick Drew I’m guessing it wasn’t Playmobil
@Sebastian weetabix I have no way of knowing your post is fact.
If it is indeed as you say, you need to report it.
Accumulatively, reporting these practices gets noticed.
I work for a German household name company.
I have to complete the yearly anti bribery and corruption policy.
Posted anonymous. Do it.

Raedwald said...

Anon - have you read my April 2018 piece?

"A change in German law in 1997 had allowed prosecutors to investigate corruption proactively - previously firms had to report themselves. However, authorities were also then starved of resources to investigate and bring corruption actions - in effect giving official German government approval to allow corruption to flourish."

Prosecutors have a backlog of several years and are still starved of funding to ensure that few cases ever come to court. Why should corrupt German firms fear the law?

Sebastian Weetabix said...

@Anonymous: don’t be a silly twat. You signing the policy gives them the cover they want - they can now pretend they have a strong stance against corrupt practices. And you’ll get fired when you buy a customer a metaphorical cup of coffee.