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 -

*******************************************************************

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.
*********************************************************************
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.

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.

Sorry, Europe, but our ways are simply better

The WEF, the World Economic Forum, has recently published its global competitiveness index. The overall rankings are pretty approximate - due to a misuse and misunderstanding of components such as productivity. No-one actually believes the UK is less productive than France. Their productivity measure doesn't include development or use of the world's biggest web platforms or apps, predominantly in English, nor many new IT driven services, just stuff like making widgets. EU nations with high productivity scores are generally late web and IT adopters with workforces poorly adapted to the coming AI challenges. No one will be re-writing software manuals in Czech or Hungarian, probably not even in French or German, so our EU chums had better either up their English classes or adopt AI translators to do the job for them. 

The real meat of the WEF report is in components such as the world ranking of Judicial Independence. Take a look yourself. We are 6th - Rwanda is 23rd, Germany 24th, France 28th, Saudi Arabia 30th, India 53rd, Spain 58th and Italy 65th. Telling us what we already knew - that the EU operate a system of political courts, where there is no real justice, just the judicial arm of the State. If the State is benign and acts in the interests of the people, the argument goes, there is no need for the courts to be independent. We have the Common Law and Equity - they have versions of the Code Napoleon. 

Likewise our constitution. We don't have one. We're not the nth Republic. We settled on our flag in 1703, not five minutes ago when their constitution was also written on a word processor. Fraser Nelson makes the point in the Telegraph - quoting a fatuous comment from the Dutcher Rutte, proving he, too, has no idea how the UK actually works.  

So when, as the Telegraph also reports, David Davis caught the heel of the jackboot in Germany yesterday, it doesn't mean what they think. David told his audience "Shared values are more important than our membership of particular institutions. Values of democracy, of the rule of law, of human rights", perhaps not quite meaning that the sharing was equal, implying perhaps that the EU had more to learn from the UK's shared values than we have from theirs. The German dogs barked. "If you are so committed to our common values, our common interests, our common approach, then why are you leaving the European Union?" demanded the moderator, Herr Krach. 

Because, Herr Krach, we're a mature and stable democracy whose people are committed to freedom of thought, to independent justice, to self-determination and to accountable government. Because when we uphold the idea of one man one vote we don't mean that the one man is Herr Juncker. Because, simply, our ways are better than yours but you don't realise it.