Money and Greed

Reaction to the WireCard-Scandal shows: Money is a highly valued good. Through potential criminal behavior a potential damage is being caused – the state reacts and demands more power and control, hoping to being able to prevent such events in the future. Constitutional rights are to be restricted; only because of money and greed?

Existing laws however are sufficient to punish potential misbehavior of the management of the company or its auditors. The call for more restrictions and control will not prevent criminal behavior. It will lead to the additionally granted power being used, respectively misused and it will lead to an overburdening and thus a weakening of criminal law and criminal procedural law as a supposed preventive danger-avoidance-tool.

What happened – according to published information?

WireCard is a company, which offers software-solutions for payment-logistics. It therefore requires licenses to become active in different countries. To being able to offer its services without having the respective license, it works with trustees or escrow agents. Such a trustee, the one responsible for Asia, was supposed to administer EUR 1.9 Billion, almost one third of the balance sheet sum of the company.

It is all about money. WireCard was successful enough to raise up into the DAX, which fired phantasies with investors resp. speculators. These bought shares in the hope to become rich. Shareprice at the stock market grew as did the greed. Investors invested their last penny in shares.

Then auditors revealed the supposedly in trust held EUR 1.9 Billion. The asked for more information. As the answers were not satisfying, another audit company was engaged to investigate only this issue – with the result that the EUR 1.9 Billion potentially never existed.

The management retires, is getting arrested or flees to Asia. Politics erupts screaming:” We need more control! The Federal Agency for Supervising of Financial Institutions needs to receive more power or control!”

The facts however show that the present laws and their application have lead to expose the supposed evil. It is a misperception that more power within a controlling government body might prevent such criminally motivated affairs. Even more, it will lead to supposed under-qualified and underpaid controllers seeing themselves pushed to apply the newly granted power; a typical human behavior: “Grant power to me and I will use it.” This comprises the utilization of power for the sake of itself but also to justify it’s grant.

The responsible individuals within WireCard potentially built a castle in the air through networks of subsidiaries and agents. If this is the case, the respective state police authorities acting on behalf of state attorneys will investigate by assessing digital information. These are e-mails, digital files, chat-conversations and much more. Primarily through the evaluation digital evidence can the knowledge of involved individuals or a plan be proven. Should such an evaluation however against all expectations result into nothing, then this is a strong indication that the respective person potentially had no knowledge. The present criminal procedural law offers the executive bodies sufficient tools to secure the relevant data, to evaluate it and to investigate the facts.

Then there are the auditors, which are being pilloried. They also are in possession of digital information, which may be assessed, or which even should get evaluated internally, to eliminate individual misbehavior. This is how it is however: The company engages the auditor. Such a mandate is based on trust. Responsibility for criminal behavior is usually being excluded by general service conditions. Should the auditor doubt the correctness of information received from the client, he/she will request additional information, will not grant the certificate or will even lay down his/her mandate. Should the auditor grant the certificate, potentially to now lose a lucrative client, he infringes professional statutes and might even render him-/herself liable to prosecution.

This needs to be investigated. The state has all necessary instruments to do so. An auditor, who is suspect of having participated in a crime is not being protected by professional standards. The information available at the auditor’s office is not protected by secrecy of the auditor-client relationship. The executive may investigate.

Should the auditors have granted their certificate in spite of doubts in previous years as partially is being suspected by politicians, this will get verified. Should however an unimpaired relationship of trust have existed between auditor and client (WireCard), the auditors most likely were correct in relying on information granted by the company.

Would a controller of the Federal Agency for Supervising of Financial Institutions have discovered more, earlier? Most likely not. It is likely that a state-authorized controller in applying its granted power comprising the authority to put all entrepreneurs, particularly those, who administer international networks, under general suspicion, would have enacted measurements of control and might even have discovered the fake EUR 1.9 Billion earlier. But how much damage would such a controller have caused on his/her way to discover the needle in the haystack by preventively infringing the economic freedom of corporations, who to him/her seem to be suspicious because he/she does not understand what they to? Such a controller on his/her way would potentially burn the whole haystack.

And which value or good in the end is at stake? It is wealth, i.e. money or even much less, only greed. Should it be revealed that people (or companies) due to such circumstances have incurred a damage, they are potentially poorer, but their freedom remains untouched, they stay healthy. Their right of property (Art. 14 para 1 German Constitution) is being damaged. But their rights of freedom, particularly Art. 1 and 2 of the German Constitution remain unharmed.

Now such constitutional rights of freedom are requested to get reduced as a reaction of the reduction of monetary values, which may even only have been installed based on greed and on pure speculation. Experience shows: Should those authorization to infringe on constitutional rights of freedom be granted, they will be utilized.