Today in Prosecutorial Cluelessness

In response to stories noting irregularities at the now shuttered German credit card transaction firm Wirecard, regulators went to Prosecutors initiated an investigation ……… of the journalists.

Now that the firm has collapsed in an orgy of fraud, prosecutors are calling backsies:

The Munich prosecutor has dropped its investigation into two Financial Times journalists, who were accused by the German financial watchdog of potential market manipulation over their reports about accounting irregularities at payments processor Wirecard.

The criminal prosecution office in Munich said on Thursday it had “suspended the investigative proceedings” against the two FT journalists after they “did not reveal sufficient evidence to support the suspicious facts” raised by BaFin, the German watchdog.

BaFin said on Thursday that it had “no objection” to the prosecutor dropping its investigation into the FT journalists. It added that its parallel criminal complaint against short-sellers alleging market manipulation on Wirecard shares was still ongoing.

The move comes 10 weeks after Wirecard declared insolvency, having admitted that about €1.9bn in cash was missing from its accounts. Its collapse, which has turned into one of Germany’s biggest financial scandals, followed years of reports by the FT that Wirecard’s accounts were misleading.

The Munich prosecutor said its investigations found that the FT’s reports “are basically correct and at least from the point of view of the information available at the time, it was neither false nor misleading. There were no direct, concrete contacts with short-sellers.”

The criminal complaint against Dan McCrum and Stefania Palma was filed by BaFin in April 2019 after the FT published articles by the two earlier that year alleging that Wirecard had been inflating its revenues by using forged and backdated contracts that raised questions over the company’s accounting.

In case your are wondering, bank fraud, and regulatory capture are not exclusive to the “Anglo-Saxon” nations.

Leave a Reply