The demise of Germany's fintech darling has exposed the extent of willful, but unjustified trust within the country's regulator, says DW's Kate Ferguson.
"We are overachievers," Wirecard CEO Markus Braun tweeted in February. For those who weren't paying attention — and this was pretty much everyone bar a select few including gritty journalists at the Financial Times — it may have sounded like a reasonable claim.
After all, here was a company with a business once limited to online gambling and pornography holding its own among some of the biggest fintech players in the world.
What's more — and this is crucial to the collective delusion that characterized the response in the leadup to Wirecard's demise — this was a German company, an outlier in a country notoriously criticized for its backwardness in all things connected to digital payments.
While the events leading to the collapse of Germany's fintech darling may appear fast-paced, the news of Wirecard's "missing" € 1.9 bn was followed promptly by Braun's resignation and arrest - the company's downfall has in fact been a long time coming.
Investigation not taken seriously
Allegations of financial misconduct date back to 2008. But an early investigation leading to the prosecution of two individuals was soon forgotten as authorities in Germany shifted their focus to an alluring narrative of rapid growth driven by groundbreaking innovation and aggressive investment in Asia.
If it were not for the courage of whistleblowers and the tenacity of journalists at the FT, that would be the story that prevails to this day.
Over the years, the understandable enthusiasm for a rare German fintech success story gave way to the far more sinister force of willful misbelief. In January of last year, when the FT reported on the suppression of an internal investigation of Wirecard in Singapore, Germany's financial regulator, BaFin, responded by accusing the paper of attempting to manipulate the market.
The following month — in a move that has aged disastrously — it imposed a two-month ban on short selling, a decision it justified on the basis of Wirecard's importance to the economy.
Now that the company has been disgraced, the soul-searching has begun. Next week, BaFin boss Felix Hufeld will be grilled by the government's finance committee. He has already conceded the situation is a disaster.
Meanwhile the self-described overachiever, who capitalized on a peculiarly German desperation to play technological catch-up, faces charges that could land him in jail.
Germany's fintech fairytale was indeed too good to be true