Germany’s finance minister has expelled Felix Hufeld, head of financial supervision of BaFin country, for his handling of the Wirecard scandal, the worst accounting fraud in post-war history in the country.
In a statement, Olaf Scholz said the Wirecard affair revealed that Germany’s financial regulatory system “needs to be overhauled, so that it can fulfill its supervisory role more effectively.” The government did not immediately name a successor for the 59-year-old, who had led BaFin since 2015.
Mr Hufeld’s deputy, Elisabeth Roegele, in charge of financial market supervision, will remain in her position.
BaFin has been criticized for ignoring early warnings fraud at Wirecardand targeting journalists and short sellers who have reported misconduct to the payment processor.
In February 2019, the watchdog filed a criminal complaint against two Financial Times journalists, triggering an investigation that was only dropped months after Wirecard’s insolvency last year.
Mr Scholz said he and Mr Hufeld discussed the situation on Friday and came to a mutual decision “that alongside the organizational changes there should also be a change at the top of BaFin”.
The FT revealed earlier this week that Mr Hufeld had suggested that Wirecard could fall victim to a conspiracy devised by short sellers, even after discovering that € 1.9 billion of its reported cash flow was missing.
Mr Hufeld’s departure comes a day after BaFin revealed he filed a criminal complaintt against an employee for insider trading with Wirecard shares last June. The FT also reported on Friday that authorities’ decision in 2019 to ban short selling of Wirecard shares was based on shaky oral evidence provided by Wirecard.
Mr. Scholz thanked Mr. Hufeld for his “great commitment” as head of BaFin over the past eight years. He had “played a decisive role in shaping and significantly advancing the supervision of financial services in Germany and Europe during this period.”
But BaFin’s planned reform could only succeed with “a change at the top,” he said.
In a statement, Mr. Hufeld expressed his thanks for the “trust shown in me”.