Is Germany Finally Listening to the Whistles?

A rapid series of major events in Germany finally could begin to nourish a whistleblowing culture in one of Europe’s most secrecy-obsessed countries.

The top two officials at Germany’s financial regulator, BaFin, were forced to resign last month in the wake of the ever-growing Wirecard scandal. Finance Minister Olaf Scholz relieved Felix Hufeld and Elisabeth Roegele after lambasting them for failing to detect what the Financial Times calls “the worst accounting fraud in the country’s postwar history.”

Adopting a notably diplomatic tone in the midst of the worsening fallout, Scholz said the Wirecard affair shows Germany’s financial oversight “needs to be reorganised so that it can fulfil its supervisory role more effectively.”

By German standards, the dismissal and public shaming of two high-ranking officials is a rare response to a scandal first brought to light by whistleblowers. Insiders, who wisely have remained anonymous, exposed how €1.9 billion went missing from the accounts of the once-admired fintech company. Former Wirecard CEO Markus Braun is under investigation and suspected of running a criminal racket that defrauded creditors of €3.2 billion, FT reports.

FT continues to peel back more layers of the massive scandal. The newspaper reported last month that Deutsche Bank board member Alexander Schütz – who also happened to be a Wirecard stockholder – urged Braun to exact revenge on FT because of its coverage. “I read in the FT what a naughty boy you are ;-)”, Schütz wrote to Braun in an e-mail obtained by FT. Schütz urged Braun to “do this newspaper in!! :-).”

German whistleblowers made more news last month when the Federal Cartel Office (Bundeskartellamt) fined two companies €6 million for price-fixing. The FCO said MeierGuss and Hydrotec Technologies, Germany’s two largest manufacturers of manhole covers and gratings, illegally colluded to divide up major contracts by raising net prices and reducing rebates. Employees planned the scheme during telephone calls and at a trade fair, the FCO said.

The tip about the scam came into the FCO’s anonymous whistleblower portal, which is managed by Business Keeper, a prominent whistleblowing portal provider based in Berlin. The agency seems to like the results so far. “We will…expand the range of possibilities offered by our digital anonymous whistle-blowing system,” said FCO President Andreas Mundt. Thirteen companies reported violations via the FCO’s leniency program in 2020, and “further tip-offs were also received from other sources,” Mundt said. The agency levied €358 million in fines on 19 companies and 24 people last year.

One can expect a surge of whistleblower reports if Germany complies with a new EU Directive that requires all EU countries to pass a comprehensive whistleblower protection law by this December. The European Center for Whistleblower Rights is co-leading an effort to ensure Germany’s law – and all new laws – strongly complies with the new EU standards.