Exclusive: German coalition parties agree on reform package following Wirecard scandal – document

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FILE PHOTO: The logo of Germany's Federal Financial Supervisory Authority BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) is pictured outside of an office building of the BaFin in Bonn
FILE PHOTO: The logo of Germany’s Federal Financial Supervisory Authority BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) is pictured outside of an office building of the BaFin in Bonn, Germany, April 15, 2019. REUTERS/Wolfgang Rattay/File Photo

October 7, 2020

By Michael Nienaber

BERLIN (Reuters) – Germany’s coalition parties have agreed a package of reforms to financial and accounting rules aimed at avoiding another Wirecard scandal, a document seen by Reuters shows.

Lawmakers launched a parliamentary inquiry in an effort to force the government to reveal more about a failure to avert Germany’s biggest post-war corporate fraud, pressuring Finance Minister Olaf Scholz, who is the Social Democrat candidate to replace conservative Chancellor Angela Merkel in next year’s federal election.

The government’s Wirecard action plan gives watchdog BaFin increased control rights and requires companies to switch their accounting firms after 10 years, the document showed.

“BaFin needs a right to audit all capital market-oriented companies including the right to information from third parties, the possibility to conduct forensic investigations as well as the right to inform the public at an earlier stage about its actions regarding balance sheet control,” it says.

Scholz and Justice Minister Christine Lambrecht are expected to present the reform plans at a news conference on Wednesday, a day before the first session of the inquiry in the Bundestag.

“We will strengthen the independence of auditors by introducing also for listed companies a duty to rotate external auditors after 10 years,” the document said.

“We’ll also sharpen the separation between auditing and consulting in companies of public interest.”

The coalition parties also want to look into ways to improve how auditors can be made liable in civil law suits in case of failures, the document said.

Germany also wants to improve oversight at a European Union level as part of efforts to harmonize the bloc’s capital market, with the Securities and Exchange Commission (SEC) in the United States as a role model, it said.

(Reporting by Michael Nienaber; Editing by Riham Alkousaa and Alexander Smith)

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