When it comes to courage, most people probably think of knights, parachutists, and perhaps also of the Ukrainian soldiers who oppose Russian superiority. When it comes to courage, Marc Branson thinks of his people. The new head of the financial supervisory authority Bafin wants courageous officials who can really mess with banks and corporations. “We mustn’t be afraid,” he said recently in an SZ interview, “to make decisions for which one is not always loved.” A tougher pace, that is to say, suits the authority, which is often perceived as tame.
And the new belligerence of Bafin officials can be observed almost every day. There are sometimes warnings about individual companies or announcements of fines every hour. Since the beginning of the year, the authority has also been responsible for controlling the balance sheets of 520 listed companies in Germany – and unlike in the past, they have been able to point out misconduct more generously since then. The reformed rules allow this and that is what the responsible executive director Thorsten Pötzsch wants.
What that means in concrete terms became clear this week. The supervisors are openly looking for a confrontation with one of the large real estate groups, discovering unclean balance sheets and saying this very clearly: Look here, the wrong numbers are being used here.
Specifically, it is about an important subsidiary of the Adler Group, a nested real estate conglomerate based in Luxembourg and listed in the S-Dax. You have calculated a large development project in Dusseldorf, informed the Bafin. The “Glasmacherviertel” in the Gerresheim district was overvalued at almost a quarter of a billion euros, so the audited balance sheet of Adler Real Estate AG for 2019 was “incorrect”. And: It is the first time that the authority has published such a partial error determination, but the test is still going on. The probably desired effect followed promptly: the shares of the parent company Adler Group slipped to a new record low, despite the announcement from Luxembourg that the decision of the supervisors would be immediately challenged legally.
Opaque deals and a “partly Byzantine structure”
So the Bafin no longer quietly investigates until it is too late and investors have lost everything. It can go faster now. Whereby the speed is quite relative. The allegations about Adler – bloated balance sheets and dubious deals – come from last fall, since then the share had already lost more than three quarters of its value. The trigger was a report by the notorious British short seller Fraser Perring. Even then, the “Glassmakers’ Quarter” in Gerresheim was at the center of the allegations, along with a man named Cevdet Caner.
The Austrian, according to Perring, does not have an official role at Adler, but pulls the strings in the background – to his advantage and that of some business partners, at the expense of shareholders and creditors. Caner also acted as an intermediary in the sale of the project in Düsseldorf, which Bafin believes was unrealistically overpriced. His brother-in-law appeared as the alleged buyer at the time, and the deal was reversed a short time later. The “Glasmacherviertel” remained in the books at the price agreed at the time.
Both Adler and Caner always vehemently contradicted the allegations, Adler even commissioned the auditors from KPMG with a special investigation. However, this was not very flattering: there had been serious omissions at Adler, and transactions had been poorly monitored and documented. Even the new head of the board of directors, Stefan Kirsten, spoke of a “partially Byzantine structure in which Adler was and is active”. At KPMG, they saw themselves as unable to completely dismiss the allegations, not even in the matter of the “Glasmacherviertel” – and the group was subsequently denied the attestation for the 2021 balance sheet.
So now the next blow, this time from an official body. As a federal German authority, however, the Bafin can only examine German companies. However, the Adler Group is based in Luxembourg, and the supervisory authority there is responsible for it. Deals were repeatedly made between the mother and her daughters, most recently, for example, Adler Real Estate granted the Adler Group a loan and bought a portfolio of apartments from it.
Bad memories of Wirecard
The sharp handling of Adler is also no coincidence insofar as the Wirecard affair is still having an effect. With the demise of the payment service provider in the summer of 2020, the Bafin did not look good. From omissions in the control of the group’s own Wirecard bank to dubious legal opinions in the classification of the Wirecard group as a financial service provider to the half-hearted handling of the then two-stage balance sheet control procedure, it became obvious that the authorities and the law needed an update.
At that time, if there were doubts about a balance sheet, Bafin first had to call the German Accounting Office (DPR), whose procedures regularly dragged on. The Bafin was not allowed to speak about the order, and only with the result of the examination did the authority itself become active. The grand coalition cleared that up, the DPR was merged into the Bafin, and the then Finance Minister Olaf Scholz (SPD) promised “supervision with bite”.
But the truth also includes: The official balance sheet control is a downstream process – the Bafin only gets started when the auditors have done their job. But, at least she follows clues. And even with the smallest interim result, it sends appropriate messages. Compared to before, that seems pretty daring.