Does the country’s two-tier board system protect investors’ interests, asks Chris Hughes
One more item for Germany’s to-do list following the Wirecard scandal: re-assess the country’s two-tier board system.
For starters, the composition of Wirecard’s supervisory board didn’t keep up with the increasing complexity of the company. It had only three members until June 2016, when it grew to five. Being so small, the board chose not to create dedicated committees for audit, or risk and compliance, until early 2019. When they were created, it was amid mounting pressure on the company following the Financial Times’s dogged investigation into its suspect accounting.
Of course, KPMG’s review wasn’t completed due to obstruction by Wirecard and partner companies. For hedge fund TCI Fund Management, that failure also raised questions about the supervisory board’s ability to be more than a passive observer. TCI wrote publicly to supervisory board chair Thomas Eichelmann, asking why he hadn’t intervened when it was clear KPMG couldn’t finish its job.
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