Wirecard fraud shows it’s time to regulate the regulators

This post originally appeared here.

What would you do if you were confident you could get away with it? Perhaps you’d rob a bank, or have a wild affair. Or maybe you’d subsist on nothing but candy floss for the rest of your life.

The chances are you won’t, though. The risk of being arrested, destroying your marriage or becoming a diabetic are simply too high.

For most of us, the question is destined to remain hypothetical. After all, life has taught us that bad behavior does not generally go unpunished.

There are notable exceptions to the rule, though. In recent years, three major scandals in Germany have provided pleasingly concrete answers to the question.

First, there’s Volkswagen, which flouted environmental tests by installing cheat devices in up to 11 million vehicles. Then there’s the young German reporter named Claas Relotius who forged a successful journalistic career by fabricating stories or elements of stories. Finally, there’s Wirecard, the payment company that built its business on €1.9 billion ($2.3 billion) of assets that did not exist.

In all cases, the deception was richly rewarded. In Volkswagen’s 2014 annual report, the carmaker boasted about receiving numerous awards for environmental protection. Meanwhile, Relotius was winning prestigious prizes for his reporting, and Wirecard rose to become the tech darling of Germany’s financial world.

Approval came from especially high places. The year before the emissions scandal broke, Autotest, the influential magazine for car buyers, and Ökotrend, an environmental research institute, named two Volkswagen passenger cars “the most environmentally friendly vehicles” across all classes. Relotius was named CNN Journalist of the Year, and went on to receive the European Press Prize and the German Reporter Award no less than four times. Meanwhile, Wirecard was receiving approbation from the highest political ranks, including from German Chancellor Angela Merkel, who advocated for the company during a trip to China in 2019.

The lies continued unabated for years. Fact-checkers at Der Spiegel, widely considered to be the pinnacle of German journalism, did not uncover Relotius’ fictions. EY, one of the largest accountancy firms in the world and responsible for auditing Wirecard, gave the company a clean bill of health. Germany’s financial regulator, BaFin, continued to offer the company its firmest backing.

In each case, the scandal was uncovered by an unlikely and relatively powerless source. Three students at the Center for Alternative Fuels Engines and Emissions in West Virginiain the US unwittingly discovered Volkswagen’s deception when they published data on nitrogen oxide emissions in two VW models. Their study had been out for a year and a half before the dieselgate scandal broke.

Juan Moreno, a freelance journalist from Spain, who enjoyed nothing close to the professional standing of Relotius, sounded the alarm about the German reporter’s work. At first, editors at Der Spiegel didn’t believe him.     

Similarly, when two journalists at the Financial Times reported on suspicious activities at Wirecard, Germany’s financial regulator, BaFin, responded by filing a criminal complaint against them, accusing them of market manipulation.

The truth did eventually come out and in all three cases, and the downfall has been spectacular. Several Volkswagen executives have been charged with crimes, two have been imprisoned, and the company has had to pay out tens of billions of dollars in damages.

Yet none of these scandals could have happened if experience had not taught each party to act with impunity.

Claas Relotius suffered a humiliating fall from grace and was stripped of his journalistic accolades. Wirecard collapsed spectacularly and is now the subject of a German parliamentary inquiry.

If Volkswagen had been scrutinized instead of idolized, its cheating may have been uncovered far earlier. If Der Spiegel’seditors had interrogated instead of unquestioningly revered Relotius, his lies would not have been published. If EY and BaFin had been diligent, Wirecard would not have been able to commit large-scale fraud.

In the world of business and media, the question of what you would do if you were confident you could get away with it should always remain a hypothetical one. The moment it isn’t, someone isn’t doing their job.

just ice cream

It was just ice cream. Fancy, overpriced stuff from Hackescher Markt.

But it seemed like we weren’t the only ones in line who were giddy at the prospect of it.

We’d decided to get the train into town. For no other reason than that it would be novel.

It was Saturday, cold still but with glimmers of sunshine.

We sat by the Spree. A dog sniffed at us. His owner apologised.

“Roll up your sleeves for the Covid-19 vaccine” Berliner Dom

We were thrilled. A bit of interaction.

In a tunnel, an old man beat a makeshift drum. Across the Spree, at a construction site, the builders, dropping steel pipes, made their own music.

On the roof of the Berlin Cathedral a banner stretched over one of the domes. “Roll up your sleeves for a Covid-19 vaccine.”

We walked past the new shiny palace on Unter den Linden, its controversial cross gleaming in the suddenly blue sky.

We stop at the Neue Wache. You can’t go in because of the pandemic, but you can look through the bars.

A sculpture of a mother holding her dead son. A universal symbol of grief.

A scene in my novel is set there. I peered in, expecting a kind of revelation.

The Neue Wache sculpture designed by Käthe Kollwitz

Further down the street, a new underground stop.

“How long has that been there?”

“Couple of months probably.”

You miss these things in lockdown.

We get the new train to the Hauptbahnhof.

Travelers with suitcases!

“When was the last time for us?”

“Christmas 2019.”

Little did we know.

It wasn’t just ice cream. It was more than that.

We got ice cream

Australia versus big tech

This month, Australia made headlines for its decision to make Google and Facebook pay for news.

The move was widely hailed as a triumph for journalism. In my column for DW this month, I outlined why I think this narrative is too simplistic.

You can read it here:

https://www.dw.com/en/opinion-australias-big-tech-crackdown-is-no-model-to-emulate/a-56681636

If life seems endlessly gray, it’s because it is

First published here

There is a Twitter account which posts thrice hourly updates on the color of the Berlin sky. The updates are affirming, in a bleak way.   

If life seems endlessly gray, it’s because it is. In the past hour, Berlin has oscillated between ‘slate gray,’ ‘battleship gray’ and ‘taupe gray.’ Before that it was ‘manatee’ and for a brief, brighter moment ‘platinum.’

Earlier, as I lay watching a silent television mounted on the ceiling of my dentist’s surgery, I wondered when I last had such unapologetically close contact to two other humans. As the dentist bored into the molar that needed filling, he discovered a larger-than-expected cavity. ‘I’m glad we went for the anesthetic,’ he said. The dental nurse sprayed something into my mouth and I felt nothing.

In this phase of the pandemic, numbness has become a familiar sensation. There is little sourdough bread or clapping for health care workers this time around. The thrill of vaccine discoveries has been replaced by squabbles over supply and distribution. This week, German media outlets reported on the possibility that the Oxford/AstraZeneca vaccine was only ‘eight percent effective’ in the over 65s. The reports appear to have been based on a fundamental misinterpretation, with the eight percent probably referring to the proportion of trial participants in an older age bracket. But the headlines were out and they spread around the world, serving more fears to an already uneasy populace.

The question of when this pandemic is going to end is not the only source of perpetual disquiet. There are also the other worrying, wearying areas of gray, like what role big tech companies should play in upholding democracy. In January, the world witnessed two approaches.

 In Uganda, the government banned social media ahead of the general election, justifying its decision on the basis that Facebook had taken down accounts linked to the ruling National Resistance Movement party. Facebook says it removed the accounts because they were being used to manipulate voters.

Meanwhile in the dying days of the Trump administration, Twitter, Facebook and YouTube suspended the former president for inciting deadly riots on the Capitol. This move provoked a surprise rebuke from German Chancellor Angela Merkel, whose spokesman called the ban “problematic” and stressed the “fundamental importance” of free speech. The response by Merkel, who herself does not have a Twitter account, highlights a debate that has been building for well over a decade: whom do we have more faith in: our elected leaders or the platforms we entrust with our personal information?

As if these questions aren’t existential enough, there is the immediate threat of climate change to contend with too. Earlier this week, ProPublica published a profile of a couple for whom this particular peril shapes every moment. How, the writer asks, “do you confront the truth of climate change when the very act of letting it in risked toppling your sanity?”

The same question could be asked about the pandemic, and for the millions of Covid deniers around the world, believing in conspiracy theories or trivializing the extent of suffering that the disease has caused is an easy antidote to the messy truth that in this most horrifying of situations, there are no simple answers.

I cannot help but feel however that if there is one thread that unites such questions as the future of big tech or the causes of the pandemic and of climate change, it is that we have become interconnected beyond our natures and our means. I think of this now, as I observe the gray sky above me through a screen.

A brief treatise on the unmatched joy of a bad holiday movie, watched in Pyjamas

“I am not enjoying this ironically,” I tell LSH.

We are on the couch, watching A Christmas Prince: The Royal Wedding, the second instalment in a Netflix trilogy set in the fictional country of Aldovia.

“I am enjoying it unironically,” I elaborate, unprompted. “I am legitimately, genuinely, authentically enjoying it.”

“Yeah,” he replies. “It’s cracking.” He reaches for another cocoa-covered almond.

LSH does not have the same instinct to analyze his joy until it becomes excreted in a blog post.

The plot follows a New York journalist named Amber who is sent to the Kingdom of Aldovia in search of a scoop on a playboy prince who is soon to become King.

As a result of a series of farfetched mishaps, she ends up masquerading as a tutor to his little sister, Princess Emily. Her closeness to palace affairs does indeed land her a career-transforming scoop. But feelings get in the way…

Oh, don’t they always? The action takes place in a snowy castle in Romania, which may or may not have inspired the fictional Aldovia. The country’s inhabitants speak with stiff British accents, except for the chef, who sounds eastern European.

The first film in the series is the love story. The second is about the wedding, with a fascinating subplot about economic irregularities in the Kingdom. The third, which we will watch tomorrow morning in our Pyjamas, is called A Christmas Prince: A Royal Baby. I have no idea what it will be about.

It is ridiculous, on all levels. An exercise in cliched box ticking. Not quite Emily in Paris standard but nonetheless, as LSH pointed out, deeply offensive to the people of Aldovia, if there were any.

It is exactly what we needed in the twilight days of this wretched year. Two glorious hours of predictable nonsense, in a beautiful, snowy setting. Far away from grey Berlin. Far away from the flattened atmosphere of Zoom catchups that were supposed to feel festive but don’t really.

Far away from the Berliner Morgenpost alerts about the number of people the virus has killed or hospitalized today.

Far away from the daily train journeys to work that I used to love to spend people-watching but that now fill me with anxiety as I scan my fellow passengers for mask compliance.

Far away from the existential threats posed by the pandemic, by climate change, by the creeping sense that the absences induced by the virus will have a longer, lasting impact. That a small part of our identity is at stake. That the pints and mince pies we had in Mulligans last year on the way home from Dublin airport were profound somehow. That the nostalgia of walking past my old school in the rain was a one-off. That my nephew and niece are growing up between video calls. That the scone and latte I enjoy, religiously, every year with a friend in Howard’s Way in Rathgar, were timestamped without my knowledge.

In Aldovia, where princes ride black beauties in snowy landscapes and economic crises are easily resolved, things are different.

Tomorrow morning, we watch the final film. As today and yesterday, we will move directly from bed to couch. There will be tealights, and coffee laced with amaretto.

And for a few hours, life will be as simple, and as beautiful as it is in Aldovia.

LSH and I sojourning in Aldovia

How to write a novel

This post first appeared here.

The first thing to do is take a walk. The road ahead is long and hard and paved with self-doubt. Might as well get some fresh air.    

The overwhelming odds are the world won’t take any notice. There’s a pandemic to think about. Also ironing, Instagram, climate change and Netflix. 

Accept this as the likeliest outcome and do it anyway. You cannot fall in love with a person while being obsessed with how to sell them. The same applies to your novel.

What you should think about is that kernel in your head. That impulse you feel to write. Where does it come from? Maybe you saw a rat crawling through an upturned trashcan on your way to work. Maybe there’s a fully formed alternate universe floating around in your head. Maybe you have always wondered what it would be like to have been born a different person in a different time. Whatever it is, interrogate it. Dig deeper. 

For me, it was Frau P. We met shortly after I moved from Ireland to Germany in 2012 and until her death in 2018, we saw each other once a week. We were seventy years apart but that didn’t stop us from being besties. If anything, it strengthened our bond.  

My novel is not about her. But it is informed and inspired by how it made me feel to sit with her in her nursing home room. Chatting about the price of pears. Her upcoming death. Germany’s political landscape. The care-workers’ private lives. Meandering between the quotidian and the profound.

This was the space I wanted to occupy. But it was not yet a story. 

I began writing my novel in 2016 and most of the time, I was miserable. I was miserable because I was overwhelmed. Because I was overwhelmed, I became masochistic. If I had a day off work, I would tell myself that I must sit in front of my computer as if I were in the office. I would spend eight and a half hours staring at a blank screen. The only word that came to me was failure. 

I have since learned that this is the worst thing you can do. Guilt and shame do not produce powerful writing. Curiosity does. 

Different novels have different driving forces. Mine is character. I needed a plot that would take my protagonist on an emotional journey. Figuring the course out became my preoccupation. I would think about it at night. In the shower. On the train to work.   

The breakthrough came while reading Story Genius by Lisa Cron. Her theory is that every story is about a character confronting their misbelief. In order to have a misbelief, they must have experienced situations that strengthened their flawed perception of the world. Her tip was to write scenes that did just that. 

This exercise, more than any other writing advice I have ever got, injected life into my story. What are my characters wrong about? How did they come to that conclusion? What can I do to challenge their perception of the world? Some of the scenes I wrote in response to those questions became key moments in my novel. Others are no longer on the page but have added nuance to my characters. 

Writing fiction, more than any other craft I can think of, is an extraordinary balancing act between the conscious and unconscious. First of all, there are the logistics of time and place and character to think about. One of the things I did was print out a calendar of 2016, the year in which much of my novel takes place, and mark the events of the story as if they were real. 

This wasn’t strictly necessary. One of the great gifts of fiction is that time can fly. But verisimilitude and plausibility are important. Even if you are writing the most outlandish fantasy story, the reader must be able to trust the world you have created. All of this is the domain of your conscious mind.  

The unconscious, on the other hand, is the repository of ideas and sensations. I ignored mine for too long, focusing instead on my calendar and plot outline. They have their place. But they are no replacement for the stuff that lies deep within you. The things you don’t know are there until the words come out. 

Annoyingly, your unconscious cannot be summoned. But I have found that it can be beckoned. A film that moves you to tears. An injustice that fires you up. A good conversation with a close friend. A poignant passage in a book. Certain music. You need to feel something. Anything, almost. 

A year ago, when I was 38,000 words into my novel, promising feedback from someone who knows her stuff gave me a boost when I needed it. She had many nice things to say about my work but it was the way she articulated what was wrong with it that made me giddy with joy. The only way to improve your novel is to be able to define the gap between the actual and the ideal. A person who can do this kindly and with conviction, is a gift. 

Earlier this month, fueled by the solitude enforced by the pandemic, I wrote the final words of my novel. I can barely believe I got there. There were so many times I didn’t think I would. 

For the next few weeks, I am giving the manuscript some time to breathe and handing it over to others to read. After that the work will begin again. To write is to sculpt. The marriage of vision and precision. When all that can be has been done, it will be time to offer it to the world. 

How a staycation changed my view of Germany

This article first appeared here

China had been the plan. A two-week whirlwind tour. A quick taste of the people and places shaping the rise of an economic behemoth. This was back in early January. Do you remember? A time when we were still making medium to long-term plans.

Well, I didn’t make it to Beijing this year. But I did explore Bad Schandau, Neuruppin, Goslar, Wernigerode and Quedlinburg. Places that were about as familiar to me as R numbers were before the pandemic. All of them on my doorstep. A mere train journey from Berlin.

“Together against corona” a disembodied voice on the platform proclaimed. “Keep distance. Cover mouth and nose.” In the years to come, these three paroles will remind me of traveling through Germany in 2020.

Discovering my adopted country during the coronavirus has been enlightening. The stunning sandstone rock formations in the eastern state of Saxony gave the impression of a faraway land. The lack of mobile internet and insistence on cash grounded me. 

Having managed to rent a bike — demand was so high you had to reserve a day in advance — I rode cheerfully along the River Elbe and into the Czech Republic, more grateful than ever for the European Union’s freedom of movement.  

Even in the small Czech border village of Hrensko, visitors cannot escape the effects of globalized markets.

In the border town of Hrensko, Chinese vendors sold TikTok-branded hoodies. Global travel may have ground to a standstill, but videos can still cross the world in the blink of an eye.

On another trip — this time to the town of Wernigerode — I traveled to the top of the Brocken mountain by steam train. The soot got stuck in my hair and I had to shield my eyes from the smoke. Once upon a time, the wall that divided Germany in two cut right across the peak of the mountain, depriving hikers from both sides from enjoying the view. The area is now under protection and home to — trigger alert — a rare species of bat.  Dead trees are being allowed to rot. Nature is reclaiming the space that humans once divided.

Leaving the youthful city of Berlin also provided a more representative view of German demographics. Everywhere I went, the buses and trains were full of leisurely pensioners wearing their masks on their chins. Walkers and fancy wheelchairs peppered market squares. One in five Germans is over 65. By 2060, it’s expected to be one in three. The country is getting old. The internet is still slow. But the buses are on time and the elderly are spending their money. In Wernigerode, I spent an hour wandering around looking for a restaurant with a free table. In the end I settled for a falafel kiosk.

When I did manage to get a table in restaurants, it struck me that I tended to be served by either a middle-aged German woman or a young man of Middle Eastern descent. The latter group could well be part of the more than a million refugees that came to the country during the migration crisis of 2015.  Hundreds of thousands of them have found jobs. Those who choose to stay will play a crucial role in propping up Germany’s ageing population.

After Germany’s controversial decision in 2015 to let about a million refugees into the country, the far-right AfD party has gained a foothold even in remote towns

The politics of the past few years has left its marks in messages scrawled in train tunnels and old town walls. Far-right slogans have been painted over by Antifa. In the quaint town of Quedlinburg, a charming timber-fronted building houses the office of the far-right Alternative for Germany party. A sticker on the door reads “Hol dir dein Land zurück” (Take your country back). Another sign reminds passersby that the property is video monitored.

As winter edges closer and the coronavirus shows no sign of going away, my trip to China may be indefinitely delayed. But if this pandemic has taught us anything, it is of the dangers of a sweeping narrative. Often, it’s the microscopic that presents the clearest view.

August

There’s always so little time to savor your break after the fact. But I’m taking five minutes today to share some images of a recent trip to Germany’s Sächsische Schweiz, or “Saxon Switzerland” where LSH and I  had a delightful time whizzing across the German-Czech border on our rented bikes, experiencing some eccentric local characters and discovering our new favorite place: the tiny town of Schmilka which enticed us off our bikes with the overpoweringly beautiful smell of fresh sourdough bread from the mill and beer from the brewery.

Also: the first draft of my novel is done. Well, you know, as much as anything like that is ever done. Will be sending it out to volunteer readers next month. If you’re interested in reading it it in its roughness, just get in touch!

Germany’s chocolate wars

Originally posted here.

This month, Germany’s highest court delivered a ruling that ended a decade-long dispute between two of the nation’s favorite brands of chocolate: Ritter Sport and Milka.

At the core of the case was a question that seems better placed in a philosophy textbook than in a court of law: What is the value of a square?

In 1996, Ritter Sport placed a patent on its square-shaped packaging. The move angered competitors, who considered themselves unfairly restricted to rectangles. Mondelez-owned Milka stepped up for the fight.

Under German consumer law, companies can patent shapes. But there is an important yet fuzzy caveat attached: the form in question cannot, itself, confer value on the product. In other words, the squareness of a Ritter Sport bar cannot be the reason people buy it.

Milka maintained that Ritter Sport’s squareness was inherent to its worth. After all, its slogan: “Quadratisch, Praktisch, Gut” (Square, Practical, Good) explicitly celebrates its form.

The square also forms an important part of Ritter Sports’s corporate story. When I first visited the company’s cafe and museum in central Berlin, the story of how Clara Ritter came up with the idea of creating a chocolate bar that would fit neatly into the coat pockets of sports enthusiasts was proudly displayed on a panel on the wall.

But is the square shape the reason you pick up the bar and take it to the till? German lawyers spent 10 years debating the question.

At this juncture I should say that I don’t have a horse in the race. There are days when nothing but a bar of Ritter Sport’s rum and raisin will satiate me and others when only a bar of Milka’s noisette will hit the spot.

The German people overall show a preference for Milka. Last year, 36% of Germans surveyed had eaten a bar of Milka in the past four weeks. That compared to 28% for Ritter Sport. While the difference may seem slight, in a country with the highest chocolate consumption rate in Europe — the average German eats 11 kilograms (24 pounds) a year — even a relatively small difference in market share has a major impact on revenue.

So: What is the value of a square?

It has none, Germany’s highest court in Karlsruhe decided. Consumers buy Ritter Sport for its content, not its form. Clothes may make the man, but squares do not make the chocolate. The quadrilateral monopoly can continue.

Naturally, it’s a blow for Milka. But the company may have some empathy. In 2004, it successfully defended its patent of the particular blend of purple that has graced its wrapper since 1901. More than a century on and with the German appetite for chocolate showing no sign of abating, there could be more bitter disputes ahead.