German Ministry to Probe $77.7 Billion FMS Accounting Error
The German Finance Ministry said it will hold talks on Nov. 2 to investigate a 55.5 billion-euro ($77.7 billion) accounting error at FMS Wertmanagement, the so- called bad bank for Hypo Real Estate Holding AG.
Representatives of PricewaterhouseCoopers LLP, the FMSA financial-market stabilization agency, Hypo Real Estate and FMS Wertmanagement will take part in the meeting, the ministry said today in an e-mailed statement. Depending on the outcome of the talks, “consequences” may be drawn, it said. A telephone conference on the matter will be held this afternoon, the statement said.
FMS has corrected its balance sheet for 2010 to lower debt by 24.5 billion euros and will reduce the borrowing figure for 2011 by 31 billion euros to 161 billion euros, Germany’s Stern magazine reported on Oct. 28, citing unidentified people in the finance industry. Andreas Henry, a spokesman for FMS, said the bank has no comment to make before the meeting in Berlin.
Now is “the wrong time to say where and when the mistakes were made, rather we have to look at what happened in detail,” Finance Minister Wolfgang Schaeuble’s spokesman Martin Kotthaus said today at a regular press briefing in Berlin. Corrections of this size are “to put it diplomatically -- annoying,” he said.
“We haven’t become richer by 24.5 billion euros or 55.5 billion euros,” even as the accounting error reduces Germany’s public debt, the ministry said. “It would be wrong to assert that money has been overlooked or found.”
PricewaterhouseCoopers said it had “no indication” of any mistakes in the FMS 2010 financial statement, based on its examinations and the documents it received. “Significant” parts of FMS’ accounting have been outsourced, PWC noted in a statement on its website.
Hypo Real Estate spokesman Oliver Gruss declined to comment.
To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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