Bloomberg News

Schaeuble Says 55.5 Billion Euro Accounting Error Was a Glitch

November 02, 2011

Nov. 2 (Bloomberg) -- German Finance Minister Wolfgang Schaeuble said the 55.5 billion-euro ($76.7 billion) accounting error at FMS Wertmanagement, the so-called bad bank for Hypo Real Estate Holding AG, was due to a balancing glitch that doesn’t require personal consequences from anybody.

The Finance Ministry knew “with certainty” on Oct. 13 that an accounting error had occurred after receiving notifications on Oct. 4, Schaeuble said at a press conference in Berlin today, adding the error is “annoying” because its magnitude can unsettle the public.

“Here raves the lake and wants to have its victim,” Schaeuble said, citing from Friedrich Schiller’s drama William Tell. “That’s not my understanding” of how the biggest accounting error in Germany’s post-World War II history should be sanctioned, he said.

HRE, acting as a service company for FMS, left the decision on whether to offset certain balance-sheet positions against others to FMS, while FMS assumed that the figures it received from HRE had already been offset, Schaeuble said.

Communication among all parties involved must be improved to avoid such “misunderstandings” in the future, Schaeuble said. The Bundesbank, Germany’s central bank, has been charged with investigating the procedural details behind the accounting error, he said.

--With assistance from Oliver Suess in Munich. Editors: Leon Mangasarian, Eddie Buckle.

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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