WIRECARD disaster: Internal whistleblower warned EY as early as 2016

Plaintiff representatives see tailwind for lawsuits against EY

FT, Septem­ber 30, 2020, Olaf Storbeck | With ref­er­ence to an ad­dendum to the KPMG re­port of April 27, 2020, the “Fin­an­cial Times” re­ports that an EY-​internal whis­tleblower had already warned of ir­reg­u­lar­it­ies at WIR­E­CARD in 2016. Spe­cific­ally, the warn­ings dealt with a com­pany ac­quis­i­tion in In­dia and ac­cus­a­tions of “roundtrip­ping”; there had also been an at­tempt to bribe an EY auditor. 

The Ber­lin law­yers Dr. Wolfgang Schirp and Dr. Marc Lieb­scher see them­selves fully con­firmed by this art­icle. Dr. Wolfgang Schirp: “We have been fil­ing claims for dam­ages dir­ectly against EY on be­half of nu­mer­ous in­vestors since June 2020 at the Re­gional Court in Stut­tgart. Our law­suits are based on the fact that, ac­cord­ing to our ana­lysis, EY has audited al­leged trust funds “into the blue” and has not un­covered fur­ther bal­ance sheet ma­nip­u­la­tions at WIR­E­CARD. The cur­rent cov­er­age in the Fin­an­cial Times now spec­tac­u­larly con­firms these assumptions”. 

Dr. Marc Lieb­scher: “We find the fol­low­ing cir­cum­stances par­tic­u­larly note­worthy: 1. the whis­tleblower came in­tern­ally from EY: this means that the whistleblower’s know­ledge is ini­tially at­trib­ut­able to his EY unit. 2. the headquar­ters of EY-​Germany was in­formed by the whis­tleblower: This means that the Ger­man lead­er­ship of EY and thus the Ger­man EY in­spect­ors of WIR­E­CARD had to know about the in­form­a­tion. The know­ledge of the whis­tleblower is thus fully at­trib­ut­able to EY-​Deutschland and the spe­cific ex­am­iners. 3. the in­form­a­tion did not come to EY from out­side, but dir­ectly and in­tern­ally through a sep­ar­ate em­ployee. This made the al­leg­a­tions much more cred­ible for EY-​Deutschland. 4. the whis­tleblower in­formed that there had been at­tempts at bribery by WIRECARD’s man­age­ment to­wards EY em­ploy­ees. There­fore, the Ger­man EY man­age­ment should have taken spe­cial care to con­duct a care­ful and in­de­pend­ent in­vest­ig­a­tion. This puts the lead­er­ship of EY Ger­many in the spot­light: “What have they done to en­sure a le­git­im­ate audit? 

Dr. Wolfgang Schirp adds: “The whis­tleblower provided in­form­a­tion about “round-​tripping”, which is one of the main tools used to in­flate the as­set side of the WIR­E­CARD bal­ance sheet. This was ex­actly the core of the ac­cus­a­tions made against WIR­E­CARD be­fore. We also con­sider it es­sen­tial that the EY in­vest­ig­a­tion was stopped at “the be­hest of Mar­s­alek”. This means that Mar­s­alek de­term­ined the scope and in­tens­ity of the audit, al­though ac­cus­a­tions had just been made against his man­age­ment in Asia by the EY employee/​whistleblower. What did the in­di­vidual mem­bers of the EY man­age­ment in Stut­tgart know about this?

Dr. Marc Lieb­scher: “EY’s de­fense at­tempts (“we un­covered it”; “WIR­E­CARD was so crim­inal that it could not be found earlier”) are thus get­ting an­other crack. EY must ex­plain in de­tail and in a com­pre­hens­ible man­ner how they in­tend to pre­vent such mis­takes from oc­cur­ring again in the fu­ture. The APAS must ex­pand its in­vest­ig­a­tions at EY ac­cord­ingly. In any case, we see a tail­wind for our claims for dam­ages in Stuttgart”.

For fur­ther in­form­a­tion please contact

Dr. Wolfgang Schirp
Schirp & Part­ner Recht­san­wälte mbB
Leipzi­ger Platz 9, D – 10117 Berlin
Tel. 0049-30-3276170 and 0049-179-5320213
mail: schirp@​schirp.​com
URL: www​.schirp​.com

Dr. Marc Liebscher
Dr. Späth & Part­ner Recht­san­wälte mbB
Kur­für­sten­damm 102, D – 10711 Berlin
Tel.: 0049-30-88701617 and 0049-176-93150194
mail: marc.​liebscher@​gmx.​net
URL: www​.dr​-spaeth​.com