Wirecard: German audit watchdog imposes record fine on EY

The aud­itor watch­dog has found massive breaches of duty at EY in con­nec­tion with the Wir­e­card scandal.

Ger­man watch­dog APAS im­pose dra­conian pen­al­ties on EY at the be­gin­ning of April. For ex­ample, the audit­ing firm is not al­lowed to take on any new audit man­dates with pub­lic in­terest com­pan­ies for two years. It will also be fined 500,000 euros. Never be­fore has APAS im­posed such a heavy fine.

EY had audited Wirecard’s bal­ance sheets for more than ten years and is­sued an un­qual­i­fied opin­ion. In June 2020, the billion-​dollar fraud at the former pay­ment ser­vice pro­vider was ex­posed and Wir­e­card had to file for in­solv­ency. Sub­sequently, in­vestor law­yers mainly tar­geted the former aud­it­ors of the com­pany, so also the law firm Schirp & Part­ner rep­res­ents the largest num­ber of the already pending law­suits against EY.

Some time ago, the “Han­dels­blatt” had already re­porte that the watch­dog had found massive breaches of duty by EY em­ploy­ees in its in­vest­ig­a­tion. Spe­cific­ally, the Wir­e­card fin­an­cial state­ments from 2015 to 2018 were investigated.

Dr. Wolfgang schirp of the law firm Schirp & Part­ner already com­men­ted last week, when the “Han­dels­blatt” pre­vi­ously re­por­ted: “Time is an im­port­ant factor in the pro­ceed­ings against EY. We have filed law­suits against EY since 2020 and have pushed all pro­ceed­ings full steam ahead. The evid­ence is good, all the pre­requis­ites are in place to en­force claims for dam­ages for the plaintiffs. Nev­er­the­less, no juge­ments have been is­sued in fa­vor of the plaintiffs to date. Our Ger­man and in­ter­na­tional cli­ents are very con­cerned that the pro­ceed­ings are drag­ging on for so long. The cap­ital in­vestor model pro­ceed­ings now un­der­way must not be the cause of fur­ther delays that give EY the op­por­tun­ity to shift eco­nomic sub­stance. Oth­er­wise, the ag­grieved parties would end up be­ing left without rights. It would be very amaging for all plaintiffs an also for Germany’s in­ter­na­tional repu­ta­tion if, after the fail­ure of su­per­vi­sion in the run-​up to the Wir­e­card scan­dal, the follow-​up by the civil ju­di­ciary were to fail as well. All the play­ers in­volved must do their best to en­sure that this does not hap­pen. Germany’s repu­ta­tion and the repu­ta­tion of the ju­di­ciary are at stake.”

All in­form­a­tion on the model pro­ceed­ings against Wir­e­car and EY as well as back­ground in­form­a­tion can be found here.

(03. April 2023)