Technology

Wirecard scandal: EY in turmoil

The global audit giant Ernst & Young (EY) is now at the heart of the Wirecard affair. EY was responsible for verifying and validating the accounts of the German company which is now bankrupt.

And now the German shareholders association SdK has just filed a criminal complaint against two current auditors and a former EY auditor in Germany reports Time.

According to Financial times, EY failed to request bank information from a bank where Wirecard claimed to hold up to € 1 billion in cash.

EY certifies the accounts of the company since 2009

The verification of bank deposits “is one of the easiest tasks” for an auditor and is done according to a “highly regulated procedure”, accuses the association SdK about EY.

But the suspicion on EY relates to a longer period. The Berlin law firm Schirp & Partner began legal action against EY in early June. EY has been unable to certify Wirecard’s accounts for years “without violating an auditor’s control obligations,” accuses the firm on its site.

The audit firm refused to certify the company’s balance sheet for 2019. It recognized “clear signs of a large-scale fraud, involving several parties in the world and various institutions, with a desire to deceive”. Except that EY certifies the accounts of the company since 2009.

A “scandal without equivalent in the financial world”

The German payments provider collapsed after $ 2.1 billion allegedly disappeared – or simply never existed.

Last Thursday, the board of directors of Wirecard decided to file an insolvency request with the district court of Munich. The company said Wirecard AG, which has approximately 6,000 employees, made the decision “because of the impending insolvency and over-indebtedness.”

After spending almost two decades at the helm of Wirecard, Markus Braun is now accused of having inflated his market position and his financial health to attract investors. The former CEO was released, on bail of 5 million euros.

German Finance Minister Olaf Scholz spoke of a “peerless scandal in the financial world” about Wirecard. He announced a tightening of controls in the electronic payments sector.

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