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Wirecard fraud: EY Germany boss Hubert Barth resigns

2021-02-25T11:28:29.266Z

The auditing company EY draws conclusions from the accounting scandal at the fallen Dax group Wirecard. The boss has to go, a commission comes.



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EY Germany boss Hubert Barth: The auditors let investors and banks believe that everything was in order at Wirecard

Photo: Michael Proeck for EY

After the resignations at the head of the financial supervisory authority Bafin and the accounting police DPR, the Wirecard scandal now also has personnel consequences for the auditor EY: Germany boss Hubert Barth is stepping down with immediate effect according to SPIEGEL information.

Although Barth had not checked the balance sheets of the fallen Dax group himself, the longer it takes to deal with the affair at EY, the more he is burdened as a long-term boss.

According to information from SPIEGEL, EY also wants to set up a commission made up of external experts to investigate whether and which errors EY has made as a Wirecard auditor and what consequences can be drawn from them.

Apparently, the auditing company wants to send a signal for a fresh start with the appointment of the examination commission and the change in leadership.

Wirecard had to file for bankruptcy in June of last year after it had emerged that the group had apparently reported 1.9 billion euros in cash that did not even exist.

The public prosecutor's office is investigating, among other things, suspected gang fraud, breach of trust and market manipulation against former boss Markus Braun, his deputy Jan Marsalek and other management staff.

The managers deny the allegations.

EY had audited Wirecard's annual financial statements for a good decade.

The accounting experts repeatedly expressed concerns and warned the Supervisory Board to improve accounting and internal control processes.

Ultimately, however, the EY people audited the balance sheet year after year without restriction.

So investors and banks kept believing that everything was in order at Wirecard.

Only the non-public audit reports by EY now show that the auditors had seen problems with the payment processor for years.

For example, they initiated an investigation into a takeover by Wirecard in India in 2015 at an early stage, but were decisively influenced by the company and, in particular, Jan Marsalek, who is now considered the mastermind of accounting fraud.

Ultimately, the EY investigation had no consequences.

Criminal complaints to the Munich public prosecutor

The accusation that EY lightly approved the fact that Wirecard accounts for alleged balances of billions in trust accounts in Asia as cash is also serious.

Apparently this money was never in said accounts.

EY argues that it has always acted within the framework of the rights and obligations applicable to auditors, and that an auditor has no remedy against fraud of such magnitude.

Shareholders and creditors see it differently.

You have now filed several lawsuits against EY and are demanding damages.

Insolvency administrator Michael Jaffé is also likely to ultimately try to claim EY financially.

In addition, several Wirecard victims have filed criminal complaints with the Munich public prosecutor's office against the EY examiners involved.

There was also a complaint from the auditing agency, which sees serious failures at EY.

Fabio De Masi, the deputy chairman of the left parliamentary group and chairman of the left in the Wirecard investigative committee, is taking the resignation of Germany boss Barth as an opportunity to sharply attack EY.

"The problems at EY could grow to the Arthur Andersen moment," said de Masi, referring to the former accounting firm Arthur Andersen, which broke up in the accounting scandal surrounding the US energy company Enron.

From his point of view, EY employees have made themselves liable to prosecution.

De Masi criticized the fact that EY was "still the most important advisor to the federal government", "for example with Mr Spahn's mask chaos".

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Source: spiegel

All business articles on 2021-02-25

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