The global giant of the audit Ernst & Young (EY) is caused to turn by the scandal of the bankruptcy of the German company Wirecard, of which he was responsible for checking the accounts.
The first lawsuits have been launched against the cabinet council, following the bankruptcy resounding this week in the provider of electronic payments and its 6,000 employees.
The association of German shareholders SdK has filed a criminal complaint against two auditors present and former auditor of EY in Germany.
Wirecard, a company listed on the Dax in Frankfurt, which filed for bankruptcy on Thursday, is suspected of having inflated its accounts with funds fictitious in the Philippines for an amount of 1.9 billion euros, representing one-quarter of the size of its balance sheet.
“Scandal without equivalent”
The Finance minister, Olaf Scholz spoke of “a scandal without parallel in the financial world” and ensured a tightening of controls on the sector, yet little-monitored electronic payments.
Nobody, neither the auditors, nor the gendarme German financial (Bafin), have seen the disaster coming.
However, since 2015 the press rustles of rumors about irregularities in the business model of Wirecard. And the Financial Times had at the beginning of 2019 published a thorough investigation on suspicion of fraud in Asia. Without a result.
This week, the economic daily at the british hold the nail in accusing EY do not seriously doing its job.
According to the newspaper, EY has failed to seek banking information crucial to a bank in Singapore, where It claimed to hold up to 1 billion euros in cash. An audit procedure of routine yet.
The verification of bank deposits “is one of the easier” for accounting auditor and be done according to a “highly regulated”, has also the association SdK about EY.
The law firm of berliner Schirp & Partner has started from the beginning of the month of June, an action-EY. EY could not certify the financial statements of Wirecard for years “without a breach of the control of an auditor”, accuses the firm on its website.
While the action Wirecard has shrunk by 98% over the last ten days, the shareholders are invited by the cabinet Schirp to come together around a collective action in court aimed EY.
Complaints outside of Germany
Outside Germany, the association of investors Dutch European Investors (VEB) has invited EY to an amicable settlement, failing which this threat of prosecution, reports the German daily Handelsblatt.
The audit firm, which has refused to certify the balance sheet of the company for 2019, has found “clear indications of fraud, large-scale, involving a number of parties in the world and various institutions, with a desire for deceit.”
The problem: this statement shock could turn against him.
As EY, which is certified, since 2009, the accounts of the group bavarian, is criticized for not having informed the public earlier about the problems at Wirecard, as the association VEB is working on this already.
Previous Arthur Andersen
The firm’s audit must also fear the wrath of Softbank. The conglomerate japanese continue to EY for his role in the scandal, according to the weekly Der Spiegel.
Softbank had bought in the spring of 2019 convertible bonds Wirecard for an amount of € 900 million, expecting to invest in a reliable company.
Questioned by AFP, EY has indicated that any complaint he had not yet received and not yet be able to respond to it.
The comparison is more and more necessary in the case of Wirecard and the fall of Enron in the early 2000s.
The group, american energy, including the accounting firm Arthur Andersen was overseeing the accounts, had made up its balance sheet before sinking.
Arthur Andersen found himself then convicted and sentenced for obstruction of justice, precipitating the fall of the once the fifth biggest audit company in the world.