The auditing company EY is coming back into focus after a controversial document from the now-defunct Parliamentary Committee of Inquiry into the Wirecard affair has surprisingly become public.
It concerns the previously secret report of the special investigator commissioned by the committee, Martin Wambach, who, as an auditor, had taken a professional look at the work of EY in auditing the Wirecard balance sheets.
The members of the Bundestag had given the EY auditors a disastrous certificate in their final report in June, based on the findings of Wambach.
Mark Fehr
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Marcus Jung
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Therefore, much of the content of the “Wambach Report” was known, but not the report itself.
That has changed since the Handelsblatt published the 168-page document on the Internet on Thursday evening.
The business newspaper justified the step, among other things, by wanting to create transparency for the Wirecard investors who were damaged in one of the largest German economic scandals.
The Wambach report was also paid for in tax money, so that the public has a right to its content.
Big doubts about reliability
The former Dax group had to file for bankruptcy in June 2020 after the company admitted that 1.9 billion euros were missing from the balance sheet and EY refused to approve the annual financial statements. In previous years, however, EY had always certified the Wirecard balance sheets as correct, despite many warning signals. In view of the extent of the scandal and the high level of effort involved in the audit, doubts have arisen as to whether the auditors have worked reliably.
EY contradicted the allegations from the start and sees itself as a victim of fraud by Wirecard. In a statement on Friday, the auditing firm described the publication of the report as a disregard for the rule of law and a violation of personal rights. Therefore, one examines criminal steps. The Wirecard scandal not only damaged EY's good reputation, the auditors are also often sued in court. At the company's headquarters in Stuttgart, there are 320 investor lawsuits with claims of more than 53 million euros. There are around 650 Wirecard proceedings at the Munich I Regional Court, but the plaintiffs were unsuccessful in 115 cases.
According to Marc Tüngler from the investor protection association DSW, the Wambach report, which has become public, gives investors very valid arguments to take action against EY now more than ever.
The DSW read from the document that EY had not complied with the test guidelines.
The investor advocates want to bundle claims against EY in a Dutch foundation, ultimately the project aims at a settlement.
"The Wambach report confirms our previous arguments," said Martin Kühler from Tilp law firm.
Aggrieved investors are advised to seek their rights in court.
Amicable solutions with EY are currently unrealistic.
EY should take part in clarification
Klaus-Peter Naumann from the auditing institute IDW appealed to EY. "For trust in the profession, it would be important that EY take an active part in the investigation," he told the FAZ. The APAS auditor and the investigating public prosecutor's offices should soon present results. As early as September 2020, the APAS reported violations of professional obligations by EY auditors to the Berlin Public Prosecutor's Office: Anyone who, according to the Commercial Code, reports incorrectly when auditing an annual financial statement, withholds material or issues an auditor's opinion that is incorrect in content, faces up to three years in prison.
In the meantime, the threads come together at the Munich I public prosecutor's office, which is extensively investigating the Wirecard accounting scandal. Senior Public Prosecutor Anne Leiding confirmed that the authority had received several reports of breach of professional duties and aiding and abetting fraud. The Wambach reports will "of course be included in the investigation," said Leiding. But here, too, the prosecutors cannot tell to what extent there is a suspicion of an initial offense.
When asked by the FAZ, the spokesman for Michael Jaffé, Wirecard's insolvency administrator, did not want to comment.
"We're not commenting on that," he said on Friday.
Nevertheless, Jaffé is likely to look with great interest in the reactions of claimants.
As an insolvency administrator, it is his job to assess possible liability claims against former Wirecard consultants and auditors.
If EY could prove the serious omissions, as they are mentioned several times in the Wambach report, or even intent, this would significantly improve Jaffé's negotiating position.