Saturday 17th April 2021
Clarification of the Wirecard scandal
Special investigator renders harsh judgment on EY
Special investigator Martin Wambach is to help the Bundestag committee to shed light on the Wirecard scandal: How has the company been able to tweak balance sheets over the years? The industry expert is now presenting his report – and is placing a heavy burden on the EY auditors in particular.
Several members of the Bundestag see the Wirecard auditor EY heavily burdened by a special report that has not yet been published. “The Wambach report is a damning verdict for EY,” said SPD finance politician Cansel Kiziltepe, who sits on the parliamentary committee of inquiry into the billion-dollar financial scandal. This is factual in tone, but more than clear in the matter. “There was no critical attitude, the most banal accounting and quality standards were neglected and warning signals were deliberately overlooked.” The special report lies in the secret protection office of the Bundestag.
On Tuesday, the U-Committee, which is investigating the failure of the government and the authorities in the case, wants to deal with it in a closed session. After the discussion with special investigator Martin Wambach, the committee will decide “whether we will hear the EY auditors as witnesses again,” said Danyal Bayaz of the Greens. “Warning signs were ignored and audit evidence was simply inadequate.” Fabio De Masi from Die Linke added that EY had a thorough understanding of the so-called third party business that is at the heart of the fraud. The Wambach report is therefore a “funeral for EY”.
The payment processor Wirecard went bankrupt in June 2020 after billions in air bookings became known. The Munich public prosecutor’s office is investigating balance sheet falsification, fraud, market manipulation and money laundering. Several ex-board members are in custody or are on the run. The financial supervisory authority BaFin and the SPD-led Ministry of Finance are accused of widespread failure in the case.
EY defends itself
Above all, the SPD repeatedly brings the role of the auditor to the fore, who has audited Wirecard’s balance sheets for years. In order to review the role of EY, the U-Committee appointed the industry expert Martin Wambach as a special investigator. SPD politician Kiziltepe accused EY of not contributing to the clarification and “leaving as much as possible in the fog”. According to insiders, EY wants to prevent the Wambach report from becoming public.
In response to a Reuters inquiry on the Wirecard case on Thursday, EY announced that it would be working intensively with all the responsible authorities and providing full support for the investigation. “The fraudulent activities at Wirecard led to the bankruptcy of the company and harmed investors, creditors, employees and clients of Wirecard and shattered confidence in the financial market as a whole.” It is legitimate to ask why the fraud was not discovered earlier.
It goes on to say: “The complex criminal network was designed to deceive numerous actors – including investors, banks, supervisory authorities, supervisory boards, auditors including us, as well as experts and lawyers specializing in forensics – despite careful and extensive efforts. For example, receipts were included Bank confirmations and other external confirmations that were presented to the auditors were falsified at great expense. ” According to the current state of knowledge, EY employees acted professionally and to the best of their knowledge and belief.
In the coming week, the committee of inquiry is heading for its preliminary climax with the questioning of Chancellor Angela Merkel and Finance Minister and SPD candidate for Chancellor Olaf Scholz. A final report should then be worked on.
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