Thursday, December 9th, 2021
OLG harshly criticized the lower court
Court opens the door for Wirecard compensation
Numerous investors have sued the auditors EY in the case of the financial service provider Wirecard, which has probably gone bankrupt through fraud. So far, they have flashed it in court. But now the next instance is reprimanding the decision and asserting considerable negligence.
In the Wirecard scandal, frustrated investors can now hope for claims for damages against the auditing company EY after their immense price losses. This had certified the wrong balance sheets of the former Dax group. The Munich Higher Regional Court made serious doubts about the court decisions of the first instance public. The Munich regional court dismissed lawsuits against EY without taking any further evidence. According to the OLG, the regional court should have examined much more precisely – analogous to the diesel scandal – whether EY was deliberately acting immorally.
The preliminary information does not mean that the OLG considers the auditors of EY to be jointly responsible in every case, or that the success of the lawsuits against the auditing company is now guaranteed. However, the 8th civil senate of the OLG made it very clear that, in its opinion, the regional court dealt with the case far too superficially.
In particular, the Senate complains that the district court probably lacks “own expertise” to assess the allegations made against EY in an expert report by the auditing company KPMG. According to the OLG, an expert opinion would have been appropriate for this.
In addition, the Higher Regional Court accuses the regional court of having ignored the report of the Wirecard committee of inquiry in the Bundestag, “in a way that is” improper of hearing “to the detriment of the plaintiff’s investors. The OLG recommended the regional court to open a model case. As an option, however, the OLG is also considering referring the proceedings back to the regional court in order to catch up on the extensive evidence that has so far been missing.
OLG: Investors would probably not have accessed it with full knowledge
Wirecard first admitted invented bookings in the amount of 1.7 billion euros in June 2020 and filed for bankruptcy a little later. EY had previously checked and audited the company’s balance sheets for years without discovering the alleged fraud. The Munich public prosecutor assumes that the board of directors acted like a criminal gang and deliberately falsified the balance sheets for years in order to steal bank loans and investor money. Former CEO Markus Braun has been in custody for almost a year and a half.
For the shareholders, the Wirecard bankruptcy meant immense losses in the double-digit billions. As a result, hundreds of claims for damages against EY that have so far been dismissed have been filed with the Munich regional court.
The district court saw in several decisions no causal connection between the EY attestations and the losses of the investors, or no breach of duty by the auditors. The OLG, however, has major concerns about this view of things: According to the Senate, an earlier refusal of the attestation by EY would also have resulted in an earlier application for insolvency by Wirecard AG. Based on this, “general life experience would probably indicate that the investors would not have made the disputed share purchases with knowledge of this,” said the OLG’s announcement.