The German subsidiary of the multinational consultancy EY, shaken by the bankruptcy scandal of the fintech Wirecard of which it was an auditor, has been heavily sanctioned by the German supervisory authority for audit firms. EY is prohibited from accepting new “audit assignments from companies in the public interest for two years” and receives a “fine of 500,000 euros”, according to a press release published on Monday by Apas, the gendarme of the auditing profession in Germany.
Wirecard, a young, fast-growing paperless payments company, found itself at the epicenter of a mammoth fraud in 2020 when its executives admitted that €1.9bn recorded in the accounts did not exist, a massive hole that EY failed to pick up. The former CEO of Wirecard, Markus Braun, has been in court in Munich since December, while his right-hand man, Jan Marsalek, allegedly another of the main organizers of the fraud, remains at large.
Fines from 23 to 300,000 euros to five former employees
The detailed investigation of the audit firm’s services to the former fintech during the years between 2016 and 2019 brought to light “proven breach of professional obligations” that justify sanctions, according to Apas. Five auditors, then EY employees, were fined between €23,000 and €300,000 and another seven ultimately escaped sanctions by giving up their license as auditors.
The British auditing giant has 12,000 people in Germany within a global network of 350,000 people.
The defrauded Wirecard shareholders are trying to get the courts to initiate class action proceedings against EY, comparable to a “class action” in the US, so far without success. Apas sanctions do not apply to existing mandates. Retired since the Wirecard scandal by several large clients -Commerzbank, Deutsche Telekom among others-, EY has remained the auditor of the first German bank Deutsche Bank, which even intends to extend its mandate by one year at the shareholders’ meeting in May.
Source: BFM TV
