Wirecard affair: insolvency administrator examines lawsuit against EY

Status: 11/15/2021 10:18 a.m.

The long-standing balance sheet controller of the scandalous company Wirecard is threatened with legal trouble. The insolvency administrator is apparently examining claims for damages against the auditing company EY.

The insolvency administrator of the payment processor Wirecard, Michael Jaffé, checks claims for damages against the long-standing auditor EY after a newspaper report. Jaffé commissioned Martin Jonas from the auditor Warth & Klein Grant Thornton to do this, reports the “Handelsblatt”. A lawsuit is in preparation. In essence, it is about the question of whether EY made mistakes – and if so, how difficult they were, Jonas told the newspaper. The answer depends on whether and to what extent EY has to be liable.

A liability limit only applies to negligent mistakes, said Jonas. It looks different with direct or indirect intent. In general: “If auditors knew that the balance sheet was wrong and they still issue a certificate, they have unlimited liability.” This also applies in the case of conditional intent, i.e. if the damage has been accepted with approval.

Liability limit raised

However, it was only in June of this year that the legislature raised the liability limit of the auditors to their clients from four million to 16 million. Because the change only took place after Wirecard went bankrupt, it is questionable whether EY will be affected by the new rule. Creditors accuse EY of having contributed to Wirecard’s entry into the DAX and becoming more and more interesting for more and more investors. The capital market had trusted that the balance sheets stamped by EY were in order. The only reason the damage had increased so tremendously because EY ignored the accounting tricks of the company from Aschheim.

Jonas is now to prepare a report on the work of EY on behalf of Jaffé. If Jonas comes to similar results as the special auditor appointed by the German Bundestag’s investigative committee to Wirecard around the auditor Martin Wambach, a lawsuit against EY is likely, according to the “Handelsblatt”.

No comment from EY

EY did not comment on the consequences of a possible lawsuit. The company “basically does not want to comment on individual or potential lawsuits,” said the auditing company. “We emphasize, however, that our auditors carried out their audit procedures to the best of their knowledge and belief.” Wirecard had to file for bankruptcy in June 2020 after air bookings worth billions became known. Since then, the Munich public prosecutor’s office has been investigating falsification of accounts, fraud, market manipulation and money laundering. However, she has not yet filed a lawsuit.

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