The insolvency of Wirecard must be a satisfaction to the journalists and editors of the Financial Times. They have critically reported on the so-called Wirecard House of Cards on the basis of facts since 2016. Because of this investigative reporting, the journalists as well as the Financial Times were confronted with lawsuits and criminal charges. From Wirecard but also from the German regulator BaFin with the German prosecutors as their facilitators.
In view of the Wirecard insolvency and the facts that have become known so far, even the most critical individuals and authorities must give the Financial Times increased credibility when it comes to Wirecard.
Now the Financial Times points out the role of the Wirecard auditor EY. In fact, it is incomprehensible how the Top-4 auditing company could have failed to notice the lack of money (currently €1.9 billion) during his audit for years. Direct talks with the banks in Asia would probably have been sufficient for this. But that obviously did not happen.
EY failed for more than three years to request crucial account information from a Singapore bank where Wirecard claimed it had up to €1bn in cash — a routine audit procedure that could have uncovered the vast fraud at the German payments group.FINANCIAL TIMES – EY FAILED TO ASK FOR WIRECARD BANK STATEMENTS FOR 3 YEARS
EY at Wirecard is obviously what Arthur Andersen was at ENRON at that time. Carelessly and/or negligently acting auditors who may actually have facilitated the ongoing fraud on the creditors and shareholders of Wirecard should finally be asked to pay the bill. Although it would be premature to raise concrete accusations, one thing is certain – the role of EY will be just as important in the processing of the Wirecard case as that of the former CEO Markus Braun. As is well known, Arthur Andersen was dissolved in the course of the ENRON scandal. EY does not seem to be that far away from this scenario.
These will be difficult times for EY. Not only that you actually have the Wirecard problem. With a probability bordering on certainty, the German regulator BaFin will also point the finger at EY. Like many investors. And the politicians will not hesitate to blame EY for the loss of confidence in the German capital market. We will probably hear the phrase “Not even EY has noticed that” many more times. In any case, EY will be a rather toxic auditor in the near future.