Since December 2022, former Wirecard CEO Markus Braun and two former executives, Oliver Bellenhaus and Stephan von Erffa, have faced charges, including falsifying the group’s balance sheets. According to the German prosecutors, the so-called third-party acquirer (TPA) “did not actually exist.” The former COO Jan Marsalek remains on the run. Meanwhile, former auditor EY faces massive lawsuits.
Short Wirecard Narrative:
The Wirecard scandal unfolds, implicating global audit firm EY in ongoing legal battles. Once a prominent German fintech company, Wirecard collapsed in June 2020 after admitting that €1.9 billion supposedly held in escrow accounts likely never existed. The missing funds, a quarter of the company’s assets, led to allegations of massive fraud and financial misconduct.
Former CEO Jan Marsalek fled the country. He allegedly was a Russian spy while he was a Wirecard director. Trials against former executives and partners are ongoing in Munich and Singapore. Now, 3,400 plaintiffs represented by a Berlin law firm are demanding €350 million in collateral from EY, which had audited Wirecard’s financial statements. EY‘s recent restructuring has sparked fears that the audit firm is shielding assets to avoid potential damages from these lawsuits.
Key Points:
- The Case: Wirecard and its former auditor EY
- The Allegations: EY is accused of failing to detect Wirecard’s missing €1.9 billion, a critical oversight that played a part in the company’s collapse.
- Reorganization Concerns: EY has restructured its German operations, allegedly to limit liability from Wirecard-related claims. Plaintiffs argue this move could hinder their ability to recover damages.
- Legal Proceedings: A test case is scheduled for November at the Bavarian Higher Regional Court, which could set a precedent for thousands of other claims against EY.
Actionable Insight:
EY’s situation illustrates the growing scrutiny audit firms face when large-scale frauds are exposed. The firm’s inability to detect the missing €1.9 billion at Wirecard, a significant portion of the company’s total assets, raises questions about audit practices and oversight. With financial transparency being paramount, it is crucial for auditing firms to enhance due diligence and strengthen their internal controls to avoid similar oversights.
Read More:
- Read the Handelsblatt report here.
- Read our Wirecard Reports here.
- Learn more about Wirecard partner GreyMountain Management.
Whistleblower Request:
If you have information about Wirecard or its partners, please share it securely through FinTelegram’s whistleblower platform, Whistle42. Your confidentiality is assured.
