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“An unprecedented scandal” targets Ernst & Young

Global auditing giant Ernst & Young is highly complicated by the bankruptcy scandal of German online payments company Wirecard

The global audit giant Ernst & Young (EY) is very complicated by the bankruptcy scandal of the German online payment company Wirecard, due to its deficiencies in the verification of accounts.

Lawsuits have already been filed against the consultancy following the bankruptcy of the electronic payments provider this week, It employs 6,000 people.

The German shareholders’ association SdK presented a criminal action against two current auditors and one cry from EY in Germany.

Scandal at Ernst & Young

Wirecard, a company listed on the Frankfurt stock exchange and filed for bankruptcy on Thursday, is under suspicion of inflating your accounts with dummy funds in the Philippines for an amount of 1,900 million euros.

German Finance Minister Olaf Scholz called it “unprecedented scandal in the financial world “and assured that Controls in the electronic payments sector will be tightened.

“An unprecedented scandal” targets Ernst & Young

No one, neither the auditors nor the German financial gendarme (Bafin), detected what was happening. And that since 2015 There were rumors in the press about irregularities in Wirecard’s economic model, AFP notes.

Furthermore, at the beginning of 2019, the British economic newspaper Financial Times published an investigation into suspected fraud in Asia. This week, accused EY of not doing their job correctly.

According to the FT, EY did not request crucial bank information from a Singapore bank, where Wirecard He claimed to have up to € 1 billion in cash.

The verification of Bank deposits “It is one of the easiest tasks” for an accounting auditor and it is carried out according to a “highly regulated procedure”, also accuses the SdK association on EY.

In early June, the Berlin law firm Schirp & Partner filed a legal action against EY. He accuses her of violating “an auditor’s control obligations”.

Wirecard shares have plunged 98% in the past ten days. The Schirp cabinet urges shareholders to file a class action lawsuit against EY.

Outside of Germany, the Dutch investor association European Investors (VEB) urged EY to a friendly agreement and otherwise threatens a complaint, reports the German newspaper Handelsblatt.

The audit cabinet, which refused to approve the company’s balance sheet for 2019, recognized “clear indications of large-scale fraud, which involves various parts of the world and various institutions, with a will to deceive. ”

The problem is that this statement could turn against him. EY, in charge of approving the accounts of the Bavarian group since 2009, is the target of criticism. He is accused of failing to inform the public of problems on Wirecard earlier.

The Japanese conglomerate Softbank plans to sue EY for his role in the scandal, according to the weekly Der Spiegel.

Ernst & Young under fire

Ernst & Young under fire

Softbank bought Wirecard convertible bonds in the amount of 900 million euros in 2019, believing that it invested in a reliable company.

Asked by the AFP, EY He said that for now he has not received any complaint.

Some Wirecard case compared to Enron crash in early 2000s. The American energy group, whose accounts were supervised by the accounting cabinet Arthur Andersen, he distorted his balance before sinking.

Arthur Andersen was charged and convicted of obstruction of justice, precipitating the downfall of the then-fifth largest audit company in the world.

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