Lawsuit against auditor Wirecard insolvency administrator demands a lot of money from EY
December 29, 2023, 4:49 p.m. Listen to article
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Wirecard insolvency administrator Michael Jaffe is trying to get as much money out of it as possible for the creditors of the insolvent company. He is demanding a sum worth billions from the auditor EY. But Citi Bank and former CFO Burkhard Ley should also pay.
Wirecard insolvency administrator Michael Jaffe is demanding 1.5 billion euros from EY, the payment processor’s long-time auditor. A spokesman for the Stuttgart Regional Court confirmed the amount in dispute of the claim for damages that Jaffe had filed shortly before Christmas.
Jaffe blames the auditors at EY, who had audited the balance sheets since 2009, for not uncovering the fraud at Wirecard earlier. He believes Wirecard’s supposedly lucrative business with third-party partners in Asia is fictitious. 1.9 billion euros in commissions that, according to Wirecard’s balance sheet, were supposed to be in escrow accounts in Asia turned out to be non-existent in 2020. Wirecard then had to file for bankruptcy.
There is “a lot to suggest that there are claims for damages against the auditor (…) because he violated his duties in auditing the annual financial statements and should not have issued any or no unqualified opinion,” writes Jaffe in the latest status report available to Reuters the creditors of Wirecard. This also emerges from a report that he commissioned from auditors.
EY did not agree to a settlement, which is why it had to file the lawsuit before the turn of the year so that the claims would not expire. A spokesman for Jaffe declined to comment on the amount.
Lawsuit against Citi Bank
As the status report shows, the insolvency administrator has also sued the US investment bank Citi for 140 million euros in the Munich district court. Just a few months before the bankruptcy, it had completed a share buyback of this volume for Wirecard.
But Wirecard could no longer have actually afforded the buyback at that point, argues Jaffe in the lawsuit. This “represents a violation of corporate law regulations, which in turn leads to the invalidity of the contractual agreements concluded,” says the report. The bank rejected the claims, which is why he has now filed a lawsuit to prevent the statute of limitations from running out.
The insolvency administrator’s job is to get as much money as possible for the creditors. After the bankruptcy, they filed claims worth billions against the former stock market star. Former CFO Burkhard Ley is also supposed to pay back money, as the report shows. Jaffe is demanding 815,000 euros, which Ley received from Wirecard in 2020, even though his consulting contract expired at the end of 2019.
The Munich public prosecutor’s office filed charges against Ley in mid-December. She accuses him, among other things, of accounting falsification, market manipulation, fraud and breach of trust, during his time as CFO (from 2006 to 2017) and later as a consultant.
Jaffe rejects Braun’s theories
In his report, Jaffe also rejects former CEO Markus Braun’s recent theories about third-party business in Asia. Braun’s lawyer Alfred Dierlamm had argued in the trial surrounding the bankruptcy of Wirecard that the fugitive board member Jan Marsalek and the co-accused governor in Dubai, Oliver Bellenhaus, had diverted the lucrative business with partners in Asia to other service providers and enriched themselves. Jaffe thinks this is absurd.
It is not plausible how the business could have been redirected “without leaving any trace in the company.” The data was evaluated very carefully. There is no evidence that Wirecard ever referred retailers to third-party partners who processed the payments on behalf of them. Even employees interviewed by the insolvency administration could not remember this.
2023-12-29 17:07:47
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