EY’s global chairman and CEO has expressed regret over the accounting firm’s failure to uncover fraud sooner at Wirecard AG, the bankrupt German payment company.
In a letter to clients, Carmine Di Sibio pledged the accounting firm, also known as Ernst & Young, will do a better auditing job as the London-based professional services network recovers from the fallout from its role as auditor in the Wirecard scandal, the Financial Times reported.
“Many people believe that the fraud at Wirecard should have been detected earlier and we fully understand that,” Di Sibio wrote in the letter obtained by the newspaper. “Even though we were successful in uncovering the fraud, we regret that it was not uncovered sooner.”
EY reportedly failed to report Wirecard’s unorthodox financial arrangements as far back as 2016. The Wall Street Journal reported the auditing firm knew of and had questions about the arrangements and signed off on Wirecard’s financial results for years anyway, according to emails seen by the WSJ.
Marc Liebscher, a lawyer with the Berlin firm representing Wirecard investors, called EY’s auditing “a disaster” and said the firm should stand trial.
The controversy is centered around a missing $2 billion from Wirecard, which was said to be stored in Philippines banks, but an investigation turned up nothing. The money represented around a quarter of the total revenue the company had between 2016 and 2019.
Di Sibio, 57, joined EY in 1985 and was named to the top job last year. He promised to “raise the bar significantly” on vetting the firm’s work.
On Monday (Sept. 14), Change Financial Co., the Australia publicly-traded company that serves U.S. customers, agreed to buy Wirecard’s assets in Australia and New Zealand, the company said in an announcement.
In a filing with the Australian Securities Exchange, the U.S. FinTech with offices in Hollywood revealed it bought the Wirecard divisions for 7.8 million Australian dollars ($5.7 million).
The sale comes a few days after Newcastle, England-based Railsbank signed a deal to buy Wirecard Card Solutions in the U.K. Financial terms were not disclosed. Under the deal, Railsbank will acquire Wirecard’s card technology, clients and some employees.
“This is a huge step forward for everyone,” said Nigel Verdon, CEO and co-founder of Railsbank, in a statement.
Last month, Michael Jaffé, Wirecard’s court appointed insolvency administrator, said an agreement has been reached to sell Wirecard’s Brazilian business to Sao Paulo-based PagSeguro Digital, one of the nation’s largest mobile payment-based eCommerce companies.