EY Pressured To Testify About Role In Wirecard Scandal

EY is increasingly finding itself on the hot seat as German lawmakers and investigators dig deeper into the collapse of payments giant Wirecard, whose books the accounting and consulting giant audited for a decade.

The board of the now-defunct firm recently gave a green light to EY, releasing it from client confidentiality rules and freeing the firm to testify before a parliamentary committee in Germany that is investigating the Wirecard scandal, the Financial Times reports.

But EY is balking at testifying, arguing that the firm’s auditors could wind up exposed to potential criminal penalties related to secrecy breaches, according to the FT.

The decision by Wirecard to cut EY loose, in turn, could further ramp up the pressure on the Big Four firm, which is currently battling lawsuits by investors claiming that EY fell down on the job when it came to auditing Wirecard’s troubled finances and allegedly fraudulent activity.

The Wirecard scandal blew wide open in June when the payments company filed for insolvency after acknowledging that $2.1 billion it had said was missing from accounts in the Philippines never existed at all.

EY has countered that it is not trying to avoid answering questions, but rather needs certain conditions to protect its auditors from potential liability.

In a statement, the U.K.-based EY said it “welcomes” the move by Wirecard’s board to free it from confidentiality restrictions, but insists that more steps are needed to prevent potential legal dangers to its partners before they can testify in the German parliamentary probe of the once-mighty payments company, whose value peaked at $28 billion in September of 2018.

“The release [from confidentiality obligations] needs to be given by the individual members of the supervisory board and the executive board who commissioned the audit in the relevant year or, respectively, were members of the management board,” EY said in its statement, according to the FT.

However, EY’s conditions include a major hitch: They would require a signature from former Wirecard COO Jan Marsalek, who disappeared at the time of company’s collapse in June and is on Interpol’s list of most wanted fugitives.