The logo of the auditing and consulting firm Ernst & Young (EY) is attached to the top floor of the high-rise in the Spreedreieck on Friedrichstrasse. picture alliance/dpa/dpa-Zentralbild | Soeren Stache
Lawyers for former Wirecard shareholders are taking action against the restructuring of the German business of the auditing firm EY. For years, EY had audited the figures of the former DAX group, which collapsed due to billion-dollar accounting fraud. The representatives of former investors are now accusing the company of wanting to protect itself from possible compensation payments through restructuring. EY emphasized to the “Handelsblatt” that the corporate law changes “have no impact on EY’s liability risks”.
The Wirecard scandal has tarnished the image of EY’s auditors. They had audited the DAX group’s balance sheets for years. Compared to the economic crime surrounding the billion-dollar accounting fraud at the payment service provider, what EY – formerly known as Ernst & Young – has been pushing forward in Germany in recent months seems dry.
The auditing company is restructuring itself under corporate law. But lawyers for former Wirecard shareholders see the restructuring as a continuation of the scandal surrounding the former darling of German investors.
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According to a report by “Handelsblatt“The Mattil law firm, which represents the private investor Kurt Ebert, wants to have the restructuring of the German business declared null and void by a court. She considers it “abusive of the law and immoral”. The lawyers suspect that EY wants to protect itself from possible compensation payments due to Wirecard.
EY is confronted with enormous demands. Just last December, the German Association for the Protection of Securities Ownership (DSW) filed an 80,000-page lawsuit for damages on behalf of more than 13,000 private and institutional investors. According to the DSW, the claims have a volume of over 700 million euros.
The restructuring of EY in this country only began for a short time. First, the company converted its German GmbH into a limited partnership. In the next steps, EY legally separated the troubled auditing division from the consulting divisions.
This brought the lawyers of Wirecard’s creditors into action. According to “Handelsblatt”, consulting units that recently generated three quarters of annual sales now only have to be liable for the consequences of the Wirecard scandal for five years – with amounts in the low millions.
Restructuring at EY: “As if VW had spun off the entire car business”
“It is as if VW had spun off the entire car business from the group after the diesel scandal in order to minimize claims against the company,” lawyer Peter Mattil told the newspaper. With two lawsuits, Mattil wants to ensure that EY is liable for all of the assets that were in the German branch until the restructuring.
EY did not comment on the allegations to Handelsblatt. However, with regard to Wirecard, the consulting company explained that the changes to corporate law “would have no impact on the liability risks for existing and completed mandates or on ongoing civil proceedings.”
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