Fraud worth billions - Wirecard: EY discovered questionable matters - and approved the balance sheet
In the Wirecard process, further evidence has come to light indicating that the company's questionable business dealings could have been discovered long before its collapse. Special investigators from the auditing firm EY discovered suspicious activities as early as 2016, including the Wirecard-Bank granting millions in unsecured loans.
"We found a driver in Dubai who received six million dollars without collateral," an EY employee testified today. In addition, the team allegedly discovered indications of manipulations during the acquisition of the Indian payment service provider Hermes by Wirecard in 2016 and 2017, as part of an ongoing but never completed special investigation.
The witness works for EY as a forensic accountant - experts who become involved when there are suspicions of irregularities. EY audited and tested Wirecard's financial statements annually, and in 2016, a whistleblower reported in writing to the leader of the Wirecard audit team. The whistleblower provided information that the Wirecard "Senior Management" had misrepresented financial statements during the Hermes acquisition.
The special investigation was a failure
Due to these findings, the EY forensic accountants initiated a special investigation named "Project Ring." "From our perspective, we found indicators that supported the allegations," the witness testified.
At the instruction of the Wirecard Sales Board member Jan Marsalek, the EY forensic accountants then terminated their work months later, before they had completed their investigation. "From our perspective, it was not completed," the witness stated during the 137th day of the ongoing mammoth trial that began in December 2022.
The EY auditors, working separately from the forensic team, eventually granted Wirecard an unrestricted audit opinion for the financial statements. The reason why the colleagues ultimately made this decision was something the witness could not explain: "In the end, it was the decision of the auditors."
Commerzbank also had suspicions
Today, EY faces numerous lawsuits from Wirecard shareholders seeking damages because the auditors approved the financial statements up to 2018. In the Wirecard trial, a former Commerzbank board member recently testified that the bank considered ending business relations with Wirecard due to suspicions of manipulation in 2019.
The indictment accuses the former Wirecard CEO Markus Braun, the former manager in Dubai Oliver Bellenhaus, and the former group CFO of the company of creating fake balances for years to keep the company afloat.
Braun denies all allegations, while Bellenhaus, who appeared as a witness, has largely admitted to the charges. The former group CFO has remained silent and will speak for the first time next week.
- The suspicious activities at Wirecard were first identified by special investigators from Ernst & Young (EY) in Munich as early as 2016, despite the company's eventual collapse.
- During their investigation, EY discovered that the Wirecard-Bank had granted millions in unsecured loans, which raised alarm bells for the forensic accountants.
- The EY team also uncovered indications of manipulations during Wirecard's acquisition of the Indian payment service provider Hermes in 2016 and 2017.
- A whistleblower reporting misrepresentation of financial statements during the Hermes acquisition had written to the leader of the Wirecard audit team at EY in 2016.
- The EY forensic accountants initiated a special investigation named "Project Ring" but were later instructed to terminate their work by Wirecard Sales Board member Jan Marsalek before completing it.
- Commerzbank, a German bank, had also entertained suspicions of manipulation at Wirecard in 2019 and considered ending business relations with the company.
