Auditor EY replaces Germany boss after Wirecard scandal

EY said the reshuffle was part of a reorganisation of its European operations. PHOTO: AFP

FRANKFURT AM MAIN (AFP) - Auditing group EY on Thursday (Feb 25) announced that it was replacing the head of its German office as it moves to "restore trust" following the collapse of fraud-hit payments firm Wirecard.

EY Germany boss Hubert Barth, who was in the job for five years, will stay at the company and be assigned to a new role "on a European level", the Ernst and Young group said in a statement.

Taking his place will be a leadership duo consisting of Henrik Ahlers, a senior executive at EY Germany, and Jean-Yves Jegourel, vice-chair at EY's global assurance division.

EY, one of the world's "Big Four" accountancy giants, said the reshuffle was part of a reorganisation of its European operations. It added that the new leadership would focus on "further strengthening the quality and growth of the German office".

But the move also comes after EY faced fierce criticism for its role in the downfall of disgraced German firm Wirecard, whose books it had been checking since 2009.

"EY's top priority is to contribute to clearing up the Wirecard case and to restore trust that has been lost," the group said, adding that it was working "on measures and initiatives to increase confidence in the quality of (its) audits".

'Elaborate Fraud'

Digital payments firm Wirecard, once a rising star in the booming fintech sector, collapsed spectacularly last June after EY refused to sign off on its 2019 report, saying 1.9 billion euros (S$3.07 billion) was missing from its accounts.

Wirecard was forced to admit that the money did not exist and filed for bankruptcy soon after, sending shockwaves through Germany.

Several Wirecard executives have since faced fraud charges.

The fallout has been widespread, triggering a parliamentary inquiry into possible political failings and an overhaul of German finance watchdog Bafin, including a reshuffle at the top.

As Wirecard's auditor for over 10 years, EY hasn't escaped scrutiny either. It signed off on the firm's accounts for years even as a string of media reports raised red flags about Wirecard's accounting practices.

EY has denied any wrongdoing and said it fell victim to "an elaborate and sophisticated fraud", but critics accuse the auditor of failing to thoroughly check Wirecard's books.

Wirecard investors have launched legal action against EY auditors in Germany and elsewhere.

German auditing watchdog APAS has said EY may have failed to properly carry out its duties, prompting Munich prosecutors to open a preliminary investigation.

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