Ernst & Young files criminal lawsuit for leak of confidential Wirecard report​​​


Ernst & Young has filed a criminal lawsuit against a German newspaper for publishing a confidential parliamentary report concerning its work for the disgraceful payment company Wirecard.

The four major companies told the Financial Times that criminal proceedings were submitted to the Munich Criminal Prosecutor on Monday. The prosecutor confirmed that they had received the complaint, but declined to comment further.

This highly critical report was written by Martin Wambach, a partner of the accounting firm Rödl & Partner, on behalf of the Parliamentary Investigation Committee on the Wirecard scandal.

It highlighted the serious shortcomings of Ernst & Young’s audit work and found that the company failed to detect signs of fraud, did not fully implement professional standards, and relied on verbal assurances from executives on key issues. The report cited more than 150 internal Ernst & Young documents that were submitted to the committee but were considered confidential under German law.

A lawsuit by members of Congress demanding that the Federal High Court allow the publication of an unedited version of the report was dismissed in August. The appeal against this decision is still under review.

On November 11, the German financial daily Handelsblatt published a complete 168-page document on its website. It argued that the report, stamped with the “Deutscher Bundestag-Geheim” seal, was paid by taxpayers, and its content has high public interest. According to German law, “Geheim” is the second highest level of confidentiality. Unauthorized persons who surrender confidential documents may be sentenced to up to three years in prison.

In a statement on Monday, the Big Four said: “From the perspective of Ernst & Young, the report [to Handelsblatt] It constitutes a violation of legal procedures, violates the authority of the Supreme Court, and constitutes a fait accompli. ”

The company argued that the rights of the employees mentioned in the report were violated, and the names of these employees were not edited by the German Business Daily. In addition, the release of the report excessively exposed Ernst & Young’s trade secrets.

In April and May of this year, after Wambach completed the two-part report, several newspapers, including the Financial Times, published reports on its content and cited specific parts. A person close to Ernst & Young told the Financial Times that Handelsblatt’s release of the complete document is “a completely different order of magnitude.”

Ernst & Young stated that its criminal proceedings were against the “unknown” persons who leaked the documents, not against the reporters of the German business newspaper.

Kay Gottschalk, the former chairman of the Wirecard investigation committee, was disbanded after the report was released this summer. He told the Financial Times that he was “confused” by Ernst & Young’s criminal proceedings.

“I can’t imagine members of the investigation committee leaking documents. We often encounter situations where journalists can obtain confidential documents even before they are handed over to the committee,” said a member of the right-wing German Alternative Party. Gottschalk also emphasized that protecting the reporter’s source is the most important.

“Handelsblatt supports its publication of the Wambach report,” Sebastian Matthes, the newspaper’s editor, told the Financial Times, adding that journalists have a responsibility to pursue political and financial power, find flaws and create transparency. “This is what we did when we released the Wambach report,” Mattes said, adding that millions of investors who lost money to Wirecard “have the right to understand how this scandal happened.”

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