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EY’s former Germany boss Hubert Barth is to challenge a €300,000 fine for alleged violations of professional duties during the Big Four firm’s audits of Wirecard.
Wirecard collapsed four years ago in one of Europe’s largest accounting scandals after disclosing that half its revenue and €1.9bn in corporate cash did not exist. It had received unqualified audits from EY for almost a decade.
Germany’s audit watchdog Apas last year fined EY €500,000 and banned the firm from taking on any new listed audit clients in Germany for two years over its failings. It also announced penalties of between €23,000 and €300,000 to five unnamed current and former staff. These fines against individuals were formally imposed last month.
The largest of the personal fines was for Barth, according to people familiar with the decision. His lawyer Jan Bockemühl told the Financial Times that he would appeal against the Apas decision on behalf of his client as he considered it “incorrect” from both a legal and a factual point of view.
EY said in March that it did not fully agree with Apas’s findings but dropped its legal appeal against the ruling and decided to “fully comply with the sanctions”.
Under Barth’s leadership, EY’s German partnership had been on an expansion spree, doubling its market share of auditing for members of the country’s blue-chip Dax between 2017 and 2020 as it won high-profile audit mandates including Deutsche Bank and Deutsche Telekom.
Half a year after Wirecard’s collapse, Barth resigned as head of EY Germany, moving on to a “European role” at the firm. He subsequently left EY and now works as an independent auditor in Munich, according to the German public register of certified accountants.
Barth told a parliamentary inquiry committee in 2021 that it was EY that uncovered the Wirecard fraud and that it “did not hesitate for a second to blow the whistle”. He defended the firm’s work against criticism, stressing that EY always worked to the best of its knowledge and had been deceived by a complex fraud.
Apas, however, concluded that EY was guilty of “grave” and “repeated” violations of professional duties in its audits of the payments firm Wirecard.
The fine against Barth and four other current and former EY employees is the final stage in a long-running Apas investigation that started months before Wirecard filed for insolvency in June 2020. Originally, Apas had investigated twelve individuals who worked on EY’s Wirecard mandate but seven of them avoided prosecution by handing back their audit licences.
Apas told the FT that it finalised its investigations into the role of the remaining five individuals in late June, and confirmed that the fines stood at between €23,000 and €300,000, but declined to disclose further details.