Lawsuit against auditors EY for 195 million euros in damages


In the course of the Cum-Ex scandal, the auditor is sued for damages amounting to millions.

(Photo: Reuters)

Stuttgart The press release of the accounting firm EY in October 2019 conveyed pride and joy. Record for the 100th birthday: sales grow by 7.2 percent to 2.1 billion euros was read there. And also: Significant mandates in auditing.

Almost exactly a year later to the day, other headlines dominate the picture in the coverage of EY. Because of their possible failure in the examination of the Dax group, which has slipped into bankruptcy Wirecard society is under pressure.

EY stamped Wirecard reports for ten years before the payment service provider’s house of cards collapsed. One of the presumably biggest fraud scandals in German economic history was revealed. The first law firms have filed claims for damages.

Since this Wednesday, the testing company has been confronted with a lawsuit for damages at a completely different point before the Stuttgart Regional Court. In room 222 of the Stuttgart Regional Court, a process has begun in front of the 27th civil chamber in which the work of EY as auditor and tax advisor to Maple Bank, which has slipped into insolvency, has started. A decision was not made on this day of the trial, the oral appointment initially served to discuss the factual and legal situation from the 189-page lawsuit with the parties.

But just a look at the total reveals how weighty the case is before the first nationwide special chamber for tax consultant and auditor liability, which was set up at the beginning of the year. The lawyer Michael Frege in his capacity as insolvency administrator of the Maple Bank is demanding 195 million euros from EY. He bases the claim on the fact that EY audited financial statements in breach of duty and allegedly wrongly advised Maple Bank in its capacity as tax advisor. If EY had done its work in accordance with its duties at the time, it would probably have stopped doing business that led to the bank.

Maple – the name of the Canadian bank is mainly associated with one of the biggest tax scandals in Europe: Cum-Ex. For transactions with (cum) and without (ex) dividends, banks and investors had a tax that had been paid once “reimbursed” several times for years. Almost 300 investigators searched the Frankfurt Maple branch in autumn 2015. The suspicion: large-scale tax evasion – the authorities put the damage at 450 million euros. At the beginning of 2016, the financial supervisory authority imposed a moratorium on the bank, and a little later the insolvency administrator Michael Frege took over the running.

Since then he has tried to satisfy the claims of the creditors. A massive 2.7 billion euros in claims were outstanding when Maple Bank went under. In August 2019, he announced that he had collected almost two billion euros.

Demand against EY increased again significantly

But Frege wants more, at the end of 2019 he filed a lawsuit against EY for 95 million euros. He now puts the claim at around 195 million, taking into account comparisons that have already been made with third parties.

The core reproach: EY should have worked to ensure that Maple sets up high provisions. After all, there was a high risk that the coveted capital gains taxes would not be offset. In the end, the treasury’s claims for repayment sealed the end of the bank.

There could even be further demands from Frege on EY, because from 2011 Maple Bank increasingly carried out so-called cum-cum transactions. With regard to this, “according to the plaintiff, the damage cannot yet be quantified,” said the Stuttgart Regional Court. However, the insolvency administrator wants – as well as with regard to any further damage from cum-ex transactions – “the determination of the liability for damages to the reason.” EY firmly rejects the claims. The company recently rejected a settlement.

More: EY stamped Wirecard reports for ten years. Now claimants for damages are taking position worldwide. EY must also prepare for possible investigations.


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