‘Restore trust’: Boss of German Wirecard office replaced following scandal

Auditing group EY on Thursday 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.

'Restore trust': Boss of German Wirecard office replaced following scandal
Wirecard's headquarters in Aschheim near Munich. Photo: DPA

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”.

READ ALSO: Five things to know about Germany’s Wirecard scandal 

‘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 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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Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

When Volkswagen chief executive Herbert Diess joined Twitter in January, he used his first tweet to warn pioneering electric car maker Elon Musk that he was coming after him.

Is Germany's Volkswagen becoming 'the new Tesla' as it ramps up e-vehicle production?
ID.3 cars in the Zwickau, Saxony production plant in March. Photo: DPA

The bold proclamation raised some eyebrows, coming from a carmaker better known for its 2015 “dieselgate” emissions cheating scandal than its green credentials.

But all that has changed since the German group announced an offensive to dominate the electric car market globally by 2025, vowing to set up six battery factories in Europe by the end of the decade.

“Volkswagen is the new Tesla,” declared the Financial Times, referring to the now dominant Californian e-car group founded by billionaire maverick entrepreneur Musk in 2003.

“Our transformation will be fast, unprecedented and on a scale not seen in the automobile industry in a century,” Diess said at VW’s inaugural “Power Day” last Monday, where he fired off a flurry of announcements.

READ ALSO: Volkswagen to spend 60 billion to transition to electric cars

Industry watchers say it’s a credible bet. Bloomberg Intelligence auto analyst Tatsuo Yoshida said Volkswagen “has (the) potential to overtake Tesla’s number one position… in a few years”.

Karl Brauer, an analyst with, said VW’s “combination of financial resources and manufacturing capacity make it a prime challenger for Tesla’s dominance” — even if catching up with its US rival is “not going to be easy”.

‘Saving face’

Diess, who has headed the 12-brand VW group since 2018, has never hidden his admiration for Musk, whose brash and unconventional ways have a habit of disrupting markets.

The two men have a friendly relationship and regularly exchange emails, according to an insider.

If the aim of Diess’s carefully choreographed “Power Day” was to capture some of the enthusiasm of a Battery Day Tesla held late last year, particularly in the United States, it appears to have worked.
Diess’s announcements saw US investors flock into Volkswagen shares, including many small traders using online platforms.

In just a week, the Wolfsburg-based car giant gained 15 percent on Frankfurt’s blue-chip stock exchange, giving the group a market capitalisation of more than 130 billion.

The rise puts Diess’s 200-billion-euro target within reach but he has a way to go before matching Tesla’s $619 billion valuation.

VW’s “forced transition” towards more environmentally friendly cars has now been “recognised by the market”, said Eric Kirstetter, an auto sector expert at the Roland Berger consulting firm.

VW ironically owes its change of course to the dieselgate scandal, which forced the group into “a face-saving dive into an all-in electro-mobility strategy”, said Germany-based industry analyst Matthias Schmidt.

The Volkswagen E-Golf in production in Saxony in March 2018. Photo: DPA

Industry watchers note especially its decision to focus on developing a single platform for all its brands which could well be the game changer for the German giant.

The platform was used for the first time on the ID.3 model which launched late last year. UBS analyst Patrick Hummel called it “the most significant bet on electric vehicles made by any legacy carmaker to date” as VW’s competitors are using mostly mixed platforms and a combination of technologies.

READ ALSO: Volkswagen to slash up to 5,000 jobs to fund electric vehicle drive

Not Apple but Samsung

VW’s move is aimed at achieving economies of scale for its 12 brands.

“Tesla is learning what is takes to move into high volume, whereas companies like Volkswagen already have volumes and it’s just a matter of switching volumes from one platform to another which they have done routinely in the past,” said Subodh Mhaisalkar, executive director of the Energy Research Institute at Singapore’s Nanyang Technological University.

But VW’s size also comes with its own disadvantages — consensus has to be found for each major decision not only with the powerful head of the workers’ committee but also with managements of the group’s various brands.

Beyond the core electric technology, Volkswagen is also playing catch up with Tesla on the just as important software.

Ben Kallo, an analyst at US investment bank Baird, believes Tesla will remain the market leader on electric cars because of its advances in battery cell production and autonomous driving.

“VW might not be the Apple but the Samsung of the electric vehicles world,”UBS said in a report.

On Twitter, Diess is still 49 million followers short of Musk.