Deutsche Bank’s head of accounting under investigation over Wirecard

Andreas Loetscher was one of EY partners responsible for audits at failed payments group

Wirecard, a once high-flying payments company, received unqualified audits from EY for more than a decade before it collapsed into insolvency this summer. Photograph: Christof Stache/AFP via Getty Images

Wirecard, a once high-flying payments company, received unqualified audits from EY for more than a decade before it collapsed into insolvency this summer. Photograph: Christof Stache/AFP via Getty Images

 

Germany’s audit watchdog is investigating Deutsche Bank’s head of accounting Andreas Loetscher over potential misconduct in his previous role at EY, where he was one of the partners responsible for the audits of Wirecard.

Wirecard, a once high-flying payments company, received unqualified audits from EY for more than a decade before it collapsed into insolvency this summer.

Mr Loetscher, who joined Germany’s largest lender in May 2018 after a two-decade long career at the Big Four firm, is one of at least two Wirecard auditors who are personally being investigated by Germany’s audit oversight body Apas over potential violations of professional duties.

Apas can impose fines and, in extreme cases, disbar auditors for misconduct. In late September the watchdog informed criminal prosecutors that EY may have acted criminally. Munich prosecutors are evaluating that assessment but have not launched a criminal investigation into individual auditors’ conduct.

‘Rocket science’

Alexander Geschonneck, a KPMG partner who led a special audit of Wirecard, told MPs on Thursday that EY should have spotted the fraud earlier. “What we did [in the special audit] was not rocket science,” he said. “It wasn’t done [before by EY].”

Mr Loetscher and three of his former colleagues on Thursday declined to give testimony to the parliamentary inquiry commission into the Wirecard scandal.

Mr Loetscher and Martin Dahmen cited the Apas investigation against them. Under German law, witnesses are entitled to remain silent if they are under investigation over the same topic. The committee accepted they had grounds not to testify and discharged them as witnesses.

Jens Zimmermann, an MP for the Social Democrats, told the Financial Times there was particular interest in the position of Deutsche Bank due to its misconduct on various matters in the past, adding that he recommended the bank should “critically reflect on its current set-up” as the lender will be audited by Mr Loetscher’s former employer EY from 2021.

Presumption of innocence

Fabio De Masi, an MP for the left-wing Die Linke party, stressed that the presumption of innocence applied. “However, Mr Loetscher currently poses a very high reputation risk [for Deutsche Bank], in particular as his former employer from 2021 will be Deutsche Bank’s auditor,” Mr De Masi said.

Deutsche Bank told the Financial Times that “we appreciate working with Andreas Loetscher as a colleague and we have full confidence in his expertise and ability for the job”. Mr Loetscher declined to comment.

Apas declined to comment.

EY said that “based on our current state of knowledge, our colleagues conducted the audits professionally and in good faith”. – Copyright The Financial Times Limited 2020