Uber’s Middle East business Careem sees ride-hailing recovery next year

Uber’s Middle East business Careem sees ride-hailing recovery next year
Uber’s Middle East business Careem sees ride-hailing recovery next year

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Jeddah - Yasmine El Tohamy - FRANKFURT: Global audit giant EY is facing growing questions and threats of legal action over its role in the bankruptcy of German payments processor Wirecard after signing off on the accounts for years.
Some plaintiffs have already launched legal cases against EY after Wirecard’s spectacular bankruptcy last week.
German shareholders’ association SdK said Friday it had launched a case targeting two auditors still working at EY and one former employee.
Listed on the blue-chip DAX index since 2018, Wirecard filed for insolvency Thursday after acknowledging that $2.1 billion supposedly held in trust for it in bank accounts in the Philippines did not exist.
German Finance Minister Olaf Scholz has called the Wirecard collapse an “unprecedented scandal in the financial world,” saying it was a “wake-up call that we need more supervision” in financial markets.
Neither Wirecard’s private-sector auditors nor Germany’s financial markets watchdog BaFin saw the crunch coming.
Press reports had since 2015 pointed to possible irregularities in Wirecard’s business model, while the Financial Times published a string of articles from early 2019 on fraud suspicions in the group’s Asian operations.
BaFin reacted by imposing a ban on traders betting against Wirecard stock and announcing a probe into FT journalists.
This week the London-based business daily took aim at EY, alleging that the auditors did not do a thorough job.
In a Friday article, the paper reported that EY did not ask for account information for over three years from a Singapore bank where Wirecard claimed to hold a cash balance of one billion euros.
“Checking the existence of bank deposits is one of an auditor’s easiest tasks,” the SdK shareholder group complained, normally following “clearly regulated” procedures.
Berlin-based law firm Schirp and Partner launched a lawsuit against EY in early June, saying on its website the group could not have certified Wirecard’s accounts “without a breach of an auditor’s auditing obligations.”
Given Wirecard’s share price has collapsed by 98 percent in 10 days, Schirp told shareholders that “EY is economically the better claimant for aggrieved investors,” urging them to join a class action suit.
Outside Germany, Dutch association European Investors (VEB) has demanded an out-of-court settlement from EY to fend off a threatened lawsuit, business daily Handelsblatt reported.
The audit group said last week there were “clear indications that this was an elaborate and sophisticated fraud” after refusing to sign off on Wirecard’s 2019 accounts.
“Multiple parties around the world in different institutions” must have acted with “a deliberate aim of deception,” EY added.
But such statements could yet be turned against the auditors, in the shape of claims they should have informed the public sooner about their doubts.
EY had been checking Wirecard’s books since 2009.
The audit firm is also in the sights of mammoth Japanese conglomerate SoftBank, which plans legal action against EY according to German weekly Der Spiegel.
In spring last year, SoftBank bought €900 million of convertible bonds issued by Wirecard, believing it was investing in a trustworthy company.
EY told AFP that it had not been informed of a legal action and could not yet comment on the Spiegel report.
Comparisons between the Wirecard scandal and the collapse of Enron in the early 2000s have multiplied in recent days.
When it emerged that the US energy firm had been cooking the books, the ensuing scandal brought down the world’s fifth-largest auditor Arthur Andersen after the firm was found to have obstructed justice.

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