Criticism of the handling of EY complaints: “Watson to district court, on both cheeks”

Sunday 12 December 2021

Criticism of handling EY complaints
“Wattschen for the district court, on both cheeks”

The way Wirecard investors dealt with their lawsuits in the first place received sharp criticism in the Munich High Regional Court. Investor attorney Mark Liebsher says there has now been a “dramatic improvement” in the chances of shareholders being duped for compensation.

You have regular hearings in the District Court of Munich I, which has so far dismissed lawsuits against EY in the Wirecard case. Are you surprised by the Munich Higher Regional Court’s criticism of regional court decisions?

Mark Libescher: The directness of the judgment is surprising, but it’s not surprising to us in terms of content. We have always been convinced of our arguments and are amazed that many chambers of the regional court have dismissed them in such a closed manner. So we are glad that the High Regional Court is now criticizing it so harshly and following our line.

Judges usually express their criticism of colleagues in a very diplomatic manner. How do you rate the High Regional Court’s decision?

Drafted in Bavarian, the decision is a slap on the regional court, on both cheeks left and right. In effect, the OLG certifies to the regional court that it has not performed the basic functions that the court has to perform.

What is OLG actually accusing the regional court of?

In its judgment, OLG very clearly states that the regional court dealt with the matter very superficially. Specifically, the judges should have appointed an expert to investigate whether the EY auditors acted intentionally by ignoring irregularities in Wirecard. OLG’s determination is violent given that regional court judges have ruled “unheard of” to the detriment of plaintiff’s investors. In short, it is an allegation of violation of fundamental rights.

what does this mean?

The need for a fair trial obliges the court to understand the essential core of the arguments on both sides of the process. OLG is of the opinion that the plaintiffs had no chance of being heard by the Court with their arguments in the proceedings. This is a clear indication that the fundamental principles of the rule of law have been violated here. We have pointed this out time and again in our proceedings. But the nine chambers in the Munich Regional Court with a total of 27 judges have not seen our arguments. Now they have to let OLG accuse them of violating the rule of law. This failure of the regional court fits with the line of failure of the state at Wirecard. Early intervention of OLG is more important.

Why have the aggrieved investors not been able to score points with their arguments so far?

The District Court has always been of the view that we will best settle the disputes against EY in our cases. But till now our customers have not been able to buy anything for him. The judges have always demanded that the plaintiffs should state in detail that they have purchased EY Wirecard shares based on verification only. It’s certainly hard for investors to prove, which is why most lawsuits were dismissed without court even dealing with any specific misconduct by EY. However, we are convinced that from the start it was a completely foreign notion that OLG is now finally criticizing. Because it’s clear: If Wirecard had gone bankrupt earlier because of declined verification, investors wouldn’t have invested any more. We have also kept this argument from the beginning. However, so far, it has just been wiped off the table.

From the point of view of aggrieved investors, the important question is: do you now have a better chance of claiming damages against EY?

We are convinced that the prospects of damaged Wirecard shareholders have improved dramatically. In previous regional court rulings, the problem was that the judges had denied default that the EY auditors had acted intentionally and thus harmed investors. The OLG now criticizes the fact that a possible intent was not adequately investigated by the regional court. The report of Special Investigator Martin Wambach appointed by the Wirecard investigative committee or the criminal complaint by the APAS supervisory authority against the EY auditors will certainly play a central role. From our point of view, both provide clear indications of intentional infringement by EY.

How are the lawsuits going now?

We are relying on the regional court to judge the proceedings from the appropriate point of view and finally deal with our arguments in the matter.

The High Regional Court also refers to the possibility of a single trial case to bundle multiple lawsuits against EY. Will it be a good option for investors to make faster decisions?

We sincerely hope that action will not be taken under the Investor Model Procedure Act. This would be extremely disadvantageous for investors as these processes usually take an absurdly long time, sometimes more than ten years. For example, in the trial case at Deutsche Telekom, the first plaintiff had died before a judgment was delivered. It is improvised.

Interview first appeared here Capital.de,