By any measure, payment processor company Wirecard’s demise has been dramatic. Within a month of KPMG refusing to verify the company’s accounts, CEO Markus Braun had resigned and it had filed for insolvency with debts of over GBP 3 billion.
Given that the writing had been on the wall for over five years, plenty of tricky questions are now being asked of Wirecard’s management and its business partners. Its long-term auditor EY and Germany’s banking regulator are in the firing line. There is widespread talk of another Enron.
Professional services in the spotlight
Other advisors are also attracting red ink, including Wirecard’s crisis law firm and PR agency. Legal and communications firms generally manage to keep their names out of the media spotlight during major controversies involving their clients.
In part, this can be ascribed to an unwritten convention between the mainstream media and the hands that feed it that says that every organisation has the right to be heard, however unsavoury it’s reputation, and that their advisors are only doing what is expected of them.
With one man’s meat being another man’s poison, it remains to be seen whether Wirecard’s dramatic collapse hinders or benefits its crisis advisors.
However, with corporate governance, responsibility, and transparency in the spotlight as never before, it is incumbent on consulting companies of all stripes to ask difficult questions of clients before they are engaged, not afterwards.
As Arthur Andersen discovered with Enron, not asking difficult questions upfront can prove a perilous defence.