The German financial regulator, Bafin, will examine Adler Group’s 2021 annual accounts after auditor KPMG refused to sign them off.
The probe, which will also cover the accounts of subsidiary Adler Real Estate, will be a major test for the regulator after its mishandling of the fraud at Wirecard.
Adler welcomed the examination, saying it would help clarify short seller allegations of conflicts of interest. Last October, short-seller Viceroy launched an attack on the German residential company, accusing it of inflating valuations and property deals that were not done at arm’s length. Adler denied the accusations and commissioned a report by KPMG to verify the allegations.
KPMG’s report, published in April, did not completely exonerate the company as the auditor was left with too many unanswered questions. A month later, KPMG said it could not approve the company’s 2021 accounts. Adler said it was going to look for a new auditor.
The examination will be closely watched by Bafin’s critics. The regulator ignored early warnings about fraud at Wirecard, a financial services company, and went after the Financial Times, which had exposed the fraud. Wirecard filed for insolvency in 2020 after disclosing that €1.9 billion of corporate cash and half of its revenues were fake, according to the FT. The head of Bafin, Felix Hufeld, and his deputy, Elisabeth Roegele, were forced out of their roles in the affair.