Deloitte Remains Embroiled in Parmalat Saga

Remember Parmalat ? the Italian diary company which plunged into spectacular bankruptcy in 2003 when it collapsed under a huge debt burden of EUR 14 Billion. Since then, the company has restructured and relisted in 2005 in Milan.

But the shareholder lawsuits continue long after these events.

Over the past weekend, the Swiss banks of UBS and Credit Suisse settled with Parmalat to give respectively EUR 184.1 million and EUR 172.5 million. Credit Suisse continues to retain 17.0 million Parmalat shares, about 1.0% of total market capitalization.

Investors liked this settlements, moving Parmalat shares up 8.4%, or EUR 0.14 to EUR 1.77 on Monday in Milan trading.

But all’s not done.

Deminor, a corporate governance consultancy advising a group of 4,000 savers who lost money in the collapse is now suing Parmalat’s former auditors and some banks, including Deloitte & Touche and Grant Thornton; and Citibank, Bank of America Corp., UBS AG, Intesa Sanpaolo SpA's asset-management unit's Nextra, Morgan Stanley and Deutsche Bank AG.

In February 25, 2007, Deloitte had agreed to settle, but looks like as Parmalat’s auditors, the Big Four firm Deloitte remains embroiled in this saga, many years after its involvement in the company’s audit. This illustrates the long-tail of the liabilities arising from auditing, and the motive for Big Four firms to seek some limitations of financial liabilities from their clients.

February 25, 2007
Deloitte to Pay $130 Million to Parmalat Shortly
Deloitte had settled with Parmalat to pay US $149 million for its role in the bankruptcy of the Italian dairy company.

Now we understand it is time to pay....Parmalat SpA says that Deloitte have a few days to come up with the money, and apparently Deloitte will pay $130 million as a first installment.

To this we say...better to settle now and get it out of the way, and link the liability to the current partners than future partners who would have a much looser connection to the audit

Source: big4.com

Ernst & Young Ukraine is blamed for wrongfull valuation

Main Control and Revision Office of Ukraine approached the State Property Fund of Ukraine claiming to cancel the license for valuation activities of LLC “Ernst & Young”
The Chief of the state authority, Mykola Syvulsky, informed the public during the press conference this Tuesday.

“We asked the Fund to cancel the right of Ernst & Young to perform any valuations” , - he added.

Accordng to him, the investigation found that E&Y performed a valuation of 5-floor administrative building of one of the regional branches of the Ukrzaliznyci (state-owned railroad monopoly) in 2007. The building with office premises space of 19,600 sq.m. had been valuated for fair value of 400k UAH (ukraininan gryvnya) – 80K USD, while the net carrying amount was 5,1 mln. UAH (more than 1 mln.USD) and considering the capital repairs were made in 2006 for amount of 19,9 mln. UAH (4 mln. USD).
There were also mentioned other issues of undervaluation.

The regional branch of the Fund qualified the valuation reports of E&Y as those which does not meet the requirements of national legislation, are of poor quality, unprofessional and are not to be used for considerations.

Enrst & Young Ukraine is keeping no response regarding this issue.

Source: Pravda.ua

PricewaterhouseCoopers named one of DiversityInc’s top five global diversity companies

London - 3 JUN 2008 - PricewaterhouseCoopers has been named one of DiversityInc’s “Top Companies for Global Diversity", a new select list of five top companies chosen for their strong commitment to creating a diverse and inclusive global culture. This is the first time DiversityInc has put together a global list.

"We are extremely proud to have made it into DiversityInc’s first-ever global top five list, which is testimony to the ongoing dedication of our firms around the world to building and fostering an inclusive environment," says Samuel A. DiPiazza Jr., PricewaterhouseCoopers Global CEO.

PricewaterhouseCoopers, No. 4 on the Top 50. Also No. 10 on The Top 10 Companies for Recruitment & Retention, No. 6 on The Top 10 Companies for Asian Americans and No. 8 on The Top 10 Companies for LGBT Employees.

In 2006, the firm formed its Global Gender Advisory Council, which reports to the global CEO. At the 2007 Extended Leadership Meeting of PricewaterhouseCoopers (PwC) CEOs from around the world, the GAC presented "The Leaking Pipeline," a qualitative study of nearly 100 PwC women, speaking frankly about their careers and paths to leadership. In addition, PwC staff are trained on global diversity issues and attend a training course on cultural differences.

Former E&Y partner charged with insider trading

The Securities and Exchange Commission has charged a former partner at Ernst & Young LLP, his friend, and his friend's father in an insider trading scheme that resulted in nearly $600,000 in illicit profits.

The SEC's insider trading case alleges that from approximately summer 2006 through fall 2007, James E. Gansman, a former partner in Ernst & Young's Transaction Advisory Services department, tipped his friend Donna Murdoch about the identities of at least seven different acquisition targets of clients who sought valuation services from his firm. According to the SEC's complaint, Murdoch used the non-public information to trade in the securities of the target companies; to tip her father, who also traded; and to make recommendations to two others, who traded as well.

"This case underscores how important it is for deal advisers and due diligence providers retained by acquirers and their targets to respect the confidentiality of the information shared with them," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.

According to the SEC's complaint, Gansman misappropriated the information about pending acquisitions on numerous occasions in breach of a duty of confidentiality owed to E&Y and its clients.
Murdoch was a registered securities professional and managing director of a Philadelphia-based broker-dealer and investment banking firm. The complaint alleges that she used the non-public information provided by Gansman to tip her father, Gerald L. Brodsky, who also is named as a defendant, and to make recommendations to two others.

According to the complaint, Murdoch traded in the securities of at least seven companies based on the non-public information that they were acquisition targets of E&Y's clients, resulting in at least $392,035 in illegal profits. She provided information about one of the pending acquisitions, Freescale Semiconductor, Inc., to Brodsky, who traded on this information through a nominee account. His illegal profits totaled $63,400. The complaint alleges that Murdoch also recommended trading in the securities of two of the target companies, Freescale and ATI Technologies, Inc., to other individuals who traded for profits of $140,760....

The Commission's investigation in this matter is ongoing.

Accounting WEB

Ernst & Young completes groundbreaking globalization move

London, 3 June 2008 — Ernst & Young today announces that its partners across Western and Eastern Europe, the Middle East, India and Africa have overwhelmingly approved the proposed integration of its country practices into a single EMEIA Area.

The new Area will be a US$11 billion organization with more than 60, 000 people and 3, 300 partners. It will operate as a single unit, led by Mark Otty as Area Managing Partner, and a single executive team. EMEIA will be effective from 1 July 2008.

Chairman and CEO Jim Turley said,

"I am of course delighted by the tremendous response from our partners in favor of this significant step change in the globalization of our business. I have also been greatly encouraged by the level of feedback I have received from many of our clients across the globe, our young people and our regulators. The feedback is that this is a groundbreaking and positive step both for our own organization, and the profession as a whole."