EY hires corporate crisis adviser to examine failed break-up plan

afr.com:

London, New York | EY has hired a leading adviser to crisis-hit companies to conduct a review of the failed attempt to split its audit and consulting businesses.

The big four firm has engaged Lord David Gold to examine the process behind Project Everest, which collapsed in April after leaders of its US business blocked the global break-up, according to people familiar with the matter.

Lord Gold led Herbert Smith, one of the UK’s top law firms, from 2005 to 2010 and has subsequently built a new business advising large companies facing high-profile problems with ethics, governance and corruption.

His review will attempt to identify shortcomings in EY’s processes and governance during its planning for the break-up, the people said. It is also expected to consider who within the organisation was responsible for any failings, according to one of the people.

Lord Gold’s work for EY may continue after he makes his initial findings, one of the people added.

EY’s global bosses spent more than a year devising the split, which would have been the biggest shake-up of the accounting industry since the collapse of Enron auditor Arthur Andersen more than two decades ago.

Preparations for the deal, which would have led to the consulting business being spun off and floated on the stock market, were beset by delays caused by infighting and the practical complexity of splitting the 390,000-person firm.

Lord David Gold will examine the process behind the plan to split EY. 

The ambitious move was an attempt to escape conflict of interest rules that restrict EY’s consultants from working with audit clients. Its collapse left some of the firm’s leaders “disappointed and embarrassed” and cost $US600 million ($887 million).

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