EY hires a corporate crisis consultant to examine a failed breakup plan

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EY has appointed a lead consultant to crisis-hit firms to conduct a review of the failed attempt to split the audit and advisory business.

The Big Four has enlisted Lord David Gould to examine the process behind Project Everest, which collapsed in April after its US business leaders prevented the global meltdown, according to people familiar with the matter.

He led Gold Herbert Smith, one of the UK’s largest law firms, from 2005 to 2010, after which he built a new business advising large firms facing high-profile issues around ethics, governance and corruption.

People said its review will attempt to identify shortcomings in EY’s operations and governance while planning the failed fork. He is also expected to examine who within the organization is responsible for any failures, according to one of the people.

One person added that Gold’s work on EY may continue after it presents its initial results.

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

Preparations for the deal, which would have seen the consulting business take off and go public, were beset by delays caused by infighting and the practical complexity of splitting up the 390,000-person company.

The ambitious move was an attempt to escape the conflict of interest rules that restrict EY consultants from working with audit clients. Its collapse left some of the company’s leaders “disappointed and embarrassed” and cost $600 million.

Global boss Carmine Di Sibiu, the driving force behind the attempted breakup, told the partners last month he would step down in June 2024 but insisted he was proud of what the company had tried. It has “set the entire sector on a new path that will only become clear in the coming years,” he said.

The factors that led to the breakup plan’s demise will likely come under the microscope in Gould’s review, his latest high-profile appointment to the company.

Gold’s previous clients include aerospace and defense groups trying to clean up their operations after corruption scandals that led to major financial settlements with the authorities.

The US Department of Justice appointed him in 2010 as an observer to ensure BAE Systems’ compliance with the terms of a $400 million settlement over corruption charges.

Gold also advised Rolls-Royce on anti-corruption policies after a bribery scandal. Most recently, he advised Airbus on ethics and governance ahead of a €3.9 billion deal to end an international corruption investigation.

Dubbed the “Litigation King” by the city, Gould built his reputation as one of London’s top barristers during his nearly four decades at Herbert Smith. He has sat in the House of Lords, the upper house of the UK Parliament, as a Conservative Life peer for 12 years.

Then UK Prime Minister David Cameron hand-picked him in 2012 to lead an investigation into the Conservative Party’s fundraising methods after the “cash-for-access” scandal. He also worked for Roman Abramovich, the Russian oligarch and former owner of Chelsea Football Club, and in a dispute between musician Sir Elton John and his former manager John Reid.

EY and Gold declined to comment.

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