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Deloitte: Finishing Parmalat?

Location: Blogs AAO Weblog (Public)
Posted by: Jack Ciesielski	7/8/2005 6:23 AM
Deloitte & Touche's woes related to its involvement with the bankruptcy of Parmalat have been pretty quiet lately here in the States. But there have been some rumblings: last week, a federal tossed out Deloitte's request to have a class-action lawsuit brought by Parmalat investors dismissed. That was particularly bad news for Deloitte, because the suit was brought against the "umbrella organanization" - the global Deloitte entity, not just the Italian national affiliate. The basis for Deloitte's request was that the firm as a whole isn't responsible for the work of the legally separate national offices. And the judge's decision is bad news for the other three global auditors, because it means they're exposed to the same sort of lawsuit. You might be able to predict the response of Bill Parrett, Deloitte Touche Tohmatsu's global chief executive. In an interview with the Financial Times, he said: "It's interesting for people to say our firms are global partnerships that we can control. My answer to that is that they ought to come and sit in my seat for a day and see how much control they have. It's not as much as they think." This just in from the BBC News: Deloitte would be willing to settle out of court, if the cost of settling was less than the cost of defending. I'm not exactly sure why that qualifies as news, and it doesn't suggest that the finish line is in plain sight for Deloitte. But - Mr. Parrett said it to the press, so it will now probably enter the legal calculus employed by the prosecution. In prowling for some news on the Parmalat front, I came across this item in Bloomberg News: Deloitte is being investigated by the Public Company Accounting Oversight Board for its audits of Navistar Financial in 2003. From the sounds of it, there were errors in the audit processes of Deloitte, as well as in the presentation of the financial statements. It's a slip-up on the part of the SEC, the PCAOB's overseer, as well: the documents describing the investigation weren't supposed to be made public. Oops.

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