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

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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. 

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 abortive 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.

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 seen the consulting business 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. 

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 $600mn. 

Global boss Carmine Di Sibio, the driving force behind the attempted break-up, told partners last month that he would step down in June 2024 but insisted he was proud of what the firm had tried. He said it had “set the entire sector on a new course that will only become apparent in the years to come”. 

The factors that led to the break-up plan’s demise are likely to fall under the microscope in Gold’s review, which is his latest high-profile corporate appointment. 

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

The US Department of Justice appointed him in 2010 as a monitor to ensure BAE Systems was complying with the terms of a $400mn settlement over corruption charges. 

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

Dubbed the “king of litigation” by the City, Gold built a reputation as one of London’s top lawyers in the almost four decades he spent 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. 

The UK’s then prime minister David Cameron selected him in 2012 to lead an inquiry into the Conservative party’s fundraising methods after a “cash-for-access” scandal. He has also worked for Roman Abramovich, the Russian oligarch and former owner of Chelsea football club, and on a dispute between musician Sir Elton John and his former manager John Reid. 

EY and Gold declined to comment.