‘Resignation of Ernst & Young Won’t Disturb Corporate Governance Drive at M&B’
Deloitte is eyed to be the next accounting firm of restaurants and pub group Mitchells & Butlers (M&B) after the company sacked auditors from Ernst & Young.
M&B, which has earlier conducted a review on its suppliers and appointed Japanese multinational computer hardware Fujitsu Limited as its new technology vendor, has been hounded with troubles in its corporate governance.
M&B shareholders are expected to closely monitor the dropping of Ernst & Young auditors from the company, the Guardian reported Wednesday. The resignation, however, is not expected to shake the grounds of corporate governance advocates, the report said.
Ernst & Young has earned £700,000 from M&B for its non-audit services in 2010. Pensions & Investment Research Consultants Ltd., a pension representation and lobby groups in UK that works on corporate governance, found conflict of interest in the said fees.
M&B’s chairman and chief executive Simon Laffin left the company earlier this year after Joe Lewis, the currency trader who holds 22 percent of stock, led a group of shareholders to force him to resign.
The forced resignation followed the ouster of four M&B directors whom Laffin accused of conniving with a group of large shareholders to take over the company’s control. The ouster was part of Laffin’s corporate governance campaign.
Since then, Lewis and the shareholders clashed with the other institutional shareholders who opposed their nomination of new representatives. However, an investigation found nothing wrong with their move.
The conflict between Laffin and Lewis was believed to have been sparked in part by an independent property valuations signed off by Ernst & Young, which displeased the group of Lewis later in 2009.
Ernst & Young told M&B and its shareholders in a resignation letter that it chose not to take part in M&B directors’ decision to retender the audit because it believed it would not succeed.
M&B directors have appointed Deloitte as the company’s new accounting firm.