Deloitte’s Parrett Feeding At The Blackstone Trough

There’s been a lot of discussion about Blackstone, the “private” equity group and its public offering. But frankly, all the stories about Mr. Schwarzman’s riches, private equity tax dodgers and the billions made by China in the launch of the firm bored me. But then I had some time to read last week’s Financial Times and my interest piqued. If Blackstone is public now, they have to disclose their auditor. It’s not that they didn’t have someone auditing them before. It’s just that it’s harder to identify who that auditor is when a firm is private.

A quick look at their website and SEC filings found this.

William G. Parrett (Pending) I

The “I” is for Independent Director!

That name is familiar. We met him when we did a little feature on Deloitte. As recently as January 30th, Mr. Parrett was Chairman of Deloitte, auditors of Blackstone for the last few years and currently.

From the Blackstone website (talk about forward looking statements!):

“William G. Parrett is expected to join the board of directors of our general partner before the end of 2007 after his retirement from Deloitte & Touche USA LLP. Mr. Parrett is currently a senior partner of Deloitte & Touche USA LLP and until May 31, 2007 served as the Chief Executive Officer of Deloitte Touche Tohmatsu (“DTT”). Certain of the member firms of DTT or their subsidiaries and affiliates provide professional services to The Blackstone Group L.P. or its affiliates. Mr. Parrett co-founded the Global Financial Services Industry practice of Deloitte and served as its first Chairman.

Currently, Mr. Parrett is Chairman of the United States Council for International Business and on the executive committee of the International Chamber of Commerce. He is also Chairman of the Board of Trustees of United Way of America, on the Board of Trustees of Carnegie Hall, and a member of the Committee to Encourage Corporate Philanthropy. Mr. Parrett also serves as a trustee of The Catholic University of America and of St. Francis College.”

Isn’t there a rule about this? If not, there should be…

Section 10A of the Securities Exchange Act of 1934 (15 U.S.C.
78j–1), as amended by this Act, is amended by adding at the
end the following:
‘‘(l) CONFLICTS OF INTEREST.—It shall be unlawful for a registered public accounting firm to perform for an issuer any audit service required by this title, if a chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for the issuer, was employed by that registered independent public accounting firm and participated in any capacity in the audit of that issuer during the 1-year period preceding the date of the initiation of the audit.’’.

Mr. Parrett was Global CEO of Deloitte until May 31, 2007 when Jim Quigley succeeded him. But he is still a member of the firm and has not yet retired. He will be a retired partner of Deloitte soon but will still collect benefits (and be interested in their success and profitability) while Deloitte is Blackstone’s auditor.

Mr. Cox, Maybe you should check into this. It seems someone is conflicted. Send your thoughts on this travesty to him here.

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