Labor group asks Hewlett-Packard to replace auditor E&Y
By Dena Aubin
NEW YORK (Reuters) - A U.S. investor activist group affiliated with large labor unions is asking Hewlett-Packard Co to replace its auditor, Ernst & Young, over the technology giant's troubled acquisition of UK software company Autonomy.
Change to Win Investment Group (CtW), based in Washington, D.C., also is seeking a revamp of HP's audit committee, which is responsible for overseeing Ernst & Young's long-standing relationship as the auditor that reviews HP's books.
Spokesmen for HP and Ernst & Young declined to comment.
Labor union pension funds own large stakes in many U.S. companies and often use them as platforms to push for changes in how those corporations are managed. Union pension funds tied to CtW invest more than $200 billion in stocks, including shares in HP, said CtW in a letter to an HP board member on Thursday.
CtW questioned why Ernst & Young did not spot problems at Autonomy. "HP is clearly a company facing serious challenges," CtW said in its letter. "Unfortunately, the highly conflicted, decade-long relationship between Ernst & Young and HP cannot provide shareholders with the reassurance they need."
Auditors are outside accounting firms retained by corporations to vet their books regularly and offer an opinion on the validity of financial results. The four firms that dominate auditing worldwide - Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers - are faced with ever-rising scrutiny of their role in investor losses and accounting lapses.
The CtW letter was addressed to Rajiv Gupta, chairman of the corporate governance committee of HP's board. It was signed by William Patterson, executive director of CtW Investment Group.
Gupta could not be reached for comment. Continued...