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Les Brorsen was Senator Don Nickles’ (R-OK) chief of staff from 1984 until 1997, when he left to head the lobby shop at accounting giant Ernst & Young. Company employees gave Bush’s 2000 campaign $179,949. After Ernst & Young signed off on the books of such failed savings and loans as Charles Keating’s Lincoln Savings, its lobbyists sought liability limits in the early 1990s for auditors that sign off on cooked books. The firm now faces huge claims for approving cooked books at AOL Time Warner (see Jerry Weintraub), Cendant Corp. (see Stephen Schwarzman) and HealthSouth. A lawsuit by investors in HealthSouth, which inflated its earning by $4.6 billion, alleged in 2004 that Ernst & Young auditors knowingly ignored HealthSouth fraud as early as 1993. Buyers of tax shelters that have been rejected by the IRS filed a 2003 class-action lawsuit alleging that Jenkins & Gilchrist (see David Laney) devised the shelters, Deutsche Bank (see Jeff Amling) prepared them and Ernst & Young marketed them. Ernst & Young paid $15 million in 2003 to settle IRS charges related to aggressive tax shelters it sold to Sprint executives. Federal prosecutors then launched a criminal probe of the firm’s shelters. The Securities and Exchange Commission (SEC) suspended the firm from taking new audit clients for six months in 2004 after concluding that it compromised its independence from audit client PeopleSoft through a licensing agreement to install PeopleSoft software on other companies’ computers. Ernst agreed to pay $125 million in 2005 to settle federal claims related to the 2001 failure of audit client Superior Bank FSB. Federal prosecutors arrested an ex-Ernst partner in 2003, charging him with criminally destroying audit documents from bankrupt Internet credit card company client NextCard. Ernst & Young and J.P. Morgan (see Alan Buckwalter) employees on the industry-controlled Financial Accounting Standards Board cast deciding votes in 2002 to kill a proposal to clamp down on Enron-style abuses of mark-to-market accounting in energy trades. Accountants have lobbied in recent years for privileged communications with clients, which would relieve them of liability for being mum about a client’s hanky panky. Ernst & Young’s Washington offices were the headquarters for the Coalition for Fair International Taxation, a 2003 lobby push seeking greater U.S. tax breaks for multinational corporations. Ernst & Young received more than $23 million in federal contracts in fiscal 2002. Brorsen sat in 2003 on the board of the U.S. Capitol Historical Society, which is chartered by Congress but dominated by corporate interests. While giving money to the society is not a precondition to be appointed to the board, a society spokesperson said Ernst & Young and PepsiCo (see Roger Enrico) each agreed to kick in $10,000 on the condition that they get board appointments. President-Elect George W. Bush also appointed Brorsen to his 2000 Treasury Department transition team.
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Of Special Interest
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| Profile last updated
Jan 6, 2005
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