Special Report Untouchacble clients
Alice Haythornthwaite asks which clients can rely on their auditor' s loyalty now that Deloitte has dropped Huntingdon Life Sciences
The victory of Stop Huntingdon Animal Cruelty, the animal rights protest group, in its battle to stop Deloitte & Touche auditing Huntingdon Life Sciences (HLS) has left other controversial companies feeling nervous. Will auditors suddenly abandon their clients at the merest hint of protest?
If one of the world' s largest accountancyfirms couldn' t stand the heat as HLS' s auditor, it' s hard to imagine that another audit firm would risk taking the animal rights extremists on. So what happens if Huntingdon can' t find another auditor? And what if other sensitive or controversial companies - such as those in pharmaceuticals, oil, tobacco and now, as the UK wages war on Iraq, defence - find themselves the victims of similar tactics? Who will audit the ' untouchables' ?
The tactic of the protest group, better known by its acronym SHAC, of aggressively targeting any companies linked with HLS is proving a powerful weapon. Not only did the Royal Bank of Scotland cave in to pressure and cancel its £22.5m loan to Huntingdon in 2001, but Marsh & McLennan, the insurance broking giant, eventually severed its links with the company at the end of last year, after having spent millions of dollars on security for its directors' homes and on lawsuits against the protest group.
And now, after suffering SHAC' s wrath for a couple of weeks, HLS' s auditor Deloitte & Touche has decided to bow out as well. Conveniently, the Big Four firm had just finished its 2002 audit for the laboratory and so was able to announce its decision not to re-tender for 2003 rather than having to try and extricate itself mid-audit.
Should Deloitte have made a stand?
Nevertheless, the firm' s decision gives rise to some awkward questions. Should Deloitte really have allowed the aggressive activities of protestors to dictate which companies it audits? Should it not have made more of a stand? Or was it quite right to avoid the prospect of months and months of relentless aggression and consider the welfare and safety of its staff foremost?
One Deloitte employee admitted to being disappointed by the firm' s decision.' I thought it was a let down that Deloitte dropped Huntingdon Life Sciences. Everyone I' ve spoken to thinks the decision just helps SHAC and proves that this type of threatening action really works,' he said. ' However, SHAC had managed to get hold of the home addresses of all the staff on the engagement and so I understand that the safety of the staff had to come first.
' I' m sure that the cost involved with dealing with SHAC compared to the revenue that the client actually brought in would also have been weighed up before the decision was made,' he added wryly.
This is a fair point considering SHAC' s claim that Marsh & McLennan spent over £100,000 a week on security for its staff until it severed links with HLS. No doubt Deloitte has also saved itself months of neg-