By Alfredo J. Non

SINCE the crisis in SGV became public and my name was quoted in some articles as a source of comments, I have been receiving several calls from friends asking what the real score is. How can the majority of the partners allow this to happen? What can be done to stop it? What are the regulators doing about it? Why am I actively involved?

As a retired partner of the firm, I have every reason to be concerned about the fate of the institution that I helped to build for 26 years of my life. Just like any Filipino citizen, I not only have the right, but the duty, to question things that could potentially violate our laws and infringe on the rights reserved only for Filipinos.

To those who are not in the accounting profession and therefore unfamiliar with the issues, consider the following:

The mere fact that 13 out of the 80-plus partners did not agree to the proposed integration of SGV with Ernst & Young over constitutional issues should already be a grave concern. Even if only one partner disagrees, a clear resolution of the matter should be pursued.

The industry?s Code of Ethics provides guidelines on resolving conflicts such as this. In this internal crisis, where the partners themselves could not agree, the Code would have required SGV to consult an independent party for guidance. Failing to reach any conclusion, SGV should have then elevated the issue to the regulatory bodies. And if, at that point, no agreement was again reached?given the conflicting legal opinions from the respective counsels of SGV and Ernst & Young?the SGV partners would have been expected to take a course of action that would protect the Philippine practice.

In the publication EY Global Review 2008, the chairman and chief executive of Ernst & Young provided a glimpse of how SGV, the country?s flagship auditing firm, would be integrated with the multinational giant:

?This year, Ernst & Young took a vital step toward achieving our vision of global integration. We brought together 87 national practices across Europe, the Middle East, India and Africa, and 15 national practices across Asia, to create operationally integrated EMEIA and Far East Areas. These sit alongside our already integrated Americas Area and confirm our status as the most globally connected professional services organization.?

The irony is that even before the integration, SGV had virtually surrendered its own identity. There is no more SGV-Philippines Web site. What is in place is a web address: http://www.ey.com/GLOBAL/content.nsf/Philippines/AboutUs. While SGV & Co. is featured in certain pages, the headings either indicate SGV&Co./ Ernst & Young, or just simply Ernst & Young.

Somewhere in the pile of information is shown Ernst & Young?s integrated structure, where SGV will be reporting to the Far East Region, similar to the setup of the other regional audit companies under the Ernst & Young umbrella.

Incidentally, during the 60s and 70s, SGV?s affiliation with the big accounting firms was a polygamous one, with SGV representing in the Philippines seven or eight big international accounting firms. During that time, SGV was the lady love being wooed by the multinationals. Now, with a monogamous relationship and with the integration agreement, SGV would no longer be the lady love but a first-class servant.

I salute the 13 or so SGV partners who have resisted the pressures of Ernst & Young. If they had accepted their fate and simply resigned, none of these issues would have surfaced, and the intended integration would have been implemented without any resistance. I understand that, initially, Ernst & Young was ready to fire them, but they had stood their ground at the risk of getting no retirement package.

Go and visit the buildings that house the offices of the big accounting firms in Makati and note how prominent the names of the foreign firms are displayed, and without even specifying that they are the affiliate of a Philippine firm. Clearly, the identities of the local firms are being slowly pushed aside in favor of the identities of the foreign firms. This is another area the regulators have not focused on.