OUSTED SGV managing partner David Balangue has unwittingly provided a smoking-gun evidence belying Ernst & Young?s claim that it had not been interfering and managing the partnership affairs of the country?s largest auditing firm, possibly in violation of local laws.

?I can not help but note that those who have attempted to usurp my position are the very same people who have recklessly pushed for the implementation of the EY Integration while issues relating to its legality under the Constitution and the Anti-Dummy Law have yet to be resolved,? Balangue wrote to the SGV partners on Feb. 4, on the eve of his ouster.

?I will not allow the Firm to be railroaded by these group of partners into approving the integration process until I and the Management Committee have thoroughly studied all the issues relating to it and have been convinced that its approval will not expose our Firm and its partners to administrative, civil and criminal liabilities.?

Balangue, whose e-mailed memo was being bounced off into cyberspace and into journalists? inboxes, also placed partners J. Carlitos Cruz, Emmanuel Alcantara, Aldrin Cerrado, and Wilfredo Villanueva under preventive suspension for a month and barred them from entering the SGV premises and using its facilities.

But before the Balangue directive could be implemented, his erstwhile number two, Cirilo Noel, fired off another memo to the SGV partners and staff, ordering them to ?disregard? the Balangue order.

Balangue had already been replaced as managing partner by a vote of two-thirds of the 84 partners the night before, the new SGV boss said. According to the grapevine, the 15-or-so SGV partners who have so far refused to sign the Integration Agreement with their de-facto principal are now trying to link up with a former American partner of Ernst & Young who is suing the accounting giant in Makati.

The ex-partner, Dale Strickland, has accused Ernst & Young of illegally operating in the country and evading income tax payment on at least P120 million it had collected in Philippine government fees.

Strickland is claiming $500,000 in withheld retirement pay, plus damages, after the Ernst & Young allegedly refused to pay his professional fees for his Philippine assignment, which involved advisory work for the National Home Mortgage Finance Corp.

Even better for Balangue and the anti-integration group in SGV, Strickland has submitted a total of 46 internal e-mails to the court to bolster his tax-evasion claim against Ernst & Young.

Strickland?s counsel, incidentally, is Jose ?Bong? Bernas, who has since been promoted in the power circles after becoming a brother-in-law of Luli Arroyo.

Heard through the grapevine

The current investigation by the Philippine Stock Exchange into the trading transactions involving the listed companies of William Gatchalian was apparently triggered by the still ongoing, but now low-intensity conflict between stockbrokers Vivian Yuchengco, the reigning queen bee of the exchange, and Robert Coyiuto Jr.

Majority of the questioned transactions were apparently coursed through Coyiuto Securities.

(Web site: www.cocktales.ph; e-mail: cocktales_mst@pldtdsl.net)