Warner Brothers Discovery Board Chair Sam Di Piazza is ready for his close-up
Sam Di Piazza was barely 60 years old when he retired as Global CEO of PwC. He’s had a big career since and is now negotiating the deal of a lifetime.
That’s me in the corner
That’s me in the spotlight, losing my religion
Trying to keep up with you
And I don’t know if I can do it
Oh no, I’ve said too much
I haven’t said enough
Losing My Religion, R.E.M. 1991
It’s the holiday season and the end of another year. If you support my work please consider becoming a Founding Member.
More and more we see former Big 4 firm CEOs and Board Chairs go on to rich second careers beyond public accounting. There had previously been a few like Jim Schiro of PwC who ended up Lead Director at Goldman Sachs, a long and strong PwC client, for some of the peak financial crisis years 2009-2014. Schiro died too young, of multiple myeloma in 2014 at 68.
Most of those who’ve made big post Big 4 leadership careers have done it post-financial crisis when many issuers, especially banks, looked to add audit committee members with real accounting skills. They needed more gravitas compared to what had been, in many cases, just good old going through the motions kind of guys on the audit committees. More about this phenomenon in a future newsletter.
Few, though, have ended up in the spotlight the way Sam Di Piazza is now. As a result of the fierce competition between Netflix and Paramount over the company where he is now Chairman of the Board, Warner Brothers Discovery, Sam is at the center of the hurricane.
Before we get to that, after the paywall, there are some other recent “the business of accounting” stories worth noting.
Former PwC Edmonton accountant Greg Abel makes some moves
Former PwC Edmonton accountant Greg Abel is supposedly cementing his hold on Berkshire Hathaway.
But is that what’s really going on?
As the Kingswell newsletter put it, “ ...you almost never see Berkshire’s name splashed across CNBC alongside the red “Breaking News” banner.”
I mentioned the move by Todd Combs to JP Morgan briefly in my previous newsletter. I thought that WSJ buried the lede: Jamie Dimon found a manly way to get on the good side of the Trump Administration with a new fund.
Kingswell puts it bluntly:
The headline-grabber, of course, is the shock resignation of Todd Combs — who leaves to take up an “interesting and important” job at JPMorgan Chase. I don’t think anyone on the outside saw this move coming, with Combs handpicked by Warren Buffett and Charlie Munger as an investment manager and later proving his managerial chops by successfully dragging GEICO out of the red.
That said, Combs’s decision makes sense. He will head up the newly-created $10 billion Strategic Investment Group inside JPMorgan Chase’s Security and Resiliency Initiative — which will take stakes in companies critical to national security, the resilience of our domestic supply chain, rare-earth elements, and more.
Basically, it’s a big, quasi-patriotic, geopolitically important role that could plausibly eclipse a person’s “why” for working at Berkshire Hathaway. You can’t say that for most jobs, but this one probably fits the bill.
I almost stopped reading there but, then I thought: Is CFO Marc Hamburg also making his exit?
Lo and behold, that’s the case. Kingswell again:
After four decades of exemplary service, CFO Marc Hamburg will ride off into retirement in sixteen months.
That news matters to me a lot. I can’t tell you how many times I’ve emailed or called Marc Hamburg with questions or for comment only to be ignored.
Who is going to take Marc Hamburg’s place? Via Kingswell:
To ensure a smooth transition, Charles Chang (now CFO of Berkshire Hathaway Energy) will assume Hamburg’s duties on July 1, 2026 — and then spend the following year working (and learning) alongside him.
Who is Charles Chang? He is a Greg Abel buddy from Berkshire Hathaway Energy and was, until fairly recently, a PwC partner.
Prior to joining Berkshire Hathaway Energy in October 2024, Mr. Chang was a partner for PricewaterhouseCoopers LLP’s Energy Practice, working with large multinational energy companies. He has 34 years of extensive expertise in accounting, U.S. Securities and Exchange Commission reporting, mergers and acquisitions, and sustainability. Mr. Chang is a certified public accountant in California and Texas. He holds a bachelor’s degree in accounting from California State University, San Jose.
As if that were not enough changes, Abel has hired a General Counsel. But look who it is! Via Kingswell:
Berkshire Hathaway also appointed Michael O’Sullivan to the newly-created position of general counsel, effective January 1, 2026. O’Sullivan comes over from Snap Inc. — which might seem like an odd precursor to a job at Berkshire — but he previously practiced at Munger, Tolles & Olson for more than two decades.
Don’t forget Berkshire announced in a March proxy statement that longtime Board member Ron Olson would step down. Reuters:
Olson, 83, is a partner at the law firm Munger, Tolles & Olson, and has been a Berkshire director since 1997.
He is leaving Berkshire’s 14-member board because of the new age limit in its corporate governance guidelines. All other directors apart from Buffett are 75 or younger.
The same proxy filing disclosed that, “Berkshire Hathaway Inc. nearly doubled the fees it paid to Munger, Tolles & Olson following questions about the company’s ties to its longtime outside counsel.”
Bloomberg Law had the whole story:
Billionaire Warren Buffett’s Nebraska-based holding company paid $21.2 million to Munger Tolles last year, Berkshire disclosed in a late Friday proxy filing. That’s up from the $12.5 million it paid the law firm for work in 2023.
The filing comes about one year after a 17-lawyer group that has handled several Berkshire deals bolted for Baker McKenzie. The team, which included 11 partners, steered Berkshire’s nearly $12 billion buy of Allegheny Corp. among other large transactions.
Some of the Baker McKenzie lawyers are continuing to do bond work for Berkshire, the company disclosed in a separate securities filing.
Berkshire discloses what it pays Munger Tolles due to the Los Angeles-based firm’s longstanding ties to Buffett. Berkshire’s late vice chairman Charles Munger co-founded Munger Tolles and a fellow name partner, Ronald Olson, has long served on its board. Olson didn’t immediately respond to a request for comment.
Berkshire, unlike most major public companies, has no general counsel or chief legal officer to oversee internal legal functions. Munger Tolles’ work for the company and its various affiliates covers a range of practice areas and legal functions, with Olson and other lawyers effectively serving as the company’s in-house counsel, he told Bloomberg Law in 2021.
While Berkshire may be a boon to Munger Tolles, the firm has other clients who can be even more lucrative. Snap Inc. revealed in its annual 10-K filed in February that it paid approximately $51.2 million last year to Munger Tolles, which has longstanding ties to the Snapchat owner.
While the legal fees paid to Munger Tolles don’t include detailed explanations for the services rendered, the firm noted on its website last year that it represented Snap in nationwide social media litigation.
Michael O’Sullivan, a former Munger Tolles partner who has been Snap’s general counsel since 2016, saw his total compensation rise almost 18% last year, to more than $11 million, according to the filing.
Talk about keeping it all in the family!
Rather than putting his stamp on Berkshire Hathaway, I think Greg Abel is readying the company to pay a huge dividend to shareholders to get rid of some of that cash and then he’ll break it up.
That’s what I said three years ago.
Don’t let acquisitions like OxyChem fool you. It’s just more of the same bailing out your friends mentality at Berkshire.
Ambac finally kicks KPMG to the curb.
Ambac has dismissed KPMG and engaged EY.
As a matter of good corporate governance, the Audit Committee of the Board of Directors (the “Audit Committee”) of Octave Specialty Group, Inc., formerly known as Ambac Financial Group, Inc., (the “Company”) has been taking a number of steps in consideration of a potential audit firm rotation.
Of particular consideration is that recent acquisitions have resulted in the Company having multiple audit firms. KPMG LLP (“KPMG”), the Company’s current independent registered public accounting firm, has served as the Company’s auditor since 1985. Therefore, the Company and Audit Committee invited several independent registered public accounting firms, including KPMG, to respond to an audit services request for proposal (“RFP”).
Until now Ambac stayed with KPMG despite being the subject of one of the most significant negative examples of what KPMG did wrong during the PCAOB inspection data theft scandal. KPMG was forced to withdraw its ICFR opinion for Ambac after a stealth review after the annual report had been issued revealed the firms’ mistake. KPMG went in for a second look because it had learned based on its theft of the inspection lists from the PCAOB that Ambac was to be inspected by the regulator that year.
I reported this, after the criminal indictments came out in 2018, based on unredacted documents filed perhaps inadvertently by attorneys in the criminal case. I was the only reporter who reported this. So, Ambac knew back then KPMG had made a mistake that forced it to file an amended 10-K.
I called Ambac for a comment!
Why Ambac was one of the KPMG clients that got a second look after inspection tip-off Justice Department description of what happened to ‘Issuer-2’ is a dramatic example of how KPMG partners allegedly cheated with stolen regulator data
By Francine McKenna MarketWatch, Jan. 30, 2018
The information was confirmed again during the Middendorf and Wada trial in March 2019. But negative media coverage didn’t matter. The share price didn’t move when my story came out or when the amended 10-K was announced. Ambac continued working with KPMG and even spent more on non-audit services.
Is the stated reason really all there is to it?
Andersen Group Inc goes public.
I was quoted in the San Francisco Business Times by my former MarketWatch colleague Jeremy Owens:
Anything but audits
All the business from wealthy Bay Area residents helped Vorsatz accomplish something that Arthur Andersen couldn’t: launch an IPO. Andersen Group avoided auditing after the scandals that took down its predecessor, and the lack of an auditing business is actually why Andersen Group can go public, explained Francine McKenna, an accounting professor who has also covered the industry as a journalist for years.
“The law of professional services, public accounting, is pretty universal all over the world,” McKenna told the Business Times. “Almost every developed country has laws that say those that sign the audit for listed companies cannot have outside investment or, if they do, they have to sort of separate that (business) so that there’s not any undue influence on the audits by an investor who might have financial interest in that company or financial interest in the outcome of the company.”
In a future newsletter I’ll outline my five things to look for in the IPO.
But look who is signing the company’s audits: BDO!
BDO is probably the most besieged by litigation woes of the next tier firms. They’ve got Super Micro, an upcoming AmTrust trial, First Brands, ongoing defensiveness about its loan from Apollo, and a class action lawsuit regarding the ESOP that the Apollo loan funded.
Why is BDO signing the audit instead of a fellow Big X firm? Because those Andersen folks — all of the top officers except the CFO are Andersen partners/senior managers who had to leave the firm in 2002 after Enron — are fierce competitors. They would never show their books to Deloitte, KPMG, PwC, or EY!
EY, Shell plc and the FRC
Finally, the FRC in the UK is apparently investigating EY over the Shell plc independence issues from July. Shell had admitted in a filing that its auditor, EY, told the company it violated partner rotation rules.
What is there to investigate?
Readers of The Dig would know that it’s still a mystery how this could happen. Neither Shell nor EY would provide more details when I asked them in July. I also asked the FRC to respond to my inquiry and perhaps look into it but got no response.
I also made an inquiry on Monday morning to the UK regulator, the FRC.
“I am confused about the EY statements and Shell PLC filings regarding partner rotation issue. Can you please clarify?”
I wondered why, and how, EY identified this apparent violation of partner rotation rules.
As most of the media reports mentioned, EY UK was recently fined and sanctioned for violating audit firm rotation rules in April. KPMG UK has also recently broken the audit partner rules and, therefore, compromised its independence. From the FT:
The update comes after the Big Four firm was fined in April by the UK accounting watchdog for a similar breach. The Financial Reporting Council issued EY with a £325,000 penalty for auditing listed company Stirling Water Seafield Finance for more than 10 years without publicly retendering for the contract. The FRC fined rival firm KPMG for breaching the same rules in June.
I asked the FRC to tell me if EY’s violation at Shell plc’s was identified due to the prior enforcement action against EY for auditor rotation violations. I have not yet heard back.
I guess this is my answer. The FT is particularly brutal about EY’s total troubles. (Gift link.)
The FRC probe is the third time EY has come under scrutiny this year for potentially unauthorised auditors signing off companies’ books. Last week the watchdog opened an investigation into two individual EY auditors, as well as the firm itself, for issuing “unauthorised” auditors’ reports to unnamed companies.
In April, the Big Four firm was fined £325,000 for auditing Stirling Water Seafield Finance, which has publicly listed debt, for more than the 10-year time limit.
EY has already paid more than £5mn in fines this year following the April fine and “serious breaches” of audit standards in its work on failed travel group Thomas Cook’s accounts in 2017 and 2018.
The new investigation means EY is sustaining six investigations simultaneously. They include probes into EY’s work for the scandal-hit Post Office, collapsed furniture retailer Made.com and former FTSE 100 hospital operator NMC Health. The NMC Health audit is also being scrutinised in London’s High Court after its administrators accused EY of negligence. They are seeking damages of about £2bn on behalf of NMC creditors who lost money when the hospital operator collapsed.
The litany of probes means EY could face millions of pounds in financial penalties if it is found to have breached audit rules. Shell said it had “disclosed this EY non-compliance matter in July 2025 and immediately refiled its Form 20-Fs for 2023 and 2024. Shell’s financial statements remain unchanged and the EY audit opinions remain unqualified.”
After the paywall I’ll dig into Sam Di Piazza, M&A guru and new media superstar.