Sunday News Roundup 23.08.13: Greenbelt giveaway, BDO bought, and more Canadian accounting news

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TORONTO, August 13, 2023 – The release of a special report by the Auditor General of Ontario is one of those occasions when an accounting story becomes the biggest story of the week. Bonnie Lysyk’s value-for-money audit of the gifting of lands by the Ford government in the environmentally senstitive Greenbelt to favoured developers made headlines across Canada. We covered the story through the lens of the accounting and audit profession, but it’s useful to see how other media covered the scandal. 

Canadian Press, the Globe and Mail, the Toronto Star and the CBC all carried stories about the “damning” and “scathing” report as well as editorials critizing the Ford government. Surprisingly, however, the Toronto Sun also piled on — at least at first. Columnist Joe Warmington called for the Greenbelt decision to be reversed and Sun columnist Lorrie Goldstein wrote Ford faces major political crisis from auditor’s findings on Greenbelt deals. 

But then the Sun’s Brian Lilley rode to Ford’s rescue, with two columns, AG report on Greenbelt is tempest in a teapot, and Plenty of Greenbelt opposition is driven by lies, not facts. Over at the National Post, which is also owned by PostMedia (which in turn is owned by an American private equity firm), the Post featured an editorial by none other than Doug Ford himself, extolling the virtues of his government’s homebuilding plans. 

The editorial was published on August 9, the same day as the Auditor General’s report, meaning the editorial was already written and scheduled to counteract the report. (Provincial legislation mandates that auditor general reports are submitted to the government prior to release.) The Post also published an Op-ed by Conservative insider Randall Delaney, defending Doug Ford and the developers: 

It’s a long play. At least one of the parcels in the new development area was acquired suspiciously close to the government announcement, but others had been owned by developers for years, some before the creation of the Greenbelt in 2005. 

Er, no. The truth is that over half the parcels of land given away include properties purchased since the Progressive Conservatives won the 2018 election. All of the information as to who purchased the properties — and when and from whom — are in Appendix 6 of the report. One way of reading the chart is this: While you and I were at home during the pandemic, with most of the economy shut down, developers were busy buying up land in the Greenbelt. Why? 

And now, on to the rest of the news from the past week in Canadian accounting. 

Private equity buys up BDO

Speaking of auditors and buying things up, there was a fascinating story out of the US this week. Apollo Global Management, a private equity firm, bought 48% of BDO USA in a a $1.3 billion debt deal. Apollo will own the biggest chunk of BDO, with 42% in the ESOP, and chief executive officer Wayne Berson, who is said to be making $25-30 million, holding one per cent. 

The news is fascinating for a lot of reasons. This is not the first time PE has snatched up a firm but by far it’s the biggest. The trend was highlighted in 2021 and earlier this year in the Journal of Accountancy. Secondly, BDO converted from a partnership to a professional services corporation earlier this year, which raised some eyebrows. And third, that move came not too long after the infamous collapse of the EY Global split, which many characterized as a money grab. 

Going Concern (entertaining as always) was the first to break the story. The Financial Times followed with the details. We don’t begrudge the partners making big bucks but we do have two questions. First: How long before this happens in Canada? And second: Who the heck would want to join (or even be recruited) by an accounting firm (company?) saddled with debt?

We all know what PE does to companies. Our guess? There’s a lot of resumés being polished right now at BDO USA. 

Quick Hits: Articles of Interest 

Canadian
High income earners in Canada are already paying their fair share of tax (Globe and Mail)
'The sick puppy': Why Laurentian has struggled in a golden age for Canadian banks (Financial Post)
Tax system not built to keep up with inflation — and it's hurting some Canadians more than others (Financial Post)

International
Canada’s tech tax threat risks sinking Biden’s global tax plan (Politico)
How the PwC virus infected the industry (Sydney Morning Herald) 

By Canadian Accountant staff.