Profile: Patrick de Cambourg, president of the Mazars Group

Patrick de Cambourg, Mazars

The top global firms are facing an uncomfortable time fending off various business-threatening litigation claims by arguing, among other things, that their member firms aren’t really all that joined up.

Set that against Mazars’ integrated structure of shared profits and potential liabilities, then the Accountancy Age Large Firm of the Year’s structure seems counter-intuitive to the anti-litigation arguments posited by the other big players.

Yet with storm clouds gathering for the profession, and on a cold and windy day at Mazars’ City of London office, president Patrick de Cambourg could not cut a more serene and contented figure.

His relaxed manner belies a determination to spend the interview making it very clear that the firm’s way of working is the most forward-thinking ­ and risk averse, compared to its counterparts.

‘We started a process prior to 1995 where we were a French-based firm with some international links,’ says de Cambourg.

‘We realised that to retain our large clients and service them properly we needed to be international.

‘But that wasn’t enough. We introduced the international partnership in 1995 then moved on a path to globalisation.’

The firm’s management then took its most important decision in creating the Mazars we know now ­ should it try and grab a slice of the US market, or not?

No, was the decision.

‘Most would go to the biggest market, we said the contrary,’ says de Cambourg.

Setting up an Asia/Pacific region, along with South America and Africa/Middle East, the firm forged ahead to a point where it has grown by a factor of ten compared to 13 years ago.

So why not the US? Because of the threat of litigation.

Following the Andersen collapse and post-Enron, with the PCAOB watching over the firms and Sarbox looking to limit the ability of individuals to get up to no good in a business, de Cambourg says there was an attempt to sort out the litigation threat that haunts auditors of US clients.

But, as de Cambourg notes, with the current financial crisis leading to another spate of litigation, it hasn’t worked out.

‘When I see what’s happening in the North American market, I think the option we took was not wrong,’ he says in a very French, understated manner. ‘The litigation issue in the US is not solved.’

But Mazars hasn’t set up a US exclusion zone. It does offer services ­ just not to US-listed businesses. This work is often in cooperation with regional US firms.

More importantly, this cooperation is usually undertaken with associate firms of accounting ‘alliance’ Praxity, of which Mazars was a founding firm.

If you imagine the closeness and linked-in business operations of Mazars, then Praxity works in an almost directly opposite way.

Praxity is definitely, without doubt, not an accounting network, insists de Cambourg. Instead it is essentially a loose cooperative, a definition that de Cambourg argues separates it from the networks that other global firms operate within.

Firms wishing to join the alliance provide details of their business across 15 criteria, explains de Cambourg, where they ‘self assess’. A membership committee, which he chairs, take decisions on allowing firms into the association based on the answers given to the criteria. De Cambourg is joined by a number of experienced professionals on the committee, including IFAC chairman Bob Bunting.

‘So we take decisions on what people tell us ­ we might ask some more questions… then we know that if we have a need for a service in an area where we’re not present, we can operate with these people because they’ve been chosen in a selective process, in terms of referral, or building a team etc.

‘If we take the US, we have our own teams… and we have located them in some of the Praxity members, because we knew the infrastructure, ethical approach, risk management, technical excellence was of a very good quality from the self assessment and our prior experience [of their businesses]. We feel it’s better to operate with risk averse, cautious regional players with a good reputation and track record, so we feel more secure.’

The integrated firm and loose association models ‘complement’ each other, de Cambourg explains, and the future of the profession lies in these ways of working.

‘Our personal belief is that the profession will move towards more integration for some players and move towards alliances for the rest,’ says de Cambourg.

‘In the long term, the level of accountability that networks can offer is possibly not sufficient, because there’s so much common ground and there’s a strong element of convergence and global governance.

‘In the other networks, my question is are they able to deliver a fully shared and fully harmonious level of technical excellence that the overall regulators, clients and public expect? [There’s] a question mark.

‘If you look at what we have done over the past 25 years, we have always taken the position that we’d be better off following the integration model, and then decided we’d be better off as one of the significant members of Praxity [as well].

He sees it as impossible for global firms to operate under a single brand then explain that the firms are independent: ‘Because the people are led to believe there’s more than that, so the profession as a whole has to think to consider the way forward for more accountability, transparency and possibly innovation.’

But with all the big business failures and associated litigation, de Cambourg expresses sympathy for other firms’ plight.

‘We see today [firms] that are unable to meet significant liabilities….can you name one that can cope with a significant claim, such as what we hear today?

‘No organisation can go through a crash of that magnitude. Frankly, reducing the number of players is not a solution as the market expects more quality players. We also see that when there’s a major crash like in the banking sector, all of a sudden governments play a significant role ­ nationalisation. That’s not a long-term solution, but a short-term reaction to a crisis situation - but when the level of responsibility becomes too high, who can cope with it? Only governments.’

Liability, an issue covered at length in the UK and which saw legislation introduced to allow for discussions between auditors and clients to limit their exposure, is ‘not solved’.

But Mazars is patient, he adds, and likes to build on ‘stone not quicksand’.

‘We want to offer a relationship to the market that’s different ­ transparency, a one-team concept.’

Networking opportunities

At a Federation of European Accountants conference in December, de Cambourg laid out the five types of networks firms could operate within, and why he believes full integration or loose associations are the best choices for the future.

1. A fully internationally integrated firm, which Mazars has chosen.

2. Very strong, highly recognised networks: The Big Four and possibly a couple of other firms below them [operate like this]. Networks that have significant substance because of the level of international work that is shared and the recognition of the brand.

But at institutional level they’re networks, created under the umbrella of a very strong economy, north America and Europe. In this category there is an interest for the creation of levels of integration – KPMG for instance. This is the beginning of a trend.

3. Those networks that declare themselves as networks but the level of commonality is low. Sharing a certain number of aspects of professional life.

4. A new category: the ‘alliance’. Firms don’t declare themselves as within networks, probably wouldn’t use the brand as a flag, but as a badge or addition. Possibly no territorial exclusivity and won’t guarantee the quality of the members. A strong type of cooperation, based on the quality of the selection process. The alliance is as strong as its members.

5. Firms on a standalone basis, which have a case by case relationship with other players.

Results business

Such was the ground covered on discussing US litigation and the future of international accounting networks, that talk of Mazars’ latest global annual report, which is fully IFRS compliant, was almost a side-issue.

However the firm posted strong results for 2007/08. Fees grew by 16% (13.4% after currency conversion) to €745m (£662m).

Set to operate out of 50 countries in 2009 compared to 47 last year, it also increased average employment from 7,742 in 2006/07 to 9,459 in 2007/08.

De Cambourg says he expects single digit growth for the group this year, and that the firm is doing everything it can to stop jobs being cut.

‘We’re growing quickly internationally, so there’s scope for people who might be affected by the certain situation in current markets to move. I was in India a fortnight ago and there’s lots to be done there. Mobility for us is one of the key tools to manage talent in a difficult period of time in uncertain markets.’

De Cambourg’s CV
58 years old, married father of three

1995 to present: president of the Mazars Group; chair of the group executive board; chairman of Mazars in France

1978: Mazars partner
A member of Praxity’s Executive Board
Honour chair of the Département Appel public à l’Epargne
Member of the Conseil National de la Comptabilité

Member of the corporate and company law working party of the
Federation of European Accountants (FEE).

National honours: Chevalier de l’Ordre National de la Légion d’Honneur
Chevalier de l’Ordre National de Mérite