ExxonMobil Corp. planned an immediate appeal after the New York Supreme Court on Wednesday ordered the supermajor's auditor to comply with a subpoena to hand over documents about its accounting practices.
New York Attorney General (AG) Eric Schneiderman's office in August asked the court to require PricewaterhouseCoopers (PwC) to provide documents after ExxonMobil said it would not permit the auditor to do so, claiming "accountant-client privilege."
Schneiderman last year launched a probe, since widened in scope and joined by other state AGs, into ExxonMobil's 30-plus years of research about how fossil fuels production has impacted operations and whether information was concealed from shareholders (see Daily GPI, Oct. 17; Nov. 6, 2015. Schneiderman also is seeking documents related to how ExxonMobil tallies its reserves and impairments.
ExxonMobil cited a Texas statute in refusing to allow PwC to cooperate. The high court disagreed, noting that since the investigation was launched in New York and any potential trial would take place in the Empire State, Schneiderman's office has jurisdiction. The decision filed on Wednesday is No. 451962/2016.
In writing the court's decision, Justice Barry R. Ostrager said the question is whether requiring PwC to produce documents would violate Texas Occupations Code Section 901.457, which concerns accountant-client privilege. The "short answer" is that the Texas law doesn't preclude producing the requested documents.
"If there were an applicable accountant-client privilege under Texas law, it would be nevertheless unavailing" because New York law applies to the New York AG's application," Ostrager wrote. And New York does not recognize an accountant-client privilege.
In response, ExxonMobil spokesman Alan Jeffers said the company "respectfully" disagreed with the ruling "and intends to take an immediate appeal."
Schneiderman also responded following the order. The court's ruling allows his office to move "full-steam ahead with our fraud investigation..." ExxonMobil "had no legal basis to interfere with PwC’s production, and I hope that [the] order serves as a wake up call to Exxon that the best thing they can do is cooperate with, rather than resist, our investigation."
ExxonMobil is scheduled to issue its third quarter results on Friday.