I found this in a public filing today:
Related party transactions
At June 30, 2010, the Company owed (amount deleted) to (deleted) (purchased by deleted in 2009), a former related party with common directors and officers. These fees relate to general and administrative expenses for the purposes of sharing the same office space and equipment.
A director of the Company is a partner at a law firm that provides legal services to the Company. For the six months ended June 30, 2010, no fees (June 30, 2009 – nil) were charged for services provided from the firm.
All related party transactions are conducted in the normal course of business operations and are measured at the exchange amount, which is established and agreed to based on standard rates, time spent and costs incurred.
And yet nobody seems too concerned about this. It did make me think about Andy Fastow and how people make such a huge big deal out of the fact that he was both an officer at Enron and LJM – a relationship that some may think was a conflict of interest.
But in this modern example, he’s a LAWYER providing legal advice to a company where he is also the director. That seems to me much more problematic.
I guess if anything happens at Enron, it’s automatically controversial. But if it happens anywhere else, it’s just business.