PROVIDENCE – Richard D. Parsons, the former Time Warner Inc. chief executive hired by Providence Equity Partners Inc. as a senior adviser last week, could face conflict of interest questions in that role due to his other job as chairman of Citigroup Inc.
As CEO of Time Warner from 2002 to 2007, Parsons led the effort that resulted in the sale of Warner Music Group Corp. to a group of private equity firms, including Providence Equity, in 2003 for $2.6 billion.
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Warner Music is now rumored to be preparing a bid for EMI Group Ltd., the debt-laden British record label – and, the Financial Times noted, Citigroup would benefit from the deal because EMI owes Citi more than $4 billion. The U.S. government has owned 33.6 percent of Citigroup since rescuing the banking giant.
“The rules at Citi are very clear and very strict: executives and board members have to recuse themselves every time there is a conflict of interest or even the appearance of a conflict of interest,” a spokesman for Parsons told the FT. Other sources echoed that. Providence Equity was not available for comment.
Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said the tangle of related investments Parson is dealing with “speaks to the quandary you find yourself in if you work for two financial services companies at the same time.”
The Wall Street Journal also took a look at the relationship between Citi and Providence Equity, noting that the two firms locked horns last year over an aborted $51 billion buyout of the Canadian telecom giant BCE Inc.
Paul Danos, dean of the Tuck School of Business at Dartmouth College, told The Journal that Parsons’ two jobs could raise eyebrows no matter how scrupulous he is. “It might be legally and ethically OK,” Danos said. “But there is also a political and PR judgment you have to make. It might not pass the sniff test in this highly sensitive environment. People are still feeling bruised.”
