March 22, 2004

Deloitte Touche Tohmatsu
Mr. Charles A. Horstmann
1633 Broadway
New York, New York 10019-6754

Dear Mr. Horstmann:

The staff has reviewed your letter of March 18, 2004 concerning Deloitte Touche Tohmatsu's ("DTT") sale by its member firm Tohmatsu & Co. of its consulting service business operated under the name ABeam Consulting Ltd.(referred to as "ABeam") to the partners of ABeam (referred to as the "ABeam Partners"). In your letter, you detail key terms of the transaction and conditions that DTT, including entities that have been considered part of DTT under Rule 2-01(f)(2) of Regulation S-X, have or will comply with in connection with the completion of the transaction. Your letter concludes that, based on its compliance with those terms and conditions, DTT should not be considered to have a "mutual or conflicting interest" or a "direct or material indirect business relationship" with, or a "direct financial interest or material indirect financial interest" in, any of its audit clients that are also clients of or enter into business relationships with or invest in ABeam, or that are invested in by ABeam or any departing ABeam Partners or employees.

As you are aware, the Sarbanes-Oxley Act of 2002 (the "Act") expressly prohibits any registered public accounting firm, or any associated person or entity of that firm, from providing certain non-audit services to its audit clients that are "issuers" as defined in the Act. The representations set forth in your letter indicate that DTT has already taken the following steps to divest ABeam: (1) neither DTT nor any of the remaining partners and affiliates have or will receive any equity interest in ABeam; (2) ABeam does not and will not use the DTT names unless there is a clear indication that they are separate firms; (3) DTT has no corporate governance or management role or interest in ABeam; (4) DTT does not and will not receive from ABeam any royalty, interest, dividend or other payments, and there is no revenue or profit sharing between DTT and ABeam; (5) DTT and ABeam are under no obligation to refer clients to one another and there will be no referral fees or other forms of compensation to each other for referrals; (6) under the Non-Compete Agreement, DTT and ABeam have agreed to provide only certain services to each other's clients through December 27, 2007, and those services are and will be provided under separate engagements; (7) shared services between DTT and ABeam are limited and transitional in nature; and (8) ABeam has no obligation to DTT in connection with any retirement obligation and DTT has no obligation to ABeam Partners in connection with retirement benefits of continuing or former partners except that vested former employees in the U.S. defined benefit pension plan have the same rights as other vested former employees.

Assuming that the representations set forth in your letter are and continue to be accurate, and further assuming that DTT continues to comply with each of the terms and conditions set forth in your letter, the Office of the Chief Accountant ("OCA" or the "staff") will not recommend an enforcement action asserting that DTT lacks independence as a result of non-audit services provided to DTT's audit clients by ABeam or any ABeam Partner or employee. Of course, DTT otherwise remains fully subject to the Commission's independence requirements, as well as the provisions of the Act, with respect to matters not expressly covered by your letter and this response. OCA has taken this position based on the specific facts and circumstances represented in your letter. DTT will consent to any review deemed necessary by the staff or the PCAOB to ascertain compliance. If the divestiture is found not to have satisfied the terms and conditions represented to the staff or if any of the remaining terms or conditions in your letter are not met, the staff's position will be vitiated, and the staff may recommend an enforcement action. Further, OCA has taken this position based on its evaluation of the relevant policy considerations and does not thereby adopt or endorse the analysis or conclusions set forth in your letter. This response expresses OCA's position only on these particular facts and circumstances and does not purport to express any legal conclusions on this or any other matter.

Incoming Letter:

March 18, 2004

Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: ABeam Consulting Ltd. (formerly known as Deloitte Tohmatsu Consulting KK/ Braxton Ltd.)

Ladies and Gentlemen:

We hereby request that the Staff of the Office of the Chief Accountant (the "Staff") of the Securities and Exchange Commission (the "Commission" or "SEC") advise that, based upon and subject to the matters referred to herein, it will not recommend that the Commission take enforcement action against Deloitte Touche Tohmatsu, a Swiss Verein, or its member firms, or its or their respective subsidiaries or any other firms conducting audit activities for SEC registrants under the name "Deloitte Touche Tohmatsu," "Deloitte Touche," "Tohmatsu" and other combinations or derivations thereof or otherwise as part of the Deloitte Touche Tohmatsu network of firms or "accounting firm" (collectively, for the purposes of this letter only, "DTT") , asserting that DTT is not "independent" based upon the attribution to DTT of the activities of DTT's former Deloitte Consulting ("DC") member in Japan which operated until December 31, 2002, under the name Deloitte Tohmatsu Consulting KK and since January 1, 2003 until October 31, 2003, operated under the name Braxton Ltd., and since November 1, 2003 under the name "ABeam Consulting Ltd." (referred to in this letter as "ABeam") including activities in any other foreign jurisdictions in which the local DC practice is separated from DC as part of, or similarly to, the ABeam separation transaction, simultaneously as part of the separation transaction or shortly thereafter. ABeam was sold by Tohmatsu & Co. ("Tohmatsu"), DTT's Japanese member firm, to the partners of ABeam (the "ABeam Partners") in late 2002.

We believe that as a result of the aforementioned transaction, that DTT and ABeam are already substantially separate organizations. DTT and ABeam recently completed the separation of ABeam from DTT in a private transaction. Under these circumstances, we believe the terms of this final separation transaction for ABeam , including the conditions proposed herein, serve as a basis for the staff to grant the relief requested herein.

Legal Analysis

The federal securities laws require that financial statements filed with the Commission by public companies, investment companies, broker-dealers, public utilities, investment advisers and others be certified (audited) by independent public accountants. The Commission has adopted Rule 2-01 of Regulation S-X regarding independence of accountants. The general standard set forth in Rule 2-01(b) provides that:

The Commission will not recognize an accountant as independent, with respect to an audit client, if the accountant is not, or a reasonable investor with knowledge of all relevant facts and circumstances would conclude that the accountant is not, capable of exercising objective and impartial judgment on all issues encompassed within the accountant's engagement.

Rule 2-01(b) further provides that:

In determining whether an accountant is independent, the Commission will consider all relevant circumstances, including all relationships between the accountant and the audit client, and not just those relating to reports filed with the Commission.

The preliminary note to Rule 2-01 states that, in considering the standard set forth in Rule 2-01(b), the Commission looks to, among other criteria, whether the relationship or the provision of service "creates a mutual or conflicting interest between the accountant and the audit client." Rule 2-01(c) applies the standards set forth in Rule 2-01(b) to particular circumstances that are considered to impair an accountant's independence. For example, Rule 2-01(c)(1) provides that an accountant will not be considered independent if "the accountant has a direct financial interest or a material indirect financial interest in the accountant's audit client...." In addition, Rule 2-01(c)(3) provides that:

An accountant is not independent if, at any point during the audit and professional engagement period, the accounting firm or any covered person in the firm has any direct or material indirect business relationship with an audit client, or with persons associated with the audit client in a decision-making capacity, such as the audit client's officers, directors or substantial stockholders. (Emphasis added.)

For purposes of Rule 2-01, "accounting firm" means "an organization . . . that is engaged in the practice of public accounting . . . and all of that organization's departments, divisions, parents, subsidiaries, and associated entities, including those located outside the United States." 17 C.F.R. 210.2-01(f)(2) (emphasis added). Although not expressly defined by rule, the Commission has stated that it intends the phrase "associated entity" to:

reflect our staff's current practice of addressing these questions in light of all relevant facts and circumstances, looking to the factors identified in our staff's previous guidance on this subject. While the rules we adopt do not provide accounting firms with the certainty of our proposed rule, we are convinced that a more flexible approach is warranted as the types and nature of accounting firms' business arrangements continue to develop.

Revision of the Commission's Auditor Independence Requirements, 65 Fed. Reg. 76008, 76059 (footnote omitted). As part of this guidance, the Commission also cited numerous prior no-action letters that had been issued to address the separation of consulting businesses from accounting firms. Id. at 76059, n.491 (citing various no-action letters). In the prior no-action letters, the staff has examined whether the firms are associated entities by considering such factors as whether 1) the accounting firm has any ownership interest in the consulting firm; 2) there are restrictions on the use of the accounting firm's name by the consulting firm; 3) the firms' corporate governance structures are separate; 4) there is any revenue sharing between the firms; 5) there are any joint marketing agreements between the firms; and 6) there will be any on-going shared services between the firms.

On July 30, 2002, the Sarbanes-Oxley Act of 2002 (''Sarbanes-Oxley Act'' or "the Act") was enacted. Title II of the Sarbanes-Oxley Act, entitled "Auditor Independence," required the Commission to adopt, by January 26, 2003, final rules under which certain non-audit services will be prohibited, conflict of interest standards will be strengthened, auditor partner rotation and second partner review requirements will be strengthened, and the relationship between the independent auditor and the audit committee will be clarified and enhanced. However, Congress left the definitions of "accounting firm" and "associated entity" untouched. In its final rulemaking to incorporate Title II of the Sarbanes-Oxley Act into the SEC's rules and regulations, the SEC also did not amend or modify its definitions of "accounting firm" or "associated entity." See 68 Fed. Reg. 6006 (February 5, 2003). Consequently, Rule 2-01 continues to direct firms to refer to the staff's practice of addressing these questions in light of all relevant facts and circumstances, looking to the factors identified in the staff's previous guidance on this subject.

The Commission's interpretations of Rule 2-01 are also collected in Section 600 of the Codification of Financial Reporting Policies (the "Codification"), entitled "Matters Relating to Independent Accountants." Section 602.02.e of the Codification addresses business relationships, such as joint ventures, limited partnership agreements, and investments, that may impair an auditor's independence. That section provides, in part, that:

Direct and material indirect business relationships ... with a client ... will adversely affect the accountant's independence with respect to that client. Such a mutuality or identity of interests with the client would cause the accountant to lose the appearance of objectivity and impartiality in the performance of his audit because the advancement of his interest would, to some extent, be dependent upon the client.

DTT desires to obtain assurance that, based on the transaction described below, ABeam would not be considered an associated entity of DTT, such that to the extent that ABeam or any partner or employee of ABeam provides services for, enters into business relationships with, or invests in or accepts investments from, DTT audit clients, DTT's independence will not be deemed impaired pursuant to Rule 2-01 or rules that are promulgated thereunder or any other provisions of the Commission's independence rules.

DTT believes that under the conditions detailed in this letter, that ABeam would not be considered an associated entity of DTT under the terms and conditions governing this Transaction (as defined below) and that DTT would not have a "mutuality of interest" or a "direct or material indirect business relationship" with, or a "direct financial interest or material indirect financial interest" in any of its audit clients as a result of the activities of ABeam, its partners and employees (which activities include, without limitation, providing services to, entering into business relationships with and making or receiving investments in or from third parties). This conclusion is based on the representations and conditions detailed in this letter, which, among other things: 1) prohibit any retained equity interest in ABeam by Tohmatsu or any other entity included in the definition of DTT; 2) impose limitations on the use of the DTT names by ABeam; 3) require a strict separation of the corporate governance, management, and financial structures and interests between all entities included in the definition of DTT and ABeam; 4) prohibit any revenue or profit sharing between ABeam and any entity included in the definition of DTT and ABeam; 5) prohibit any joint marketing between DTT and ABeam; and 6) limit any services between DTT and ABeam to those that are transitional in nature.

Factual Background

In 2001, the ABeam Partners agreed with Tohmatsu that the consulting partners should be able to own the equity in their own line of business. Prior to that agreement, Tohmatsu owned 100% of the equity interests in ABeam through which the DC business was run in Japan. As a result of that basic agreement, the ABeam Partners purchased 66% percent of the equity share interests in ABeam on June 1, 2001, and the remaining 34% of that equity share interest was sold by Tohmatsu to the ABeam Partners as a group on December 27, 2002, pursuant to a Share Transfer Agreement. Therefore as of the completion of the transfer of those equity shares before December 31, 2002, as and from January 1, 2003 neither DTT nor DC nor Tohmatsu holds any equity share interest in ABeam whatsoever. Neither ABeam nor any partner of ABeam owns any equity interest in DTT, DC or Tohmatsu.

The above described equity share sales, withdrawals and related agreements, together with the Conditions to No-Action Confirmation listed below are referred to collectively as the "Transaction."

Other key terms of the Transaction are:

1. ABeam and Tohmatsu have entered into a Memorandum of Understanding Concerning Non-Competition dated December 27, 2002, (the "Non-Compete Agreement") which prohibits Tohmatsu from competing against ABeam in Japan for certain services for a period of 5 years. DTT will effectively be bound by the Non-Compete Agreement.
    
2. There are and will be no corporate governance, management or direct or indirect financial ties between any entity included in the definition of DTT and ABeam (other than payments relating to the settlement of intercompany accounts described in footnote 12 below and the transition services arrangement described below).

Conditions to No-Action Confirmation

DTT requests that, subject to continued compliance with the following conditions, the Staff not recommend enforcement action to the Commission based upon the attribution to DTT of the activities of ABeam following completion of the Transaction:

1. As a consequence of the Transaction, neither DTT nor any of the remaining partners in any entity included in the definition of DTT now have nor will they receive or retain any equity interest in ABeam.
    
2. ABeam has already announced that from November 1, 2003 it will conduct its business under the name "ABeam Consulting Ltd." and thereafter will use the "Braxton" and/or "Deloitte" names only in limited circumstances during a transition period. Specifically, ABeam will be entitled to use a variant of the "Deloitte" name (e.g., "Deloitte Tohmatsu Consulting KK") and the "Braxton" name (e.g., "Braxton Ltd."), including in conjunction with its rebranding to ABeam Consulting Ltd. (e.g., "ABeam Consulting Ltd., formerly Deloitte Tohmatsu Consulting KK/Braxton Ltd.") for a short transitional period not to exceed three years, as long as:
    
1. All publications, letterhead and stationery, name plates, office signage, business cards and similar materials that use the "Deloitte" name clearly designate that ABeam is not owned by DTT (e.g., "an independent consulting firm");
    
2. DTT does not represent in any publication, advertisement, press release, name plates, office signage, business cards or other similar material that it is the same firm, or controls, manages, governs or is affiliated with ABeam, or any affiliate, subsidiary or division of ABeam; and
    
3. ABeam does not represent in any publication, advertisement, press release, name plates, office signage, business cards or other similar material that it is the same firm, or controls, manages, governs or is affiliated with DTT, or any affiliate, subsidiary or division of DTT.
3. DTT and ABeam have and will maintain separate corporate governance, management, and financial structures and interests including: separate boards of directors (including no contractual right of DTT to representation on the board of directors or governing body of ABeam), executives, employees, capital, credit lines and facilities, client bases, governing documents, operating policies, financial operations and financial and accounting policies. DTT and ABeam do not and will not exert financial or other influence over the other party's corporate governance, management, and financial structures or interests.
    
4. DTT does not and will not (other than with respect to services specified in the last sentence of this paragraph 4) accrue, pay to or receive from ABeam any royalty, interest, dividend or other payment, whether or not tied to the performance of ABeam. Accordingly, DTT and ABeam do not and will not share profits or revenues from consulting or any other engagements or agreements. Prior to the date that ABeam and DTT cease to occupy shared lease space (as described in paragraph 7 below) DTT and ABeam have not entered into any prime/subcontractor relationship to provide professional services to the same client, except that existing prime/subcontractor relationships may be completed in accordance with their existing terms but in no event will DTT be able to provide prohibited services under these relationships beyond May 6, 2004 and all other such relationships will not extend beyond 18 months following the issuance of the SEC's no-action letter.
    
5. DTT and ABeam may, but are under no obligation to, refer clients to one another. DTT does not and will not designate ABeam as a preferred provider of services, and DTT and ABeam may not pay referral fees or other compensation to each other for referrals to each other nor to any subsidiary, affiliate, employee or agent of the other. DTT and ABeam may not enter into any co- or joint marketing, advertising or similar agreements or arrangements with the other that are inconsistent with this paragraph 5 or paragraphs 2 or 4 or that do not clearly state that DTT and ABeam are separate firms.
    
6. Subject to the Non-Compete Agreement as referred to in paragraph 9 below, DTT may continue to provide services to clients of ABeam under separate engagements with such clients and ABeam may continue to provide services to clients of DTT under separate engagements between ABeam and such clients.
    
7. DTT and ABeam have entered into transition services agreements (collectively, the "TSAs") for certain infrastructure and information services, operations services and other services as specified in Schedule A to the TSA. DTT and ABeam also are granting each other limited, royalty-free licenses to use certain intellectual property to facilitate the provision of transition services. Neither DTT nor ABeam will make a profit on services provided to the other under the TSAs. The services provided under the TSAs will be provided for varying terms from three months up to three years except for Knowledge Sharing. Services identified under the TSA for Knowledge Sharing will be provided in accordance with the TSA so long as (i) ABeam is physically separate from DTT's other businesses and (ii) charges for such use are determined at arm's length (defined as cost, the basis historically used by DTT to allocate expenses to ABeam) and appropriate provision is made so that confidential information is not communicated between DTT and ABeam. DTT also may receive certain transition services from ABeam for limited transition periods following the Transaction and, in addition, non-separated consulting practices that intend to separate may receive transition services pending their separations. Each of DTT and ABeam also may purchase the other's services for its own account in exchange for customary arm's length compensation.
    

In certain cases, DTT and ABeam have entered into sublease or license arrangements for office space that is currently shared with DTT. Under these arrangements, ABeam or DTT, as applicable, must pay its proportionate share of the cost of such space based on the total square footage of each facility used by or allocated to ABeam or DTT, as applicable, under the terms of such subleases or licenses and, with respect to related services and capital costs, under the terms of the TSAs. The sublease or license arrangements for each space do not extend beyond the term of the lease held by DTT or ABeam, as applicable. With respect to new leases for office space, DTT and ABeam individually will enter directly into such leases with a landlord and will not enter into new subleases with each other for office space after the expiration of the leases currently held by DTT or ABeam. Until such relocations are made, DTT and ABeam will have separate and distinct office signage and their offices will be clearly distinguishable from one another although they may share certain common facilities.

8. DTT will consent to any reviews deemed necessary by the Staff or an independent party designated by the Commission or the staff (such as the Public Company Accounting Oversight Board) to ascertain that DTT is complying with the conditions herein provided.
    
9. DTT and ABeam are bound by the Non-Compete Agreement that extends for a period of five years from December 27, 2002. Notwithstanding the previous sentence, DTT may, after expiration of the Non-Compete Agreement, provide services otherwise restricted under the Non-Compete Agreement, including providing such services to audit clients that file reports with the SEC to the extent permitted by the SEC independence requirements and professional standards at such time.
    
10. ABeam has no obligations to DTT in connection with any retirement benefits to continuing or former partners or employees of DTT. DTT has no obligations to ABeam in connection with any retirement benefits to continuing or former partners or employees of ABeam. However, certain DC employees who withdraw from DC and join ABeam, and who are vested in US defined benefit pension plans, would still have the same vested pension rights as any other vested former DC employee. No additional US pension rights or US pension obligations would accrue to these employees after such withdrawal but when they have satisfied the requirements for receipt of payment in due course there would be a continuing obligation on the plan to pay the benefits. The value of the continuing pension obligations for vested DC employees who choose to join ABeam will be insignificant to DTT and DC.
     
11. In accordance with the terms set forth in this letter, on the date that DTT and ABeam no longer share lease space, DTT and ABeam will be free to contract and enter into business relationships with one another as would any other independent entities.

Certain Confirmations

In connection with its request herein, each of DTT and ABeam, insofar as each item below relates to it, hereby confirms to the Staff that:

1. DTT (including those firms that had not consummated their separation transactions at the time of the Transaction) continues to be subject to the independence requirements of the securities laws and the SEC's independence rules and interpretations issued thereunder to the same extent as they were so subject prior to the Transaction.
    
2. DTT agrees to the above conditions and has furnished a copy of this letter (and will forward any final agreement on this subject) to ABeam. ABeam will expressly acknowledge that it has been furnished a copy of this letter. DTT further represents to the Staff that it is not aware of any provisions of the agreements described herein or any agreement or instrument referred to therein that is inconsistent with this request.
    
3. DTT has furnished the Staff with a copy of the final or penultimate draft of the TSAs (including without limitation the schedules, exhibits and annexes thereto) and hereby represents to the Staff that the final executed versions of such documents will not differ in any respect material to the matters referred to in this letter from the drafts so furnished.

Confirmation Requested

Based upon the representations contained herein (including without limitation the Annexes attached hereto) and in the materials provided herewith, and subject to continued compliance with the foregoing conditions, we hereby request that the Staff advise that the Office of the Chief Accountant will not assert or recommend enforcement action that asserts that DTT's independence has been impaired to the extent ABeam or any of its partners or employees provides services for, enters into business relationships with, or invests in or accepts investments from, DTT audit clients. We fully understand that if the Staff takes a no-action position, that position will be based on the representations and undertakings set forth in this letter and continued compliance with the material terms of the related executory contracts. We further understand that failure to comply with any of these conditions would invalidate the relief granted by the staff in response to this request as of the date the staff's relief was communicated to DTT.

* * * * *

Certain matters described above have not yet been publicly announced. Accordingly, pursuant to 17C.F.R. §200.81(b), we hereby request confidential treatment of the contents of our communications with the Staff with respect to all issues relating to this letter (the "Confidential Material") until a date 120 days after release of your response to us, or such earlier date as the Staff is advised by us that all of the information contained in the Confidential Material has been made public. However, when the Staff determines to grant the no-action relief requested herein, we understand and agree that the letter itself and the text of your response to the letter may be made public immediately. In addition to this request for confidential treatment, we will request, under separate cover, confidential treatment for the transaction documentation and the other materials furnished to you in connection with this letter pursuant to the provisions of 17C.F.R. §200.83.

* * * * *

If for any reason you do not concur with the views expressed in this letter, we respectfully request an opportunity to discuss this matter with the Staff prior to any written response to our letter. If you have any questions or need any additional information concerning the foregoing, please do not hesitate to call Scott Bayless of Deloitte & Touche SEC Services at 203-761-3693 or 202-879-5315, Douglas R. Cox of Gibson, Dunn & Crutcher LLP at (202) 887-3531, Kevin Keogh in the New York office of White & Case LLP at 212-819-8227 or Robert Grondine in the Tokyo office of White & Case LLP at 81-3-3259-0155.

Sincerely,

Deloitte Touche Tohmatsu

By:______________________

Sincerely,

http://www.sec.gov/info/accountants/staffletters/abeam032204.htm