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U.S. Securities and Exchange Commission

Office of the Chief Accountant:
Cap Gemini Transaction

May 14 Letter from Ernst & Young

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May 25, 2000

Kathryn A. Oberly, Esq.
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019-6079

Dear Ms. Oberly:

The staff has reviewed your letter of May 14, 2000 concerning Ernst & Young LLP's ("E&Y") proposed transaction with Cap Gemini, S.A. In your letter, you detail key terms of the transaction and conditions that E&Y will comply with following completion of the transaction. Your letter concludes that, following completion of the transaction and under the specified conditions, E&Y would not havea "material indirect business relationship" with any of its audit clients that are consulting clients of or otherwise involved in business relationships with Cap Gemini. 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 that are also clients of, enter into business relationships with, or that are invested in by Cap Gemini.

Assuming that the representations set forth in your letter are and continue to be accurate, and further assuming that E&Y continues to comply with each of the conditions set forth in your letter, the Office of the Chief Accountant ("OCA" or the "staff") will not assert that E&Y's independence from an audit client has been impaired solely because that audit client is also a client of, enters into a business relationship with, or is invested in by Cap Gemini. Of course, E&Y otherwise remains fully subject to the Commission's independence requirements. OCA has taken this no-action position based on its evaluation of the relevant legal and policy considerations and does not hereby adopt or endorse the analysis or conclusions set forth in your letter.

As noted, the staff's position is contingent upon the accuracy of E&Y's representations as well as E&Y's continued compliance with the conditions set forth in your letter. These conditions will, among other things: 1) limit at the outset and within five years end E&Y's equity interest in Cap Gemini; 2) impose limitations on Cap Gemini's use of the E&Y name; 3) require a strict separation of E&Y and Cap Gemini's corporate governance; 4) forbid any revenue sharing between E&Y and Cap Gemini; 5) forbid any joint marketing agreements between E&Y and Cap Gemini; and 6) restrict any shared services between E&Y and Cap Gemini. OCA emphasizes the importance of strict compliance with the conditions detailed in your letter. Failure to comply with any of these conditions will vitiate this no-action position. Further, 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.


Lynn E. Turner
Chief Accountant


Modified: 10/16/2000