A leading corporate governance activist is calling on Vodafone's shareholders to vote against the reappointment of Deloitte & Touche as auditors in protest at the high level of consultancy fees it earns.

Pensions Investment Research Consultants (Pirc), which advises 60 institutional investors and pension funds, noted that last year the mobile operator paid just £4 million (€5.08 million) in audit fees to Deloitte, while non-audit fees totalled £18 million. "This is a lot higher than most other companies," said Mr Stuart Bell, research director at Pirc. "They are not the highest we've seen but this ratio is rather steep."

Pirc's recommendation is made in its latest corporate governance report on Vodafone, sent to investors this week, ahead of the annual meeting on July 31st.

Pirc said the practice of companies paying more in consultancy fees to their auditors heightened the risk that accountancy firms could be tempted to compromise on their auditing function. "We've had the view for 10 years now that where consulting-based non-audit fees are greater than the audit fee, we record our opposition," said Mr Bell. "The independence of the audit process is potentially threatened by this."

Vodafone defended its practice of awarding substantial non-audit work to its auditors, insisting that it was often far more cost effective to do so.

"We do apply a judgment to it," said a company spokesman. "But if we were to go to another accounting practice, they would have to start very much further back in the process than Deloitte & Touche and this would cost our shareholders more money."

However, in the wake of accounting scandals at companies such as Enron and WorldCom, there is growing pressure from investors on companies to tighten up their corporate governance and accounting practices.

Pirc also argues that companies should rotate auditors every five years, to avoid too close a relationship developing.

Vodafone has used Deloitte & Touche ever since the company was demerged from Racal in 1988. Vodafone said its independent audit committee, made up of non-executive directors, looks at the fees paid to its auditors on an annual basis.

It said the committee also regularly examined the independence of its auditors. The mobile operator said it had no intention to change its practice going forward.

"After the Enron event, the audit committee went through any possible issues and concluded they were happy with our accounting policies and our auditors," a spokesman for Vodafone added.