“Everyone in the country had this strange sense of it being too large, too dramatic, too much like a film,” Chandra said.
That same sentiment also exists in Sacred Games. Chandra says that as the novel’s central character unravels a massive conspiracy, he is told that “it’s too ‘filmy’ to be true. If it happens in a movie, it can’t happen in real life.”
It’s been two weeks or so since my last update on Price Waterhouse India and their infamous audit client, Satyam. In that post, I told you how the PWC International Limited Board of Partners was clearly focused on their “matter” in India, even judging by a fairly watered-down set of minutes from their April meeting that was distributed via email to partners worldwide.
The minutes from the June Board meeting have a very different format, with lots of logos and template tricks.
Big title banner in the distinctive PwC typeface all lower case:
inside the boardroom*
news from your US Board of Partners and Principals
The word “litigation” appears three times. The word “India” not once.
Much more generic than the April report, very few details, no actionable information, only reporting that certain topics were discussed. Did someone adjust tactics?
In a few cases you can read between the lines…
“Brad Oltmanns, John Carter, and Carol Nebe updated the Board on the Special Committee’s recommendations on how to enable high performance within our partnership through modifications to the partner planning, evaluation and reward system (a.k.a. the “PwC Income System”).
Ruh roh, as Rosie Rott would say.
Sounds like, in addition to the recent comments reporting PwC reductions once the new fiscal year started, it’s now time for PwC to actualize my half tongue-in-cheek prediction of partner layoffs and salary reductions.
In the meantime, there have been several updates and new developments from India. The consensus of those “in the know” is:
“PwC messed up big time.”
1. The Indian government represented by the Corporate Affairs Minister Salman Khurshid said last Friday said that the government will support Mahindra Satyam in resolving class action suits which it is facing in the US.
On the other hand, not only does the Securities and Exchange Board of India (Sebi), which is probing the accounting scam at Satyam Computer Services Ltd, seem to favour prohibiting Price Waterhouse and its arrested partners S. Gopalakrishnan and Srinivas Talluri from auditing any listed Indian firm or intermediary for a “certain period, ” but now SEBI said today that they will fund a domestic investors’ association that has filed a class action suit against Satyam Computers, its former promoters, auditors and directors.
2. Some media reports also suggested that the Institute of Chartered Accountants of India, like SEBI, was ready to recommend not only banning the PW partners but also the firm from auditing in India. PwC reportedly sent out an internal communication to all its employees dismissing any such possibility. ICAI officials later clarified and said that the CA Act, as it is worded currently, only gives the institute powers to act against individual chartered accountants, not CA firms.
The highlights of the PwC mail are as follows:
- ICAI cannot ban the firm in India
- ICAI does not have power to act against firms
- Newspaper report on banning PW incorrect
- ICAI can take action only against partners
- Any action against partners a long process
- PwC was not contacted by ICAI high powered committee
PwC is yet to hold a single press conference ever since the Satyam scam broke out in early January.
Unfortunately for PwC, one way or the other, it looks like they are heading down the Misuzu, formerly ChuoAoyama Pricewaterhouse/PricewaterhouseCoopers Aarata path I predicted when the scandal first hit.
4. A team from the US SEC is visiting India next week “to take stock of the progress made so far by the Indian regulatory and investigating agencies in unravelling the Rs 7,000-crore accounting scam.”
5. A reader writes:
Folks in PwC are trying to obfuscate and say that Lovelock & Lewes is riddle and PwC is an enigma both wrapped in a shroud of mystery.
Thank you for blowing up the myth that L&L and PwC are two
different organizations. They are one and the same.
Apart from the various mischiefs committed by the common partners that you have already reported -here is the evidence that partners are running lucrative computer training businesses with politicians. Please go to http://www.iijt.net and then see the section “about us”. You will find that Partha Mitra who has been described as Senior Partner L&L and Partner-in-charge PwC is running a computer training business along with a central council member of the Institute of Chartered Accountants of India and the ex-Finance Minister of India Mr Yashwant Sinha.
Thus the incest lies deep within both the regulator (ICAI) and the
Indian political system. Hence while two of their partners are in
jail no action is being taken against the firm.
Perhaps they got the idea from the President of the AICPA.
6. In the “more problems” department: The Indian Supreme Court on Monday, Jul 13 has handed over a case to the Centre to decide whether to prosecute chartered accountant firm PricewaterhouseCoopers Pvt Ltd for alleged errors in computing its taxable income for 2000-01.
7. The restatement may take until next March, 15 months after the scandal was uncovered and almost a year after Tech Mahindra bought the company “blind.” It looks like Deloitte has opted out of the process because they may end up auditor of the whole enchilada.
Deloitte, which along with KPMG, had been mandated to restate the accounts of Mahindra Satyam,
is reliably learnt to have opted out of its restating role due to a possible conflict of interest. Deloitte is the statutory auditor for Tech Mahindra — a part of the Mahindra Group that had acquired Satyam Computer — and hence can’t undertake the twin roles, said people close to the development.
Finally, I have identified more examples of potential independence violations on the part of PwC with regard to Satyam like the one I described in the PwC/Idearc/Satyam engagement.
PwC and Satyam have been spending too much time together, in too close quarters, at a number of clients all over the world. When you add the scandal to the mix, it’s becoming pretty clear that PricewaterhouseCoopers International Limited’s relationship with their audit client Satyam was long and deep and broad and systemic. It went far beyond their audit relationship, surely can be perceived as compromising their audit obligations, and was directed by the highest levels of PwC and PWC IL management for the benefit of their “phoenix from the ashes” consulting practice.
Details on those client engagements in my next post.
Inside photo by by Jehangir Sorabjee taken during Ganesh festival in Mumbai courtesy of this website.
Main photo is the Haji Ali Dargah (Hindi: हाजी अली दरगाह), a mosque and dargah (tomb) located on an islet off the coast of Worli in Mumbai. Lying as it does in the heart of the city, the dargah is one of the most recognizable landmarks of Mumbai. The dargah was built in 1431 by a wealthy Muslim merchant and saint named Haji Ali who renounced all his wordly possessions before making a pilgrimage to Mecca.