The truth is out: PwC is losing its top professionals

Exit figures PwC Global Chairman Dennis M Nally has a lot to worry about the India operations
Exit figures PwC Global Chairman Dennis M Nally has a lot to worry about the India operations

TWO INCIDENTS in a fortnight have taken further wind out of the sails of Pricewaterhouse Coopers India (PwC). The first was market regulator Securities and Exchange Board of India (SEBI) getting the Bombay High Court’s nod to probe allegations of irregularities against PwC auditors in the Satyam scam. And the second, reports that there could be a fresh exodus from the audit firm after Dinesh Kanabar, former head of PwC’s tax practice, left in 2009 with 19 partners and around 180 professionals to join KPMG India.

PwC is getting little support. The finance ministry is reportedly unhappy the firm’s auditors were embroiled in the Satyam scandal; and the Institute of Chartered Accountants of India (ICAI) has sided with the finance minister, saying it welcomed the Bombay High Court ruling that allowed SEBI to proceed with its inquiry against the audit firm for its alleged role in the Satyam scam. The UKbased company was trying to challenge SEBI’s jurisdiction over the audit firm, claiming it had nothing to do with the securities market. But the judges were not convinced. “We welcome the ruling,” ICAI president Amarjit Chopra told TEHELKA, adding that being an institute, the ICAI could not proceed against any firm. SEBI, which had the authority to do so, served it a show cause notice, asking why it did not react, though it is said to have been aware of the Satyam mess for years.

Attrition is PwC’s other big worry. Recently, all but one of the seven partners of its government reforms and institutional development (GRID) practice — a key one offering advisory services on energy, infrastructure, state government reforms, public finance and public sector restructuring — resigned, citing irreconcilable differences between the Indian and the global managements. A newspaper report said they were joining Deloitte Touche Tohmatsu India.

THE GRID practice generated Rs63 crore in 2010. The figure could be as high as Rs 80 crore next year — a fourth of the total projected revenue of PwC’s advisory practice. Another recent high-profile exit was that of Kaushik Dutta, head of PwC’s advisory services on International Financial Reporting Standards, who could be starting an independent research centre on economics and social sciences, with help from Grant Thornton LLP, the world’s fifth largest professional services firm.

SEBI has been allowed to probe PwC auditors’ involvement in the Satyam scam

“Some GRID executive directors are likely to pursue interests outside PwC. Nothing is final as yet,” disclosed a company spokesperson. Leading the pack is practice leader Vedamoorthy Namasivayam. The other six GRID partners are Debashish Mishra, Vishwas Udgirkar, Amrit Pandurangi, Latha Ramanathan, Shubhranshu Patnaik and Kameswara Rao. There were chances, said top PwC officials, that other members of the GRID team could join the exodus. “Post- Satyam, a serious discord continues to mess up relations between the global and Indian operations of PwC,” a top company official said, adding that handling the India operations, on and off from Singapore, was becoming difficult for chairman Gautam Banerjee.

It is learnt that Banerjee wanted to absolve himself of the India responsibility, because he found the market too complicated, but has been requested to hang on till December before taking a final call. Meanwhile, in October, PwC Global Chairman Dennis M Nally is planning to visit India to investigate why growth in this market has virtually come to a halt.

Photo: AFP Montage: Sudeep Chaudhuri


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