PricewaterhouseCoopers India grappling with people issues even after two years of the7,000-crore Satyam fraud case
MUMBAI: PricewaterhouseCoopers India, one of the largest and oldest professional services firms in the country, is grappling with people issues, including an inability to clearly specify the future role of a former chief and a failure to stem senior partner exits as clients fret on the possible impact from multiple investigations into the Satyam case.
Two years and an SEC investigation later, uncertainty surrounds the fate of former PwC India chairman, Ramesh Rajan, as the 130-year-old firm has not yet relieved Rajan, nor has it given him a new role. Rajan had stepped down immediately on moral grounds after PwC India's audit firm Price Waterhouse, was alleged to have been involved in the7,000-crore Satyam fraud case, which stunned the corporate world in 2009. Price Waterhouse was the statutory auditor of Satyam, now known as Mahindra Satyam.
Despite the completion of an investigation by US capital markets regulator SEC, where PwC was fined $7.5 million, the firm is still undecided about Rajan's tenure, sparking speculation about the firm's plans for the previous chief. The 53-year-old former chairman who was elected to the top post of the over1,200-crore firm in 2007, in a closely-contested election, is now without any official role.
The global network of PwC, in its efforts to salvage the firm's reputation after the Satyam case, brought in Gautam Banerjee from Singapore, who after completing a year, left to be replaced by Deepak Kapoor.
Rajan, who is now in Chennai, declined to comment for this story. Responding to questions from this paper, PwC said Ramesh was taking on a new role. "Ramesh continues and is taking on a new important role with PwC Network in its Global Audit Delivery services."
Multiple Investigations
The firm is also facing class action lawsuits amounting to $25 million and investigation by Indian regulators.
The Institute of Chartered Accounts of India, the accounting regulator, has sent a showcause notice to PwC India, asking why the firm should not be shut down after the SEC investigation proved that the firm was guilty of gross negligence. The Bombay High Court has ruled that Sebi can proceed against the firm if collusion of the firm's partners with the former management of Satyam is established.
Price Waterhouse partners, S Gopalakrishnan and Srinivas Talluri, are on trial in Hyderabad for allegedly being hand-in-glove with Satyam's former management.
The company said the US probe had not indicated any collusion.
"Settlement with SEC and PCAOB, to resolve all US regulatory issues for PW India regarding Satyam are a key part of putting the Satyam issue behind us. It is clear from the settlements that the US regulators did not find evidence that anyone from PW India was involved in or knew about the fraud at Satyam. PW India is co-operating fully with Indian regulators and others into the various investigations that are taking place into the Satyam situation.
Two years and an SEC investigation later, uncertainty surrounds the fate of former PwC India chairman, Ramesh Rajan, as the 130-year-old firm has not yet relieved Rajan, nor has it given him a new role. Rajan had stepped down immediately on moral grounds after PwC India's audit firm Price Waterhouse, was alleged to have been involved in the7,000-crore Satyam fraud case, which stunned the corporate world in 2009. Price Waterhouse was the statutory auditor of Satyam, now known as Mahindra Satyam.
Despite the completion of an investigation by US capital markets regulator SEC, where PwC was fined $7.5 million, the firm is still undecided about Rajan's tenure, sparking speculation about the firm's plans for the previous chief. The 53-year-old former chairman who was elected to the top post of the over1,200-crore firm in 2007, in a closely-contested election, is now without any official role.
The global network of PwC, in its efforts to salvage the firm's reputation after the Satyam case, brought in Gautam Banerjee from Singapore, who after completing a year, left to be replaced by Deepak Kapoor.
Rajan, who is now in Chennai, declined to comment for this story. Responding to questions from this paper, PwC said Ramesh was taking on a new role. "Ramesh continues and is taking on a new important role with PwC Network in its Global Audit Delivery services."
Multiple Investigations
The firm is also facing class action lawsuits amounting to $25 million and investigation by Indian regulators.
The Institute of Chartered Accounts of India, the accounting regulator, has sent a showcause notice to PwC India, asking why the firm should not be shut down after the SEC investigation proved that the firm was guilty of gross negligence. The Bombay High Court has ruled that Sebi can proceed against the firm if collusion of the firm's partners with the former management of Satyam is established.
Price Waterhouse partners, S Gopalakrishnan and Srinivas Talluri, are on trial in Hyderabad for allegedly being hand-in-glove with Satyam's former management.
The company said the US probe had not indicated any collusion.
"Settlement with SEC and PCAOB, to resolve all US regulatory issues for PW India regarding Satyam are a key part of putting the Satyam issue behind us. It is clear from the settlements that the US regulators did not find evidence that anyone from PW India was involved in or knew about the fraud at Satyam. PW India is co-operating fully with Indian regulators and others into the various investigations that are taking place into the Satyam situation.
Senior-level Exits
PwC, according to company insiders who spoke on condition of anonymity, is experiencing flat growth in revenue - the firm's financials are not in the public domain - and a sharp erosion in profitability. A number of senior partners, who have led the firm's key practices, have either left the firm or have stepped down from active roles, leading to complaints from clients about the quality of services.
In June, Jairaj Purandare, managing partner and country leader for markets and industries, left the firm. Sharat Bansal, who was heading the lucrative advisory practice, has stepped down from an active role in the firm. Grid practice leader Vedamoorthy Namasivayam quit to join Deloitte, taking with him about 100 professionals.
In its response, PwC said in a competitive industry "people come and go". "We have a very strong management team and an excellent group of partner and staff who are all committed to quality work. Sharat Bansal continues to be an executive director in the firm. We have seen a healthy growth of our staff numbers with a current strength being 7,000 and counting. Our partner/executive director number in all PwC network entities in India today stands at 160+ and is the highest ever till date, with 18 new admissions in the last four months."
The firm which grossed a revenue of1,200 crore two years ago, has seen flat growth mainly due to a fall in the number of clients. While PwC maintains that only about 2-3% of clients have moved on, people familiar with the situation and companies who had earlier employed Price Waterhouse as their statutory auditor, say the firm has lost more number of clients.
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