PricewaterhouseCoopers India grappling with people issues even after two years of the Rs 7,000-crore Satyam fraud case

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 the Rs 7,000-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 over Rs 1,200-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.