PricewaterhouseCoopers limited (PwC), one of the leading global auditors manning the accounts of the most sensitive Government departments such as Ministry of Defence and Ministry of Environment at the Centre, is in the mid of a huge controversy.
On Friday, the Supreme Court directed the company and its partner firms across the country to respond to a PIl by NGO Centre for Public Interest litigation, which alleged serious fraud and irregularities in PwC’s operations that related to evasion of Income tax, violation of Foreign Direct Investment (FDI) policy, FEMA Regulations and standing orders of RBI.
The court even sought the response of Ministry of Finance, Reserve Bank of India, Central Board of Direct Taxes, and Institute of Chartered Acco untants of India (ICAI) on the said charges within four weeks. Presenting a wealth of documents to support its charge, the NGO in its petition filed through advocate Prashant Bhushan pointed to successive infusion of funds into the company of sums ranging from Rs 40 crore to Rs 240 crore without disclosing source, considered mandatory under FDI and RBI regulations.
In the balance sheets of the company, the said amounts were initially listed as reimbursement of expenses, but later fudged to be shown under the head of “Support” and finally changed to “Grant”. During 2011-12, the company pooled the insurance premium of the private limited company and its various partner firms to claim benefits. Under the Companies Act, this cannot be permitted as each company is a separate legal entity, and so they have registered as independent firms with ICAI.
Significant to note is the case of Satyam Computers, which inflated its accounts that later got exposed after the company head busted the myth behind the fictitious figures, landing him and PwC in a criminal case of breach of trust, presently under investigation by CBI.
The petition pointed out that following Satyam scam, PwC India was fined USD 7.5 million by the US agencies which made stinging criticism about the company’s approach in the audit process. As Government of India too hired the services of the company in question, the petition felt that the Central regulators may not be keen to probe into the irregularities.