In what amounts to another example of the Big 4 not having any control over their “global” operations, a new scandal has come up in Sri Lanka that involves both PwC and E&Y. According to the Sri Lankan Sunday Times the firms have “forfeited their reputations” in that country after working on a privatization transaction of a public enterprise.
The article is a tad on the long side so we’ll give you the highlights:
• Unauthorized preparation for the sale of SLIC – Both firms helped move the transaction along without the required approvals and questionable independence. Bureaucracy is a pain in the ass anyway.
• Manipulation of Accounts – Both firms were either producing or working with shoddy numbers and then weren’t exactly upfront about it.
Continued, after the jump
• Conflicts of interest – “Deva Rodrigo, a senior partner of PWC, was also a member of the Steering Committee that selected PWC as consultants on the transaction. He supervised their work and authorized payments to them while he simultaneously worked for them himself and received a share of such fees as a Senior Partner, PWC Sri Lanka…The report stated that [E&Y] continued to be the auditors of SLIC after the purchasers took possession, management and control on April 11, 2003. At the same time, E&Y was committed to audit SLIC accounts on December 31, 2002 and April 11, 2003 for the government, i.e., the sellers. The report further states that because of its representation on the Steering Committee, PWC was aware of the misconduct of E&Y.”
This less than flattering news for P. Dubs and E&Y follows the snoozer raids of the E&Y offices in Hong Kong and the PwC and KPMG offices in Reykjavik, Iceland. Regardless of the lack of dramatic moments in these raids, we can safely say that the firms would rather that they make news by issuing less than objective reports rather than raids and scandals involving blatant chicanery by their employees.
Dennis Howlett points out that the firms continue to market themselves as “global” firms when it’s pretty obvious that there is very little control over what goes on in each individual country: “Message to the Big Four: stop pretending you are in control of the global networks. Either do the job properly or acknowledge that in reality it’s all a PR stunt.”
Does DH have a point? Are firms just faux-global? Sure you can do a rotation, new associates can get their own rooms in Rome, and you can send a prank email to a partner in Sydney from an intern’s laptop but is does that mean they are global organizations or just have money to burn?
Make your case for or against the ‘Global’ mantra in the comments.
PWC and EY heavily implicated in unlawful privatization [AccMan]
Unlawful privatisations in Lanka – Role of the Auditors [Sri Lankan Sunday Times/FT]