I spoke to a senior partner at PwC last night and he said he didn’t think the guys in the US were smart enough to pull off what I described. Kind of a backhanded alibi. However, what could have happened in India is clearly another kettle of dal.

Francine

I believe that the portrayal of the relationship between PwC and Satyam during the Idearc project documented in the Gartner report was a accurate depiction of a strategic relationship that existed both to bypass the IBM non-compete agreement and to further the business interests of both Satyam and PwC. PwC was Satyam’s auditors. The analyst day was a high level briefing that I am assuming was authorized by the highest levels of PwC leadership. That tells me that they were aware of this business and working relationship and condoned it in spite of the independence violation. The actual working relationship between PwC and Satyam in this case and the fait accompli nature of Satyam getting the outsourcing contract after working alongside PwC at this client was confirmed to me by parties who were there.

My opinion is that this was not an anomaly but a pattern of behavior by both PwC and Satyam and that it would not have occurred without financial incentives on both sides. Why do I believe that there are more examples? Because sources told me there were. I chose to find the likely fertile fields for this type of relationship between PwC and Satyam by reviewing publicly available information and allowing you, the reader, to come to your own conclusions. Some may agree, some may not. But deciding to look further into these connections and coming to the conclusion that such a scenario was possible, for me, was based on additional information from sources and my own personal experience.

I am proposing a hypothesis and asking you to evaluate it based on your own experience. We may come to the same conclusion or we may not. I am interested in your feedback either way.
Francine

Having lived and worked in the developing world for a number of years, I agree that it would not be too surprising to discover behavior in developing world practices that would not have been permitted in the US (note that I use “US” rather than “developed world” intentionally – I do not have the impression that the independence standards have been hammered into Europe or Asia as thoroughly as in the US). In fact, I recall commenting to folks from the PCAOB at the time of its formation that there was a high risk of the next meltdown being in the developing world.

However, what would surprise me would be to find that the senior US leadership of a Big 4 firm was not only aware of that behavior but was encouraging it, which I believe is what you’re suggesting.

Best,
AA