The Bombay High Court on Thursday ordered the disciplinary committee of the Institute of Chartered Accountants of India (ICAI) to provide a fair hearing to Partha Ghosh, a Price Waterhouse (PWC) partner and a senior manager, DVP Rao, in connection with a case of alleged professional misconduct.
The duo, both chartered accountants, had audited the accounts of Global Trust Bank in 2003. ICAI had, based on news reports, alleged that the external auditors had approved suspect accounts and data in RBI’s annual financial inspection (AFI) report, ordered that an inquiry be conducted by the disciplinary committee for alleged professional misconduct.
“We have no hesitation in holding that the disciplinary committee has failed to act in conformity with the provision… and settled cannons of natural justice and fair play,” division bench of chief justice Swatanter Kumar and justice SC Dharmadhikari observed. The court also held that Mr Ghosh and Mr Rao had “not been given a fair deal” and their rights stand violated.
Mr Ghosh and Mr Rao contended that there was significant divergence in the report of the special auditor M Bhaskar Rao, appointed by RBI for the financial year ending March 31, 2002, and the 2002 AFI report. RBI had recommended additional provision to the extent of Rs 596.3 crore, while according to the special auditor, the provision was only for Rs 373.43 crore.
For the year ending March 31, 2003, the non-performing assets were shown in the notes at Rs 915.8 crore and accounts were qualified to the extent of Rs 311.61 crore, they added.
However, in AFI 2003 report, RBI had recommended provisioning requirements far in excess of those contained in the report of the special auditor as well as those contained in the accounts for March 31, 2003, which had been audited by Mr Ghosh and Mr Rao. When the inquiry was being conducted by the disciplinary committee, in October, last year, the petitioners sought to cross-examine RBI’s witnesses who had knowledge of the facts stated in the chargesheet against them.
But the officer did not attend the hearing and no documents were submitted. Also, attempts were made to deviate from the set procedure, the PwC officials alleged.
In March this year, the members of the committee were changed and the new members did not clarify the procedure to be adopted. The order rejecting their application seeking adjournment was also not provided to Mr Ghosh and Mr Rao.
The court held that a copy of the order be provided to the petitioners and until the directions are complied with, the committee should not submit its report to the Council of ICAI.
The matter on the net goes as under
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…I’m hearing that Price Waterhouse India has been playing fast and loose with quality and pushing the envelope on independence for a while. Price Waterhouse holds a special place in the Indian business community due to their long presence in India, more than 100 years. They are grandfathered in to many of the rules that have ben established more recently for others.
For example, partners who retire are not permitted to hold positions in boards of companies that are audited by their former firm. Price Waterhouse India has done exactly the opposite. As soon as Amal Ganguli retired as a senior partner in 2003 and immediately he joined the boards of the companies he himself audited : HCL, NIIT,NDTV and Maruti –just to name a few.
Similarly Satyabrata Ghosh another retired senior partner joined the board of Global Trust Bank while his protégé Amal Ganguli signed the accounts. In the last year just before Global Trust Bank collapsed, Satyabrata Ghosh was a director of the bank while his own nephew Partha Ghosh a partner of the firm signed the accounts of the bank
Yes, agreed to the views of the Bombay High Court that the PWC partner need to be given a fair hearing. But, just go through the article below, which I have read on the net. All set aside, would it not be shocking that a problem occurs with a bank where the ''uncle'' is on the board and his own nephew, in this case Mr. Partha Ghosh', the PWC partner, has signed the accounts. This is shocking and a strong evidence for the court and the ICAI to evaluate.It is blatant compromise with the ethics that professionals of this profession are required to hold on to. Read it and you will be shocked.So, if Mr. Gopalkrishnan and Mr. Talluri can go behind bars in the Satyam case, why not Mr. Partha Ghosh in the GTB's case.Here in the GTB case the blatancy is more apparent. Why such a discrimination? The ICAI or the court should consider this too.
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