Allegations of Corruption Against KPMG India: An IAS Officer's Anonymous Letter Raises Serious Concerns
On February 23, 2018, an anonymous letter from a senior Indian Administrative Service (IAS) officer to Prime Minister Narendra Modi made serious allegations against the multinational consulting firm KPMG's operations in India. Dated December 5, the letter claims that KPMG is involved in corrupt practices by leveraging relationships with key government officials, including recruiting their children and relatives. The officer describes a pattern of collusion between KPMG and senior bureaucrats, suggesting that these relationships influence major government contracts, to the detriment of domestic industry.
Details of the Allegations
The letter alleges that a senior executive at KPMG India’s government advisory services attempted to bribe a joint secretary with a "substantial bribe" to secure a lucrative consulting project. Although the joint secretary refused the bribe, they did not report the incident, fearing KPMG’s considerable influence over senior government officers. The officer highlights that KPMG has hired relatives of several high-ranking bureaucrats, a practice that raises questions about integrity and accountability in public service. According to the letter, this practice effectively operates as a “bribe” in a different form, with lucrative jobs offering salaries potentially exceeding Rs 40 crore over a career.
Specific Examples of Connections
The letter lists nine senior officers whose relatives allegedly hold positions at KPMG, including those connected to the Ministry of Urban Development and the Smart Cities mission. For instance, it names the son of a former secretary currently in the Ministry of Home Affairs and the nephew of an additional secretary. These individuals are alleged to have been in pivotal roles when KPMG secured substantial contracts for various government initiatives, including the Swachh Bharat project and the Atal Mission for Rejuvenation and Urban Transformation.
Accusations Against KPMG Leadership
The letter specifically calls out Arun Kumar, the India head of KPMG, alleging that his past connections with the U.S. government have biased him towards American firms in government contracts. It claims that U.S. companies like Cisco and IBM have benefited disproportionately from Indian government projects, causing significant job losses domestically.
The author of the letter asserts that the corruption extends beyond KPMG, suggesting that similar practices are prevalent among other "Big Four" consulting firms, which reportedly employ the relatives of many senior bureaucrats. The director claims that these connections diminish accountability within government decisions, facilitating a culture of crony capitalism.
KPMG's Response
KPMG has vehemently denied the allegations, characterizing the letter as “baseless” and suggesting it was motivated by “malicious competitive intent.” The company emphasizes its commitment to transparency and merit-based recruitment, stating that its associates are hired based on qualifications rather than familial connections. KPMG's spokesperson asserted that the letter is filled with factual errors but did not specify any corrections or disproven claims.
Reaction from the Consulting Sector
A top executive from one of KPMG’s competitor firms expressed concern over the culture of corruption in the consulting industry, noting that the relationship between government officers and consulting firms fosters a system of cronyism. This sentiment echoes the broader discussion around wealth inequality and the "revolving door" between corporations and government, which continues to shape public policy and investment in India.
The Fallout
The allegations come amid heightened scrutiny of multinational firms operating in India, following the Securities and Exchange Board of India’s (SEBI) decision to ban the Indian arm of PwC from auditing for two years due to its involvement in the Satyam scandal. This context highlights the growing concern regarding the intertwining of corporate interests and public governance.
Conclusion
The anonymous letter has ignited a debate about the integrity of consulting practices in India and the potential collusion between bureaucrats and multinational corporations. As the anonymous IAS officer urges Prime Minister Modi to take action against corruption, the situation underscores the challenges of maintaining accountability and transparency in governance, especially as the influence of large consulting firms continues to expand.
The Prime Minister’s Office has yet to respond to the allegations made in the letter, and further developments remain to be seen. This report is based on an article published by The Caravan.
