While India reels under the effect of the PNB scam, an anonymous letter has made yet another allegation of “rampant corruption” – involving both private parties and government officials. The letter dated December 5, written to the Prime Minister alleges that the multinational consulting firm KPMG offers high-paying jobs to the children and relatives of bureaucrats to bag consulting projects and to influence awarding of contracts. The author of the letter claims to be an IAS officer working at the post of a director in the union government.
A KPMG spokesperson has denied any wrongdoing in a statement to The Caravan magazine, which published the letter today. The statement says the letter is “replete with factual errors”. However, it has not contested the names of its employees listed in the letter or their relation to bureaucrats.
The author of the letter makes four broad allegations:
1. They say that a bribe was offered, though not taken and not reported, to a joint secretary in their department for awarding “a large consulting project” to KPMG.
2. They list the names of nine KPMG employees (name withheld in Caravan’s report) and point out that they were hired when their parents or relatives were working in key government posts, “where eventually, large consulting assignments were given to KPMG”. This is tantamount to a bribe, the letter says, because these jobs pay an employee over Rs 40 crore in a lifetime at today’s salary levels.
3. They allege that KPMG India’s head Arun Kumar, being a former US government functionary, has been pushing US firms in India, which is made possible by KPMG’s influence over bureaucrats.
4. Finally, they allege that this influence goes beyond KPMG. “A quick investigation will reveal that government projects worth over Rs 300,000 crore are being handled by US consulting firms and that atleast 100 top bureaucrats have their children or relatives working in these consulting firms (sic),” the letter says.
Three of the nine employees listed in the letter are related to top bureaucrats in the urban ministry. Explaining how the influence works, the letter says that KPMG is executing two national projects under the ministry – HRIDAY and and Swachh Bharat. “In fact, KPMG is involved in all our key national projects, including Make in India, Smart Cities, Startup India, Bharatmala, Sagarmala, AMRUT, etc,” the letter says.
At the state level, the letter claims the firm won projects with an outlay of Rs 5,000 crore across Andhra Pradesh, Telangana, Rajasthan, and Gujarat because it could influence decision making “by hiring children of powerful bureaucrats”. “In fact, KPMG will be running your flagship program, Vibrant Gujarat, for the fourth time, while the norm is that each consulting firm gets only two terms to run the prestigious program,” the letter adds.
This influence, the letter suggests, benefits not just KPMG, but other multinationals too. The United States Trade and Development Agency (USTDA), the US government’s arm that pushes the country’s trade interests globally, the letter explains has “exclusively appointed KPMG to work with the US government to push US firms” into the Smart Cities programme. KPMG is headed by Arun Kumar in India, who was the Assistant Secretary of Commerce for Global Markets and the Director General of the US and Foreign Commercial Service during President Obama’s second term.
The author of the letter alleges that the result of this network, where Indian bureaucrats are betrothed to KPMG and KPMG is tied to the interests of US firms, is that “all equipment for Smart Cities is coming from US firms and most service providers are from US”. “Hence tenders are coming out with Cisco equipment specifications, making it impossible for competent Indain firms such as Tejas network to compete,” the letter explains.
“Similarly, we do not see Wipro and Infosys in the implementation of the projects but US firms involved, as the terms and conditions make it difficult for the Indian firms to compete,” the letter adds. This happens, the letter alleges, because children and relatives of several bureaucrats work for KPMG.
KPMG is regarded as one of the “big four” consulting firms. The other three firms are Ernst & Young, PwC, and Deloitte. The letter alleges that all four of these influence the government in a similar manner, with children or relatives of at least 100 top bureaucrats working in these firms.
In a statement to The Caravan, KPMG said that the allegations of wrongdoing are “totally baseless”. “Talent at KPMG is recruited solely on the basis of merit and the organization has robust processes to ensure objectivity and fairness in selection and promotions,” the letter reads, and adds that the insinuations made in the letter are “replete with factual errors”. The firms also defended Arun Kumar by saying that his work at KPMG India is unrelated to his prior role in the US government.
The Prime Minister’s Office had not replied to questions about action taken on the letter by the time The Caravan published the story. The letter, the magazine’s report says, “has been doing the rounds in government circles in recent weeks”. “Reliable sources”, not named in the report, confirmed the authenticity of the letter to the magazine.