“YOU ARE FIRED!”

By Ruma Dubey

“Zero tolerance for unethical behavior!” Saying that is one thing but actually acting upon it is quite another!

The Chairman and CEO of KPMG, one of the four from the “Big Four” auditing firms,  uttered these words and actually fired her top man and deputy for indulging in what could be termed as “insider trading.” It was not for any stock market benefit but information was leaked or traded to ensure that it saves its name.

Scot Marcello was the top auditing official and it is alleged that he and six of his employees received improper warnings ahead of planned audit inspections by the regulator, Public Company Accounting Oversight Board (PCAOB) – it polices the auditors of USA. The news is that one individual, who had recently joined KPMG from PCAOB had information about an oversight, which if the PCAOB had detected could have further added to the deficiencies at KPMG. Thus despite getting leaked information, instead of reporting about this, the top guys used the information to try and correct a wrong.

This, in India would not even get mentioned; in fact similar things must be happening all the time. We might not even call this “integrity.” But KPMG decided to do the right thing and fired the people who had acted upon leaked information though it was to save KPMG from some bad name. This was considered to be a violation of a code of conduct.

But then again, did KPMG do the right thing or it was forced to do the right thing? KPMG has been facing a lot of flak and many a questions have been raised about its failure to uncover illegal sales practices in Wells Fargo during the 2008 crisis. Even the allegation of corruption at FIFA has put a smear on its name. In fact amongst the Big Four, KPMG has the highest number of deficiencies cited by the accounting board in each of the past two years. So in many ways, this awakening of integrity could be more for political reasons than really about code of conduct.

The point though is that Scott was the top guy and had a solid reputation of thirty years and almost everyone who knew him vouch for his integrity. Yet, he did what he did and he was fired. How often do you ever hear in Indian corporate world that a celebrated and well reputed top guy is fired? That’s like a misnomer, almost like saying politicians will be caught and tried for their atrocities.

In India, corruption exists and so does it in USA but what they call corruption, we in India do not even think about it as anything wrong. In fact in India if someone had done the same thing, corrected a wrong which could have later proved to be costly, the stock price would have soared and the top guy could have got a hefty bonus. It is like the concept of cleanliness and hygiene – what is clean to us is dirty and filthy to them and we cannot ever imagine reaching their levels of cleanliness.

Scott and his employees breached trust and they might get punished. But how many of us can today believe that our system will even recognise breach of integrity as a crime? That in a nutshell probably shows have deeply our values have fallen into the abyss.