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PwC Auditors Arrested In Satyam Fraud Inquiry
theodp writes "Indian police arrested two employees from the affiliate of PricewaterhouseCoopers who audited Satyam Computer Services, the IT outsourcing giant at the center of the nation's largest fraud inquiry. The move comes after Satyam founder Ramalinga Raju said he had fabricated $1 billion of assets and confessed to making up more than 10,000 employees to siphon money from the software company. State Farm Insurance has severed its ties with Satyam, citing uncertainty about the company's future as 'the only factor responsible for the termination of the contract,' which will reportedly affect at least 400 on-site Satyam employees. Other customers, including GE, are standing by Satyam, one of the top recipients of H-1B and L visas (so much for those $500 Fraud Prevention and Detection fees!)."
These folks are virtually a privatized branch of government. The US elites depend on companies like PWC to understand what is going on in big organizations. If PWC is compromised, that means the US elites are effectively flying blind.
Now, personally I think use of H-1b workers for critical financial infrastructure is stupid. It is impossible for an American to do a good background check on someone in/from India.
Nobody really knows how they will react when they have a chance to steal millions of dollars. Putting a young guy far from home into the position where he can do that-and the costs are born by citizens of a country he may not identify much with isn't doing that country or the young guy any favor.
There are differences in the real costs of some things. The problem is exchange rate differences. That is, work 40 hours in place A and you can live for a week there or then take that cash and live for a month in area B. Do that same 40 hours of work in area B and you can't even live for a day in area A.
The problem comes in because it's much easier to move a job overseas where labor is cheap than it is to move oneself overseas to where jobs exist.
Were the exchange rates equalized out, beef in Japan would still be more expensive due to shipping costs and houses in the middle of nowhere would still be cheaper, but there would be nowhere near the differences we see now between labor and living costs in (for example) New York and Mumbai.
In turn, that would lead to greater efficiencies overall. A pair of shoes takes X hours of human labor no matter where that labor happens. Currently it happens far away from the market they're sold in and then they get shipped halfway around the world. Were things equalized, they would still require X hours of labor but would only be shipped 1000 miles over land (much less resource intensive).
Economy is supposed to serve the people, not the other way around.
And that the auditors were a local subsidiary of PwC, well outside of US jurisdiction.
AFAIK, a US firm is responsible for ethical conduct irrespective of the country it operates in. For example, if your US firm's subsidiary bribes an Indian official , US courts have jurisdiction over the parent company in the matter
If something goes south we can take them to court, but short of that I can drive over to their office and find out for myself what's going on. Not so easy to do if your vendor is in Bangladore, now is it?
Outsourcing is a skill. You cant outsource work to the first tom dick or harry that quotes the lowest. You need to do your homework.Its challenging, and those from your side of the pond who have lived upto the challenge have saved millions of dollars in labor costs.
I have zero sympathy...and the meter readings to prove it
I have zero sympathy too. I and countless others lost our investments overnight as Satyam plummedted 80% within hours.
We can fix our regulatory environment and I frankly don't give a crap what happens in yours.
Unfortunately, the days , when people/comapnies/nations could island themselves economically and didnt give a crap what happened elsewhere, are over.You cannot stay unaffected, and sooner or later, you will be splashing in the very same crap.
Maybe stick to managing your own problems, that might be a good start.
Actually thats exactly what I was doing. I work for a shared project team half of which works in US and half is in Bangalore. Your very own US guy coded a deadlock in a "single writer multiple reader", and yours truly, the cheap coder fixes it.
> a culture where bribery can be a way of life
I hate to break it to you, but there are places where that's true in the U.S., too. There are places where it's difficult to impossible to get a water meter put in or a building plan approved without bribery. Doing it legally makes you the exception rather than the rule, it takes months or years longer to get it done, and you've got a good chance at being rejected on spurious grounds.