PwC banned from Kerala state government projects for two years

07 December 2020 Consultancy.in
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PwC has been slapped with a “breach of contract” charge by the Kerala state government in the Space Park saga, banning it from any involvement with the Electronics and IT Department for the next two years.

The Big Four accounting and advisory firm was involved in developing a Space Park – a cutting edge innovation and manufacturing hub for space technology – in Thiruvananthapuram since last year. In July, PwC was asked by the state government to wind down its work in the project.

The firm’s downfall was Swapna Suresh – a politically connected individual who was appointed as operations manager for the Space Park by one of PwC’s sub contractors – Vision Technologies. Suresh has subsequently been arrested in a high-profile gold smuggling case, while allegations are that she fudged her professional qualifications for the position.

PwC banned by Kerala State Government

At the time, PwC came under the gun for poor due diligence. A Kerala government official explained to Times of India that “PwC was asked to provide a qualified resource for the existing opening,” and that it was a “failure on the part of the consultants to ensure that a proper candidate is recruited.” 

Now, a panel led by Kerala’s Chief Minister Pinarayi Vijayan has reiterated that the “entire responsibility to satisfy the credentials and integrity of resources persons in Space Park lay upon PwC,” which puts the firm in “serious breach of contractual obligation.” 

The meeting was held to debate PwC’s involvement with the Kerala government – which extends across several projects – and the conclusion is that PwC will be banned from engaging with the state’s Electronics and IT Department for the next two years. The firm was involved as a consultant for the Kerala Fibre Optic Network – a contract that has also been terminated.

And there is more bad news for the firm. Reports suggest that an anti-corruption inquiry is due to be launched, which will scrutinize all those involved in Suresh’s appointment, including PwC, senior government officials and Kerala State Information Technology Infrastructure – the government body that hired PwC.

The premise is that high-profile connections and “favouritism” were used to secure the contract for Suresh, who stood to make a salary of Rs. 2 million at the expense of state government coffers. The inquiry is yet to be confirmed, although PwC’s ban has been enforced with immediate effect.