By Roopen Roy Aug 05 2016
Tags: Leisure Writing
The two firms, Price Waterhouse and Lovelock & Lewes, which merged to form PwC India were born nearly 140 years ago in Calcutta. Both had a timid and mild bhadralok culture. There was no cut-throat competition. Succession of the CEO and the leadership team were planned well ahead. There was no tradition of contested elections for the office of the CEO or the chairman.
In December 2001, Jim Schiro, the global CEO of PwC, unexpectedly resigned without completing his second term. Sam DiPiazza took over in January 2002. Sam succeeded in divesting PwC’s consulting practice to one of its largest audit clients IBM and things started rapidly changing.
Sam then took over as global chairman in 2005 and shortly thereafter we had a meeting with him in New York. I was then the managing director of PwC in India and R Datta, the chairman. The meeting was joined by Frank Brown who was the global business advisory services (BAS) leader. I sensed in the meeting that Frank Brown was not part of Sam’s inner cabinet. My hunch proved right. Next year, in 2006, Frank quit PwC to become the Dean of INSEAD in Fontainebleau, France.
As soon as Frank left, Sam did a reorganisation that reflected his game-plan and preferences. He put his very loyal protégé Gene Donnelly in charge of both global tax and global BAS. This was a most unusual move. No big four firm had done a reorganisation of this nature, before or since. It is like making one cabinet minister responsible for defence, home and external affairs, all at the same time.
I met Gene Donnelly for the first time in Amsterdam in 2006. He had called the global leadership meetings of both tax and advisory in the same hotel in separate rooms and ran the sessions in parallel. Legend has it that the Bengali poet Michael Madhusudan Datta used to dictate three different epic poems to three separate teams of pundits contemporaneously but in turns. But this was the first time I was seeing such a class act in a global firm.
In the evening, Gene and I went for a drink at the bar of the Grand Krasnapolsky’s Winter Garden near Dam Square. The Winter Garden is my all-time favourite with its slanted glass roofs and tropical trees resembling a hot house. He told me about the critical role he had played in easing out the previous CEO Jim Schiro. He took immense pride in being the chief architect of the regime change.
He also did something unexpected and strange. He presented me with a box containing a bobble-head doll created in his own image, a kind of “mini-me” with his name emblazoned at the base. Later I discovered that he habitually presented one to each of his “subordinates.” He expected each one of them to keep the bobble-head doll at his/her office desk. When I visited his office in New York, I found the bobble-head doll on every desk, including his own. Gene was obviously serious about his image.
A few months later Sam put Gene Donnelly in charge of India. Gene was the ultimate micro-manager. For such leaders, a pliant management who will execute instructions without questions is a pre-requisite. Soon he realised that was not going to happen in India. He then decided he needed a regime change in India: a regime of his liking.
He wanted a new CEO of his choice. To make way for the new elections, both the chairman and I stepped down on February 16, 2007. The supremacy of the global headquarters in a big four accounting firm is subtle in its appearance but over-powering in its dominance. The local firm derives a significant part of its revenues from the global network clients. PwC had cut loose its Japanese affiliate ChuoAyoma when it was suspended by Japan’s Financial Services Agency in connection with an accounting fraud by its client Kanebo in 2006. Almost immediately, ChuoAyoma sank out of existence. We all knew that standing up against the global chairman’s appointee was not an option.
At the meeting of the partners held in Delhi on February 16, 2007, we approved the acquisition of RSM. As a result, 19 new partners were admitted taking the number of partners from 80 to 99. Gene Donnelly announced that the elections would take place in April 2007. Meanwhile, he announced D Kapoor as the interim CEO hoping that his confirmation by election would be a cake-walk.
In this all-partners’ meeting, he requested the chairman R Datta to speak. He declined. I was requested to speak and was handed a piece of paper on Taj Palace hotel business centre notepaper in Gene’s own handwriting which I preserve to this day. It said:
“Partners, before you vote on the new governance, I’d like to make an announcement. I am proud of PwC and all that we have accomplished together. As I look around the room, I see many talented partners who I believe are ready for greater responsibilities. Therefore, effective immediately I am stepping down as managing partner. I will also not stand for nor serve as a POC or TSP. I look forward to spending 100 per cent of my time serving clients and to new leadership of our wonderful firm.”
For those who are not aware, POC stands for partner oversight committee which is like the board of directors and TSP is the territory senior partner or CEO.
Since I took the speech written by him, he assumed I would read it out verbatim. I had mentally taken the decision not to serve under him and to quit PwC. Therefore, I did not care. I went and told my partners that PwC was a firm with more than 125 years of history, India was a free country and they should vote for a candidate who was independent and was not a rubber stamp. As soon as I came down from the podium I talked to N Ramesh Rajan and said, “I am going away to HBS to complete the advanced management programme (AMP). You are our only hope. You must contest the election.”
I left for Boston in the end of March 2007. In the last week of April, I voted electronically from HBS. A couple of days later I was awoken in the middle of the night in Boston. The person on the other side of the phone said, “Are you aware what has happened in the elections? There has been a tie with Rajan and Kapoor receiving 49 votes each.”
I expressed surprise. There were 99 partners, so a tie was an arithmetic impossibility. Secondly, Gene had instructed the 19 new partners from RSM and, anyone who cared to listen to him, to vote for his nominee Kapoor. Unless there was a landslide of existing partners in favour of Rajan how was this possible?
It transpired that a tax partner was overseas. He could not manage the logistics to vote electronically. Therefore, 98 votes had been cast, 49 on each side despite the 19 RSM partners voting together. I was told there would be a re-poll. I then called and spoke to three partners whom I knew would switch if I made a request.
The Economic Times of May 5 carried the following news: “Late Wednesday night, Ramesh Rajan, 49, a partner with Lovelock Lewes (one of the PwC network firms), finally won the chairman’s seat. Delhi-based Deepak Kapoor, the interim CEO and a strong contender, lost the election.” Insiders told me that Rajan won by seven votes. This reconciled accurately: the three swing voters changed their minds and the tax partner had managed to vote this time.
There is a sequel to this story. After the elections, Gene Donnelly lost all credibility with the global leadership on his reading of India. At the request of the newly-elected chairman Rajan, Gene was replaced in his India oversight role by a British partner. Sam stepped down as CEO and chairman before his term ended. Gene Donnelly contested the election to become global CEO but was trounced by the charismatic Dennis Nally who was a protégé of Jim Schiro. The chickens had come home to roost for my bobble-head boss.
Gene quit PwC to join a private equity firm as a CFO. He wrote an email congratulating me on my assuming the leadership of Deloitte Consulting. Soon thereafter, he left the private equity firm to enjoy his quiet retirement.
(Roopen Roy was the Managing Director of PwC India, thereafter managing director of Deloitte Consulting, India and is the Founder and CEO of Sumantrana, a strategy advisory firm)
Chez Roopen >