MUMBAI: Richard Rekhy’s leadership role at KPMG India was curtailed as the firm’s global bosses sought to right the ship following the recent departure of 20 partners and 300 others by handing over effective charge to deputy CEO Akhil Bansal.
More than a dozen KPMG executives confirmed the development in conversations with ET. “All heads of service lines will report directly to Bansal,” said a partner. “These changes were announced by a US partner who represented global headquarters in a video conference with senior Indian leaders after many rounds of consultations.”
Under the new arrangement, Rekhy will continue as India CEO but will handle mostly client-facing and global coordination responsibilities.
“There is a strong chance that he might get a global role,” said the partner. Rekhy had been re-elected unopposed for a second term as CEO on January 8.
KPMG drama: Global heads step in to steady ship
A KPMG spokesperson told ET that Rekhy will remain India CEO. “We would like to confirm that Richard Rekhy is the CEO of KPMG in India and continues to have the overall responsibility for KPMG’s business in India,” KPMG said.
“Akhil Bansal, who was appointed as the deputy CEO of KPMG in India in November 2014, with responsibilities for managing the operations of the India business, continues to serve in his role with a strong focus on leading KPMG India’s business operations,” it said. In other changes, advisory leader Ambarish Dasgupta will be stepping down to pursue political ambitions, according to people in the know.
Partners were also told that Romal Shetty, a highly reputed telecom consultant and COO of KPMG’s advisory business, will be leaving the firm. His was one of departures cited above, all of them leaving to join Deloitte’s advisory business.
The mass resignations had sparked complaints by partners over Rekhy’s management style, people said. “The KPMG International team stepped in to manage the crisis and after a series of video conferences with the global team the latest changes were brought forth,” said a senior partner.
A senior US partner will visit India for a week every month to help keep an eye on things, sources said.
“Increasing politicisation, some conflict of interest issues and arbitrary organisational changes,” were among the reasons for the brewing disaffection, said a former KPMG partner now at a rival. An advisory partner, Rekhy took over as India CEO in October 2012 after a shock victory over Russell Pereira, the incumbent. Under Pereira’s leadership, KPMG, the youngest of the Big Four in India, had grown rapidly, establishing a solid presence with marquee clients like ICICI Bank and Infosys.
In the last two and a half years, KPMG has seen a steady drain of more than 60 partners quitting to join PwC, Deloitte and EY. Veterans like Pereira, Vikram Uttam Singh, Dipankar Sanwalka, Hiten Kotak and Bhavin Shah have all left to join competitors. While KPMG competed successfully by winning business against strong competition, talent attrition couldn’t be stemmed.
For instance, Dinesh Kanabar, one of the country’s leading tax consultants, quit as deputy CEO two years ago with a group of partners to start boutique tax firm Dhruva Advisers, dealing a blow to KPMG’s tax practice. After Kanabar’s exit, Rekhy tried to scale up the firm’s tax business through acquisitions.
One target was BMR, run by ex-Andersen partners, but talks failed over valuation and role issues. The leadership change and churn comes at a time when the firm faces company law mandated audit rotation that will lead to the loss of old clients.
Still, under KPMG’s aggressive audit head, Jamil Khatri, the audit business has managed some big wins recently.
The firm faces a challenge in its advisory business with the recent partner exits. As a strategy to compensate for the audit business loss, the Big Four firms are trying to get advisory business from their old audit clients. But with a leaner advisory team, KPMG may find it difficult to compete in that market. Having two leaders in India will be tricky, some insiders said. “It remains to be seen whether two conductors will create music or noise in the orchestra,” said the CEO of a rival Big Four firm on condition of anonymity. KPMG said.