Chennai, July 14: The Chartered Accountants’ Action Committee for Level Playing Field has urged the Union government to prevent multinational accounting firms from operating in India, either as consulting companies or accounting firms, as most of them are tainted in their countries of origin and thus pose a grave threat to national interests. In a 141-page white paper on “Multinational accounting firms operating in India,” the committee also wanted the government to revoke the licences given to four MAFs pending the outcome of GATS within the WTO. The document, released by Union HRD minister Murli Manohar Joshi at a huge gathering of CAs here on Sunday, documented the various illegalities and fraudulent operations by some of the top MAFs and how they controlled the “virtual finance that runs the world economy,” which in turn meant that their functioning in India posed a threat to national economy. The white paper said the MFCs could be allowed to operate in India only if they subjected themselves to the same regulations prescribed for the Indian chartered accountant firms and agree to be bound by Indian laws. Also, the services of these MAFs should be restricted to foreign companies, which have invested in India and are used to their services. Indian companies, financial institutions and government agencies should not retain these MAFs unless insisted upon by their foreign investors. Indian corporates would do well to engage Indian auditing firms, as they would be better positioned to gauge the business and legal environment, were more skilled and far less expensive, the paper said. The white paper illustrated its complaint by some cases, such as a recent advertisement from the State Bank of India inviting bids from accounting consultancy firms stipulating that the balance sheet size of the bidders should be Rs 50,000 crores. “The SBI knows too well there is no Indian firm of that size. Nothing can more effectively delegitimise the Indian CA profession than efforts like the SBI advertisement,” the paper lamented. It also wanted a scrutiny of the agreements the four MAFs in India have with domestic accounting firms and steps to prevent them from entering any royalty or consultancy arrangements here. These MAFs should declare their complete details such as parentage and ownership.

Terming the arrival of the MAFs as yet another dirty face of globalisation, Union Minister Joshi said globalisation and the MNCs that came with it, hardly enriched Indian business or economy. Does globalisation distribute income fairly? The US consumes 43 per cent of total electricity generated in the world, he said.

Referring to the plethora of allegations of fraud against the MAFs in the west, the Minister said: The MAFs will continue to be unethical because they are born out of sin. He assured the Indian CAs that the government would take a hard look into the issues they had now raised.

Subhash Chandra, CMD of Zee Telefilms, urged the Indian CAs to fight back the MAFs by creating large consultancy firms and going international. You must compete globally, conquer the world and only then, we can ensure level-playing fields.