PwC in Hot Water Over 'Leaked' Report

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The publication of a sensitive report into an Indonesian telecoms company has landed PricewaterhouseCoopers in the middle of a $150 million row, according to a report on our sister site,

Telekomunikasi Indonesia, or Telkom, is filing claims with the International Chamber of Commerce and is looking to recover $150 million damages after rival AriaWest's disclosure of the report.

And Telkom has called the study, which allegedly cost $6 million to produce, "unauthorized, unreliable and fundamentally flawed."

In September, 2000, Telkom and AriaWest agreed they would jointly appoint PwC to undertake a forensic audit of all transactions on accounts holding KSO Unit revenues and assets. Telkom wanted to buy out AriaWest's interest in the KSO System.

As part of the process, Telkom would pay AriaWest any amounts determined by PWC to have been "misappropriated, unaccounted for, lost stolen or otherwise unreasonably disbursed" by Telkom. Telkom agreed to this joint audit of the KSO Unit in order to refute any potential claim by AriaWest that Telkom had caused losses at the KSO Unit.

The study, claims Telkom, purports to have found that KSO Unit revenues and expenditures amounting to Rp. 298,553,000,000 ($28 million) "are unaccounted for, lost or were unreasonably disbursed." PwC added an interest allowance of Rp. 331,268,000,000 ($31 million).

Telkom alleges that PwC "did not find that any amounts had been misappropriated or stolen. Furthermore, the PwC Report concededly does not allocate blame or responsibility or identify the personnel responsible or assess whether the loss was inadvertent or involved deliberate acts of the KSO Unit staff."

In short, Telkom claims that the study does not hold it to blame.

Telkom is also arguing that AriaWest broke the terms of the agreement when it released the report, and wrongfully retained PwC when the study was supposed to be a joint effort.

As well as not being allowed to review the draft report in good time, Telkom claims that it contains commercially sensitive information.

"It is clear from the face of the PwC Report that there is no evidence or reliable basis from which to conclude that Telkom was responsible for any wrongdoing," the firm said.

Now Telkom has called in KPMG to review the report, and is seeking $150 million in damages from AriaWest, which represents the loss in market value of Telkom's shares on the date the PwC report was publicized.

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