Bishop Hill KPMG: not shooting straight?
Sep 27, 2010 Climate: Pachauri This is a guest post by Shub Niggurath. Shub followed up on an odd detail in RK Pachauri's expense claims. It could be nothing, but is interesting nevertheless.
The Guardian recently published an article about a "limited-review" of the IPCC chairman RK Pachauri's personal accounts by KPMG, a firm of accountants. This report had widespread play as it followed closely behind the Telegraph's apology to RK Pachauri over its article about his business interests. For example, using conclusions and language from the report, George Monbiot went on to claim that the IPCC chairman had "no conflicts of interest".
A small glitch
Among other things, the KPMG report looked at how Pachauri handled his travel expenses as paid from his accounts and his organization TERI's. KPMG judged Pachauri's financial records to be kept "accurately" and with "no exceptions". However, a curious detail emerges on closer examination (h/t DennisA).
On page 14, a table appears to indicate RK Pachauri and his spouse Saroj Pachauri were fully reimbursed by Yale University for attending the "presentation ceremony" in 2008 at which Pachauri was given an honorary degree. KPMG indicate that TERI promptly and quite properly repaid Dr Saroj Pachauri’s share back.
The only problem with this statement is that the ceremony took place on May 26 in New Haven, and not during June 28-30.
Pachauri was awarded the degree of "Doctor of Humane Letters” and received it in person, along with the rest of the 'class of 2008' (p. 8). Yale even declared the ceremonies a 'carbon neutral graduation'.
RK Pachauri - conferred 'Doctor of Humane Letters' by Yale
What did take place in the last week of June, 2008? On the 26th, Pachauri visited New York City, met the mayor Michael Bloomberg over lunch and delivered a global warming speech. He reached California by the 27th where he met Arnold Schwarzenegger and Hal Harvey among, going by the IPCC's itinerary document (p. 28). While there Pachauri even took the obligatory dig at climate skeptics as this video shows. Pachauri travelled back to New York on the 28th where he delivered a talk at an UN Economic and Social Council (ECOSOC) meeting.
The larger point
Perhaps an explanation does exist, but it seems quite odd that a slip-up of this kind should find its way into the final report of KPMG’s review, given that the veracity of reports such as these depend on thorough examination of small details.
Reader Comments (36)
In my very first hour of 'How to read a set of accounts 101' we were taught that any qualification whatsoever by the auditors ought to make one very very suspicious...and usually is written for the benefit of the auditor avoiding subsequent suits for negligence.
KPMG state
'Our work constituted limited review, and the scope of our work was significantly different from that of an audit and cannot therefore be relied upon to provide the same level of assurance as an audit'
Scuse me...what do you think they are trying to tell us here? That the client couldn't afford a proper audit? Or that they didn't want one..for good or bad reasons?
It is a very very strange set of circumstances. Even if everything is 100% tickety boo and fine, ...why do they act in a way to give the impression that something isn't right?
Environmentalists and journos may not know the first thing about business and commerce and overlooked this important qualification, but the entirety of the populace aren't totally naive in this area.
Does anyone know Monbiot's home address?...I've got this great bridge I'd like to sell him.....complete with snake oil and shares in the South Sea Company
Dear Bish
The paragraph/s after the picture is repeated. Correction needed. ;)
Shub
Fixed now. I've also tweaked the first image to make it more legible.
This is the mistake:
Page 14 “The Cost of travel for Dr. Saroj Pachauri was incurred by Dr. Pachauri through his personal account for attending the presentation ceremony of Yale University’s Honorary Degree. Travel Reimbursement in respect to travel to New York during 28-30 June 2008. ” Saroj is his wife.
What’s the mistake? The Honorary degree ceremony took place on 26th May and is shown in his UN travel itinerary as such and also on the Yale website. He was in New York from 28th to 30th June, but he was at a UN Economic and Social Council “High Level Policy Dialogue”.
The degree ceremony was in May - not noticed by KPMG.
Why do realists have to be so pedantic about warmists. Facts, figures and accuracy are just inconvenient truths, and must not be allowed to damage the scientific fantasy, that is consensus.
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And no doubt will empty a full commercial fee into the tip jar to pay for this advertisement?
Commercial Highjacks:
I was a regular poster on the U S A Freedom Forum when the fringe advertising industry discovered a cheap means of "buying" space. They simply joined a forum or blog as a poster and trumpeted their wares, sometime with a subtle integration with the topic at hand; sometimes just brazenly touting.
May I suggest readers here keep a watch for this kind of "business" and alert the Bishop, as once in they tend to plague.
Never mind tweaking the 1st image, the 2nd one is scaring me. Or making me want to 'shop a hockey stick uptick onto the right side of his mortar board.
I'm still having no luck finding any detailed accounts for the TERI mothership though :(
Mysterious. And another thing; "Pachauri was awarded the degree of "Doctor of Humane Letters” and received it in person......."
Properly incurred as a ligitimate business expense? This was a personal award not linked to TERI. Did Dr.P take time-off for personal business. If not, who was paying during his travel and attendance time? (FYI May 26, 2008 was a Monday and I am not an accountant.)
Latimer Alder
Absolutely spot on! Jezzzzus, doesn't anyone remember Enron and Arthur Andersen?
Back while I had a corporation for my tech writing business I was given a thorough course in "How to Keep Books" by my accountant. First and foremost, Never Have a Miscellaneous Account. It's like honey to the bear doing the audit. However, in an interesting reversed psychology, he did put real miscellaneous items in it, documented them fully and was careful not to include them in the deductions. Sure enough, when audited, that was the first place the auditor looked and when all of the items came up 100% legit, he ended the audit.
Second, most auditors do not look at items less than $5,000, if you are a large corporation and $1,000 if you are a small one. This is the hole that Bernard Ebbers drove the scandal at WorldCom through by having his accountants build up thousands of bogus transactions of less than $5,000. That accumulated to $3.8 Billion before it was all over. And the account firm was -- you guess it -- Arthur Anderson. And least you think that the remaining accounting firms got religion from watching Authur Anderson carved up for being caught, I have this toll bridge in New York City I would like to sell you. Connects Manhattan to New Jersey. It's a real money maker, but I want to sell it and move to Ireland.
Shub
I have just finished reading the 15 page fairy tale -- and I do know fairy tales -- accounting effort by KPMG for Packy.
It's not even a proper accounting, just a listing of where he claims to have income. After all, KPMG even notes that all the papers examined were supplied by him, his account or TERI. Worthless. Of course his "personal" accounts will add up to what is in his tax report. Every crook since Al Capone knows that you have to do that.
No forensic accounting what so ever. When you get audited by a serious group, such as the US or UK IRS, (they have the same initials) they look at your life style, how much it costs and where the money to support it comes from. The last thing they trust are your "personal" books as supplied by you, as was the case here.
How many houses, cars, apartments, investments does he have? No indication. He could own a dozen Rolls Royces and we would never know from this "audit".
No mention of off-shore accounts, hidden trusts, mysterious Lichtenstein corporations or Hong Kong bank accounts. Let's get serious, do you think that someone on the take is going to put the money in his public personal account? What do you think Off Shore accounts are for? They have been around for hundreds of years and still flourish.
No, this is a deliberate Red Herring pull together to create the illusion of propriety. If anything it sets off the alarm bells. I really don't like people trying to "pull the wool" over my eyes like this is obviously attempting to do.
And as for KPMG's name on it, remember Enron.
If TERI employs Pachauri (or is it the other way around), why is it that TERI pays for his wife's travel?
"TERI paid back cost pertaining to Dr Saroj Pachauri's travel to Dr Pachauri to his personal account."
I am sure that there are many business travelers' wives who would appreciate such consideration (however, the global CO2 and environmental effect would be significant).
@Don Pablo de La Sierra: "This is the hole that Bernard Ebbers drove the scandal at WorldCom through by having his accountants build up thousands of bogus transactions of less than $5,000. That accumulated to $3.8 Billion before it was all over."
Somebody may have done that, but it wasn't Bernie Ebbers. WorldCom's offence was to capitalise the line rentals on their network, neatly removing huge costs from their P&L, and showing a profit where none existed. The CFO was Scott Sullivan, I'm not sure to this day whether Bernie Ebbers knew and turned a blind eye, or didn't know at all. Scott Sullivan admitted doing it but said it was under pressure from Bernie Ebbers, although he said the pressure was implicit rather than explicit, getting his 25 years reduced to 5 years.
Sorry to go O/T Bish but accuracy, even in the comments is important.
Sorry Bish, O/T but we should be accurate.
Back O/T I think you'll find that Pachauri is as blameless as the poor scientists in the UEA/CRU.
Oh, and why doesn't George grace us with rebuttal posts?
Because the IPCC chairman addressed students at the Yale convocation, it is listed as an IPCC outreach activity as well.
Most of the outreach activities seem to consist of meeting climate change advocates who are already convinced of the problem. It is hard to know why the IPCC, a presumedly scientific body, has its chairman and administrative head go all over the world expounding the science.
Ok - I see that Yale reimbursed Pachauri's wife's expenses, and TERI passed this on to Pachauri. No doubt Yale also purchased the necessary offsets to render this a carbon neutral exercise. (right KPMG?).
I'll also note for the record that Yale have had problems with travel expense 'largesse' in the past:
http://www.thecrimson.com/article/2005/1/12/yale-professor-ousted-for-misconduct-following/
I wonder what Yale get in return for these honorary degrees?
geronimo
Somebody may have done that, but it wasn't Bernie Ebbers.
You sound just like his lawyer. Let's see, we have a total control freak who counts the empty coffee bags at the coffee stands in the office (before he removed them) to be sure no body was stealing coffee and taking it home. And he wasn't looking at the books? Gimme a break.
No, I am sure Bernie was at the head of it all and Scott and the rest were just doing what they were told.
And as for Pachy, if you believe that he isn't on the take, that is your right. However, could I interest you in my bridge? One million down and 20 years of installments of one million more that you can earn out of the tolls? I am motivated to sell it as I want to return to Ireland and it is just too far away for me to look after.
@Don Pablo
Thank you for your kind words about my post.
On further reflection, what is truly astounding about this whole affair is that they must have thought hey could get away with it..that nobody with even a smidgin of commercial business experience would ever either look at Pachie's report, or that if they did would fail to spot the huge Red Flag being waved by KPMG in about as blatant a way as possible - consistent with still expecting their invoice to be paid by the guilty party :-)
Do they genuinely believe that we are to stupid to notice ...or that even if we did that they are such Masters of the Globe that they can get away with almost anything they chose to? I forget who said 'only little people pay taxes', but Pachy and crew must now believe 'only little people need to have proper audits'
I seem to remember that in the end, the protagonists in Tom Wolfe's 'The Bonfire of the Vanities' whose egos knew no bounds, came to a sticky and unpleasant end.
Perhaps there is a lesson for IPCC in that ..and some hope for the rest of us that our revenge will be a dish best eaten moderately warmed..but with only a small anthropogenic component .. and positively no feedback :-)
Discrepancies aside, Dr.P travelled on private business. The payment was received by TERI which, and I am making a reasonable assumption here, raised the invoice against which that payment was made. TERI then transferred part of that payment to Dr.P's personal account. So Dr.P didn't pay for his trip, didn't pay for his wife's trip but has received money from TERI for that trip.
OR
Dr.P paid for the trip, TERI received payment but passed only a part (that for his wife) back to Dr.P. Either way, the bookkeeping is incorrect and KPMG commented on the fact, albeit obliquely.
simpleseeker
Pachauri paid for both his and his spouse's travel to New Haven (?). Yale paid back TERI the entire amount for the trip. TERI gave Pachauri back half the amount - toward Saroj Pachauri's travel.
So this means, Pachauri paid out his pocket for the trip. Even though he was reimbursed by Yale for the trip, he left that money in TERI's account.
Which is what he has always claimed he does - any money he recieves, he donates to TERI. So basically TERI gained that amount from Yale.
Pachauri paid for his own travel personally, but his wife's travel was reimbursed?
Isn't this a little inconsistent? Altruistic with respect to his own travels (and on that meager salary this would be a significant dent) - yet, unaltruistic with a presumably identical amount for his wife's travel.
And, I'm still worried about his carbon footprint...perhaps it will be offset by the Kindle sales of Return to Almora. (I wonder if anyone at Amazon has thought of that marketing scam - of course they have).
I guess we're learning that KPMG aren't particularly careful and consistency is the hobgoblin of small minds - fortunately KPMG are broadminded and Pachauri is a dedicated and extremely expansively minded public servant.
Shub,
That was my 2nd scenario but this wasn't income, it was expenses reimbursed for a private trip and paid via an intermediary. Whether this was a donation or not, the books don't show that and it was the books that KPMG were looking at. Now add in the confusion on the dates which you have brought to light. As I commented earlier - mysterious.
Re Don Pablo
"You sound just like his lawyer. Let's see, we have a total control freak who counts the empty coffee bags at the coffee stands in the office (before he removed them) to be sure no body was stealing coffee and taking it home. And he wasn't looking at the books? Gimme a break."
Also wanted someone fired for walking past a meeting room he was in using a mobile phone instead of cheaper landline calls. Someone pointed out they were a contractor, so not his dime.
Part of the decline and fall of WorldCom though was Bernie the Baptist's passion for investing, using his equity to fund large timber purchases. Those were fashionable investments at the time due to offset potential. Enron, who helped kick start the whole trading thin air nonsense also had large chunks of woodland going cheap in their bankruptcy auction. Bernie though was facing declining stock price and margin calls, threatening to bankrupt him which added pressure to keep blowing quarterly results and maintaining the share price..
People who've invested heavily in 'green' schemes will be feeling very similar pressures as the 'green' bubble starts to burst. No doubt some of them will be equally creative with the truth to hide their declining fortunes.
May I see the actual books please? All we have is a rendition by KPMG. Just what happened is not clear in the least.
Naturally, I will never see the actual books, but please do not pretend that what we have seen is not a fairy tale. The whole question of just what "reimbursement" Pachy received and how is so bizarre as as to defy any form of credibility.
As Latimer Adler points out:
Obviously they do. And the sad thing is while we would go to jail, they get a new sinecure.
Atomic Hairdryer
You posted while I was still working on the previous post and then the phone rang.
As usual, you are 100% right.
O/T I assume you are looking into the Stuxnet virus. It can infect smart meters as they are just another form of PLC. This is a very sophisticated worm, rootkit and all. It now appears that it has been around for a year, infecting power networks and other SCADA systems world wide. It was only by accident it was discovered in June, and only God knows what it can really do. Just google Stuxnet for the latest.
Slightly off-topic but definitely seems to be in the spirit of things...
http://en.wikipedia.org/wiki/Leona_Helmsley
I said: "You must pay a lot of taxes". She said: "We don't pay taxes. Only the little people pay taxes."
–Elizabeth Baum, former housekeeper to Helmsley (October 1983)
Simpleseeker
You are right (option #2). Now add to that, that KPMG printed this as an example to show that the books are in order (after goofing it up).
Sorry to return once more to this forum but another point has been troubling me overnight.
Why are these people so incompetent? Even when they try to organise a distraction (eg this report about Pachie's finances), they can't even do that to a standard that gets them past first base in the credibility stakes.
That Moonbat took it all at very face value is no surprise..he only has limited intellectual resources to play with...but for the rest of the sentient world, this is so transparently a scam that the perpetrators y must have been aware of it.
Like so often, the cover up is the real cause of the problem....if they could really have reassured people that the transactions were above board, then they would have had a proper audit and KPMG could have written the usual stuff about 'full and fair summary'..or whatever the appropriate form of words is in the country of publication. TERI and Pachy are not poor people...the additional cost involved in a proper examination would have been good value.
But they didn't. In many ways it is worse to have a highly caveated report done than not to have one at all. Beforehand folks will just individually suspect that you are a lying shyster. Once published, it is apparent that a respected firm of accountants don't believe a word either.
We must assume therefore that it would not have been possible to provide auditable details that would have stood up to KPMG scrutiny.
Oh dear..what a shock. Pachie found to be less than full and frank in his dealings. Call for the smelling salts. I need to lie down for a minute or two.
Re Don Pablo
It's a curious wee beasty, and the reporting has shades of the Climategate hack. Lots of people seem to be assuming it's state crafted but it's got some odd characteristics for that to be true. If the intent was to target a specific site, it's route there has been a bit random. That seems to increase the risk of detection, plus diplomatic blowback from inflicting collateral damage. People seem to be assuming the skill required means it's state sponsored. Alternatively, Siemens has been busily laying off a lot of staff, which may include people who've worked on their SCADA systems and would have the skills to code for them. My first term project 20 years ago was writing a traffic light control system using microcontrollers. Coding those isn't really rocket science.
My bet is it'll turn out to be an insider with a grudge, or a blackmail attempt against Siemens. Or someone who watched Die Hard 4 and thought 'I could do that', or read Carlin's Wired article that the movie was based on. If Stuxnet really is written to target a specific installation, once that is identified, narrowing down likely suspects should be easier. Who's more likely to know the site's specific configuration, an insider, or an outsider?
Rest seems to highlight bad security practices. Why rely on Windows to control SCADA, with all the vulnerabilities that brings? A stripped down unix build with minimum fuctionality to do the job would be far safer. It uses C&C and P2P for control, but why is a SCADA system connected to the 'net? Why are people allowed to connect untrusted USB devices to them?
Atomic Hairdryer
STUXNET is a bit of a mystery. True it is aimed at Siemens Step 7, but the techniques for the Rootkit (that means it is hidden down where the system is loaded from, or not even on the formatted the disk) were among the most sophisticated so far. And it used four different ways of spread, two of which were not generally known.
This is not the work of a disgruntled engineer. And since it is using IEC 61131 protocols, it can be easily adapted to just about any PLC, which does include our power grids.
Interesting write up HERE
And it doesn't take much imagination to see that we can all end up "Freezing in the dark" so let's hope for a warm winter. "Com'on Global Warming! WARM! WARM! WARM!"
Using 4+ different vectors, including ones that are more hardware related still makes me think insider rather than state. Belt & braces is good engineering practice. Symantec's due to present a more in-depth look at it in the next couple of days, but not sure if it's all been decrypted and studied. It's quite neat how computer viruses can mimic biology and epidemeology, so how they've been evolved. Unfortunately it's easy to grab virus construction kits off the 'net and modify them, which'll help show how much Stuxnet is orginal work and how much is hybridised. That may explain the use of multiple languages.
Wiki's gone into full hyperbole mode though, with quotes like this-
"security experts believe that it is a military grade cyber missile deployed early in 2009 to seek out and destroy one real world target which still remains unknown."
If it were a non-cyber missile, it's spent the last 18 months+ flying through random buildings leaving bits of itself all over the place, hoping to get lucky and find a building it recognises but leaving a wide trail. At which point, it may think 'ah, this looks familiar' and do something. Not very precise for a supposedly 'military grade' weapon.
A bit O/T but I can't resist reposting this from the DT. Originally posted by Madrid1. Raised a smile from me.
'Chapter 1
It was a dark and stormy night, darker and stormier than Dr Pachauri had ever known, due to the global warming. He slipped off his jacket, loosened his tie and headed for the bedroom.
The rain fell in torrents, more torrenty than usual since the Himalayan glaciers had melted, but as he entered the boudoir he sensed a presence. And there, in the gloom, but shadowed against the fading light of the broken roof of the Olympic Village, was his old lover Clima Tewarming, dressed only in a skimpy negligee.
His heart beat faster as the acid rain continued to beat down, except at occasional intervals, when it was checked by a violent gust of wind, a wind made ever more violent since deforestation caused by evil capitalists, rattling along the housetops, and fiercely agitating the scanty flame of the lamps that struggled against the darkness of the energy saving lightbulbs.
"Come here my love," he whispered, scarcely able to draw a breath. "Come here and make passionate love to me on my rattan, made from only sustainably grown palm cane fields".
She drew closer. "I love you Dr Pachauri," she said. "I've always loved you. Take me now and make wild love to me. Make love to me with the energy of one of your TERI wind farms."
He grabbed her in his strong, engineer arms.
"When I'm finished with you," he husked, "you'll have to plant 23 hectares of forest to assuage your carbon footprint."
"I adore it when you talk dirty," she replied as she dropped to her knees and started unbuttoning his belt.... '
Re Stuxnet
It is designed to infect/affect Siemens PLC's, but use Windows as a convenient vector, since most PLC's (which are very widely used industrial controllers) are not directly hooked up to the outside world, but report back to and are programmed via PC's, which are.
Not sure what the author has against Siemens, but one hopes he doesn't branch out too much. This sounds a lot more concerning than AGW...
And thank you, Latimer. It made me smile, too.
James P
It has AGW elements. Siemens is a large player in the windmill game. Presumably it eats it's own dog food and uses it's own controllers. If so, windmills are vulnerable to a variety of PLC-based attacks, like not shutting them down in high winds, turning off de-icers, turning off lubrication pumps or warnings. No idea how many other turbines rely on PLC's, but I imagine all large ones have them, although not necessarily from Siemens. Then there's the smart meter risks. We need those to help deal with the grid instability created by wind and renewables. Those mean the meters are networked, in untrusted locations and often using less than secure communicatons paths. Security professionals have been warning about infrastructure attacks for years, bean counters and marketing types have been ignoring them.
AH
"infrastructure attacks"
As I'm sure you know, PLC's are used to control industrial processes absolutely everywhere. I don't know enough about Stuxnet's effects to predict anything (it may just be a proof of concept device for now) but it doesn't sound encouraging. At least it might divert some research attention from AGW for a while!