The foreign hand: Memani insists E&Y India has nothing to do with the exodus. It's a problem between them (the exiting partners) and E&Y Global, he insists. Rajiv Memani/CEO & Country Managing Partner/ Ernst & Young

A little over two years after Arthur Andersen's Indian operations merged with Ernst & Young India, creating an audit firm that was, depending on whose account you went by, slightly larger or just smaller than India's #1 audit firm PricewaterhouseCoopers, the company's present CEO, 38-year-old Rajiv Memani is having to revisit much-trodden ground to prove that the union was a success. ''We are better off because of the combination,'' he says. ''We have more than doubled the size of our operations since 2002.'' He rattles off the benefits of the merger: size, growth, and the adoption of Andersen's systems-driven style of management by Ernst & Young India, a company that followed a more traditional approach. Memani finds himself doing the explaining because of the exit, over the past two months, of five partners who came in from Andersen. Today, of the 11 worldwide partners of Andersen who signed on with E&Y, only one, Farokh Balsara, remains. Memani finds himself at the receiving end of questions because the recent spate of exits has come in the wake of the March 2004 retirement of his father Kashi Nath Memani as Chairman and Country Managing Partner. Rajiv, who was CEO until then, a post he was elected to in November 2003, took over the job of Country Managing Partner (see How It All Came Unstuck). The exits, to cut to the chase, have come on his watch. And, finally, Rajiv finds himself offering explanations because the financial media is abuzz with reports of how the exits are a sign of a merger gone sour, largely on account of a clash in cultures and family-style succession at the top.

Unfortunately, that's all the explaining Rajiv will do. The merger was a success, he repeats, and yes, the organisation will feel the impact of the exodus. ''If we lose some accounts,'' he says in a matter-of-fact fashion, ''we will definitely make it up.'' The CEO and his team have been busy meeting companies. Rajiv himself has just flown in from Mumbai on the morning of his meeting with Business Today, and he admits that he met with executives of Reliance Infocomm in the city (that account was handled by Sanjay Mehta, a partner who quit last month). Rajiv refuses to be drawn into a discussion on the exits and toes the company's official line that they revolve around some differences between the partners who left and E&Y Global. That echoes a press statement issued by E&Y Global that the exits were caused by the fact that the partners did not stick to ''certain commitments made by them in connection with their joining E&Y and their departure from Andersen Worldwide''. Outgoing Chairman Jai Purandare counters, ''There is no such commitment. I don't know what they are talking about.'' In response to an e-mail sent by BT, E&Y Global spokesperson William Mutton says, ''We have no further comment on this matter, beyond the statement that you have already received.''

The Bone Of Contention

BT's investigations reveal that money is at the core of the problem. This money-more than one person BT spoke to used the term corpus-was reportedly the cash surpluses generated by Andersen and put away for a rainy day. The story goes that when the merger happened, the Andersen partners assured E&Y Global that this money would be used for the benefit of the merged entity. That, it continues, didn't happen, and the partners of Andersen enriched themselves sometime back. Here, the story diverges. One version insists that the global partners sort of split the money between themselves (which could explain why the exits have largely been of those people who were global partners at Andersen). And another insists that the national partners got a share too (it even puts a number Rs 50 lakh to Rs 75 lakh to this).

One thing BT was able to establish was that the money did exist. Two former global partners at Andersen, one who quit well before the merger and another who did just before it confirm the existence of a corpus. ''There is a hell of a lot of money at stake,'' one says. ''And that is the only reason for this trouble.'' The exact magnitude of the corpus is anyone's guess, although the numbers doing the round vary from Rs 70 crore to Rs 150 crore. Purandare for his part says, ''All talk of a corpus is speculation and a mere conjecture.''

Butani was reportedly close to former E&Y Chairman and Country Managing Partner Kashi N. Memani and his son and current CEO Rajiv. That seems to indicate that all talk of a clash of cultures is exaggerated. Mukesh Butani/Former National Tax Director/ Ernst & Young

He and the other partners who have quit deny that there was a corpus at all. ''This is a deflection from the truth,'' says one. ''The house (E&Y India) is not in order and professionals are not getting their due.'' ''Everyone is running scared because all ex-Andersen partners could get together and do something big,'' says another partner who recently left E&Y India. ''So, the rumour of a corpus is being floated; we are a major threat to them.'' ''In any case,'' asks a third partner who left, ''why should someone earning around Rs 3.5 crore a year want to leave; we are professionals and we have a code of ethics; we left without jobs in hand for reasons other than money.''

That would have to be the Parikh vs Memani tussle that came to a head last November. At stake was the control of E&Y India. A senior executive in the audit industry claims that most E&Y partners were afraid that the crowd that came in from Andersen would ''hijack'' their firm. This, he adds, was the main reason for Bobby Parikh's loss in the election to the CEO's post. Another senior executive claims that the partners were put off by Parikh's indecisiveness and wanted a change. Parikh himself refused to speak to BT. This tussle, the way some of the exiting partners see it was a clash of cultures: Andersen was a professionally run MNC and its partners expected the same thing of E&Y India which turned out to be a family-run company.

Memani was the face of E&Y India. Some reports suggest that it was his desire to see his son Rajiv succeed him and that this caused the trouble. That seems unlikely Kashi N. Memani/Former Chairman and Country Managing Partner/ Ernst & Young India	Parikh's exit, in November 2003, can be directly linked to his loss in an election for the CEO's post to Rajiv Memani. He is reportedly considering starting a financial services business process outsourcing firm Bobby Parikh/Former CEO/ Ernst & Young India

The one thing that goes against this version is the timing: Parikh quit in November; the exits happened eight months later although it must be said that they happened just three months after Rajiv was made Country Managing Partner. That was the time Kashi Memani's designation of Chairman and Country Managing Partner was broken up and Jai Purandare, a former Andersen partner made Chairman with powers related to governance and partnership-issues. It is quite conceivable that this was the proverbial last straw. Only, the exits have come four months thence, and most of the partners who have left do not have a job in hand.

Either way, it has been a rough induction for Rajiv. Apart from losing some of the finest minds in the business (Rajiv Dimri and Mukesh Butani are widely reckoned to be at the top of their respective fields in India), he now runs the risk of losing some key accounts. Not to mention the bad press he is getting.