kpmg review of personal financial records of dr. rajendra k. pachauri and other records of teri for...

ABCD

The Energy and Resources Institute

Review of personal financial records of Dr. Rajendra K. Pachauri and other records of TERI

for the period 1 April 2008 to 31 December 2009

25 March 2010 This report contains 15 pages

© 2010 KPMG, an Indian Private Limited Company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG

International”), a Swiss entity. All rights reserved

ABCD The Energy and Resources Institute

Review of personal financial records of Dr. Rajendra K. Pachauri and other records of

TERI for the period 1 April 2008 to 31 December 25 March 2010

© 2010 KPMG. All rights reserved.

Contents

1 Introduction 1 1.1 Background 1 1.2 Objectives 2 1.3 Work done 2

2 Executive Summary 3

3 Review of personal books of account of Dr Pachauri 4

4 Review of positions held by Dr. Pachauri other than at TERI 6

5 Review of books of account of TERI 11

6 Restrictions and Limitations 13 6.1 Limitations 13 6.2 Restrictions 13




1 © 2010 KPMG. All rights reserved.

1 Introduction

1.1 Background 1.1.1 The Energy and Resources Institute (‘TERI’ or ‘the Institute’), a non profit organisation, was

established in 1974 and is involved in development of solutions to global problems in the fields of energy, environment and current patterns of development, which are largely unsustainable. The Institute has grown substantially over the years, particularly, since it launched its own research activities and established a base in New Delhi, its registered headquarters in 19821.

1.1.2 We were informed by the management of TERI that the media has published reports alleging misuse of position at various banks, universities and institutions by Dr. Rajendra K. Pachauri (‘Dr. Pachauri’), Director General of TERI, to earn income for his personal benefit rather than for the benefit of the Institute leading to a conflict of interest.

1.1.3 To illustrate, an extract of the article “Questions over business deals of UN climate change guru Dr. Rajendra Pachauri” in the Sunday Telegraph dated 20 December 2009 is reproduced below:

“The head of the UN’s climate change panel – Dr. Rajendra Pachauri – is accused of making a fortune from his links with carbon trading companies…Dr Pachauri remains silent on, however, is how much money he is paid for all these important posts, which must run into millions of dollars. Not one of the bodies for which he works publishes his salary or fees, and this notably includes the UN, which refuses to reveal how much we all pay him as one of its most senior officials. As for TERI itself, Dr Pachauri’s main job for nearly 30 years, it is so coy about money that it does not even publish its accounts…”

1.1.4 We were informed that TERI and Dr. Pachauri issued a press release and denied the above allegations. An extract below of the article “The questions Dr. Pachauri still has to answer” in the Sunday Telegraph dated 26 December 2009 is reproduced below:

“… Dr Pachauri does not deny that he holds all the positions referred to in our article, such as giving advice on climate change to bodies ranging from major banks such as Credit Suisse and Deutsche Bank to the Chicago Climate Change, the worlds largest dealer in buying and selling the right to emit CO2. He and TERI insist, however, that all the money he receives for his services, such as 100,000 euros from Deutsche Bank and $ 80,000 from Toyota Motors are paid not to him personally but to his institute (and that he receives no fee from the Chicago Climate Exchange)...”

1.1.5 TERI requested KPMG to conduct an independent review of personal financial records of Dr. Pachauri and other records of TERI to confirm if there is any evidence that suggests that Dr. Pachauri misused his position for personal benefit as alleged.

1 Source: TERI website





1.1.6 The review was performed in accordance with the terms of our engagement letter dated 12 February 2010.

1.2 Objectives 1.2.1 The main objectives of this engagement were to determine whether:

• there were any unexplained receipts and disbursals in the personal books of account of Dr.

Pachauri; and • the honorariums related to Dr. Pachauri’s advisory services to various organisations were

actually received and recorded in TERI’s books of account. Further, these honorariums have not been reimbursed to Dr. Pachauri by TERI.

1.3 Work done

1.3.1 KPMG carried out the following work procedures pertaining to the period 1 April 2008 till 31 December 2009:

• Reviewed the Contracts / Letters / Emails of various organisations / institutions to which Dr. Pachauri provides advisory services or holds honorary positions and related remuneration entitlements, as provided by TERI and Dr. Pachauri.

• Reviewed personal bank account, income tax returns and other books of account maintained by Dr. Pachauri, as provided by him and his tax counsel, Mr. Ashok Khurana (M/s A.K. Khurana & Associates, Chartered Accountants)

• Reviewed specific ledger accounts in the books of account of TERI where expenses and reimbursements pertaining to Dr Pachauri have been recorded and selected transactions on a sample basis to verify if they were adequately supported by underlying documents.

• Reviewed books of account of TERI to verify if honorariums related to Dr. Pachauri’s advisory services to various organisations are received by TERI.

• Conducted discussions with Mr. Ashok Khurana and other employees of TERI as considered necessary.





2 Executive Summary 2.1.1 Based on a review of personal financial records of Dr. Pachauri and other records of TERI

provided to us for the period 1 April 2008 to 31 December 2009, we did not come across any evidence that either suggests any unexplained receipts and disbursals in Dr. Pachauri’s personal books of account or inappropriate recording of expenses/incomes pertaining to Dr. Pachauri’s advisory services in the books of account of TERI. No evidence was found that indicated personal fiduciary benefits accruing to Dr. Pachauri from his various advisory roles that would have led to a conflict of interest.

2.1.2 The financial emoluments received by Dr. Pachauri appeared to be consistent with the terms of his employment with TERI and terms stated in contracts with various organisations to which advisory services have been provided. It was also noted that receipts from various organisations such as companies, universities and other institutions with respect to Dr. Pachauri’s advisory services were accounted for in TERI’s records as an income.

The executive summary is not intended to be all inclusive. It should be read in conjunction with the main report and not as a substitute thereof.





3 Review of personal books of account of Dr Pachauri 3.1.1 We were informed that Dr. Pachauri’s personal books of account are maintained by M/s A.K.

Khurana & Associates, Chartered Accountants and we were provided with copies of these records by Mr. Ashok Khurana (Partner) for the purposes of our review.

Review of personal bank accounts

3.1.2 We were informed that Dr. Pachauri holds personal savings accounts with the following two banks:

• State Bank of Hyderabad (‘SBH’)

• Central Bank of India (‘CBI’)

We were informed that Dr. Pachauri does not hold or operate any other bank accounts other than those mentioned above.

3.1.3 Dr. Pachauri primarily receives salary from TERI in the SBH account. We reviewed the contract of employment of Dr. Pachauri with TERI and the monthly pay slips provided to us. It was noted that the amount received by him on account of salary correlated with these records.

3.1.4 Apart from the above, other primary receipts appearing in his account with SBH are summarised below. It was noted that the maximum value of these receipts on an individual basis did not exceed INR 100,000. These receipts have been declared to income tax authorities as a part of personal income of Dr. Pachauri.

• Sitting fees for attending Board Meetings as a Director in Oil and Natural Gas Commission and National Thermal Power Corporation – Individual maximum value of INR 20,000.

• Honorariums of nominal values (including income for writing articles in newspapers, appearances on television and delivering lectures at Universities) –Individual maximum value of INR 35,880.

• Income from royalty and awards bestowed on him – Individual maximum value of INR 100,000.

• Interest on saving bank deposits

3.1.5 It was noted that Dr. Pachauri receives dividends on his personal investments in both the bank accounts.

Income tax returns

3.1.6 It was noted that Dr. Pachauri has duly filed his income tax return for the Financial Year 2008-2009 on 30 July 2009.





3.1.7 During the review, we noted that income tax return of Dr. Pachauri for the Financial Year 2005-06 was randomly selected for scrutiny through Computer Assisted Scrutiny System (CASS) on the basis of notice of assessment under Section 143(3) of the Indian Income Tax Act, 1961. The notice of information served upon Dr. Pachauri was duly furnished by him and the returned income was accepted by the tax authorities under Section 143(3) with a NIL notice of demand by them.





4 Review of positions held by Dr. Pachauri other than at TERI

Positions with financial emoluments

4.1.1 We reviewed the list of positions held by Dr. Pachauri with various other organisations such as companies, universities and other institutions (as provided by TERI) for which he was entitled to financial emoluments.

4.1.2 It was noted that receipts from these organisations were directly recorded in the books of account of TERI during the period 1 April 2008 to 31 December 2009 (‘2008-09’). We also did not come across any evidence that suggested that these were further reimbursed to Dr. Pachauri by TERI. Details of such receipts have been summarised in the table below:

S.No. Position Organisation Financial entitlement as per

contract / other correspondences

Amount received by TERI during 1

April 2008-31 December 2009

(in INR millions)

1

Director and Professor, Sustainable Development

Yale Climate and Energy Institute Yale School of Forestry and Environment Studies, USA

US$ 12,500 per month for July and August 2009 US$ 11,250 from September 2009 onwards

3.28

2 Distinguished Professor

Ritsumeikan University, Japan

JPY 2.4 million - Annual remuneration 1.20

3 Member - Advisory Board of Deutsche Bank

Deutsche Bank AG Honorarium payable - Euro 50,000 per annum payable on a semi-annual basis

6.65

4 Chairman ADB’s Advisory Group on Climate Change and Sustainable Development

Meeting fees and travel reimbursement 0.21

5 Member

Veolia Institute’s Foresight Committee, The Institut Veolia Environnement, France

Euro 12,000 for each meeting 0.84

6 Member Board of the Credit Suisse Research Institute, Zurich

US$ 45,000 for each meeting US$ 60,000 for one speaking or other engagement.

1.19

7 Member Leadership Group on Water Security, Asia Society, USA

Video conferencing charges 0.16

8 Adviser International Advisory Board, Toyota Motor Corporation, Japan,

US$ 10,000 retention fees per annum. US$ 15,000 attendance fees for IAB meeting per annum

1.15

9 Member EDF Panel Euro 1,200 for honorarium plus travel reimbursement 0.32

10 Patron Premier Schools International LLC (PSI) US$ 60,000 per annum 2.64





S.No. Position Organisation Financial entitlement as per

contract / other correspondences

Amount received by TERI during 1

April 2008-31 December 2009

(in INR millions)

11 Member

The New York Academy of Sciences International Board, New York

$ 25,000 per annum 0.02

Total 17.66

Total amount received by TERI on account of Dr Pachauri’s advisory services to various organisations during the above period aggregates to INR 17.66 million. It may be noted that TERI’s annual income as per the audited income and expenditure account for the 12 months period ending March 31, 2009 was INR 801.03 million.

4.1.3 During the review of personal books of account of Dr. Pachauri, certain instances were noted where travel reimbursements pertaining to Dr. Pachauri’s advisory services were credited directly by various organisations in his SBH bank account. However, these amounts were subsequently transferred by Dr. Pachauri to TERI as per details given below:

Date Description Amount (in INR)

Date on which amount was paid to TERI

1-Aug-08 Travel reimbursement from UNECA for visit to Addis during the period 31-03-08 to 2-4-2008 72,292 31-Oct-08

22-Aug-08 Travel Reimbursement received from UNIDO for visit to Vienna during the period 14-07-2008 152,601 31-Oct-08

18-Sep-08 Travel Reimbursement in respect to travel to New York during 28-30 June 2008 297,746 16-Feb-09

6-Oct-08 Travel Reimbursement in respect to travel to Washington during 1 July-31 August 2008 212,825 16-Feb-09

10-Oct-08 Travel Reimbursement for Bhabha Atomic Research Centre to Mumbai on 25-08-2008 44,571 31-Oct-08

29-May-09 Reimbursement of travel to Amman, Jordan to attend sustainable development in the Middle East

114,986 4-Jul-09

17-Jun-09 Reimbursement of travel to Kolkata to attend Environment partnership summit 2009 42,121 4-Jul-09

21-Dec-09 Reimbursements for travel to Mexico 596,065 31-Dec-09





4.1.4 Further, it was also noted that Dr. Pachauri has transferred following award/honorarium received by him to TERI:


Date on which amount was paid to TERI

18-Feb-09 Reimbursements from Environment partnership Summit for Lifetime award 200,000 9-Mar-09

24-Feb-09 Honorarium received for visit to Dhaka dated 1 Nov 2008 24,596 31-Mar-09

4.1.5 During our review it was noted that no amounts have been claimed or received yet by TERI with respect to Dr. Pachauri’s advisory services at the following organisations. It was confirmed that there are no receipts pertaining to these positions in his personal books of account as well.

S.No. Position Organisation Financial entitlement as per contract / other correspondences

1 Professor and Chair in Energy Economics

Universiti Tenaga Nasional (UNITEN), Malaysia RM 25,000 per visit

2 Member

Singapore’s first International Advisory Panel (IAP) on Energy, Government of Singapore

Singapore $ 10,000

3 Member of the Board

International Risk Governance Council (IRGC), Geneva, Switzerland

CHF 480 per working day plus travel reimbursement

Honorary positions without financial emoluments

4.1.6 We were informed that Dr Pachauri also holds honorary positions at the following organisations from which he does not receive any financial emoluments except reimbursements for expenses such as travel etc. This was confirmed during the review of terms of contracts/emails/other correspondences between these organisations and TERI/Dr. Pachauri.

S.No. Position Organisation

1 Chairman Intergovernmental Panel on Climate Change (IPCC)

2 Ambassador Global Observatory (GO), Geneva

3 Special Advisor to the Energy for All Partnership Asian Development Bank (ADB)

4 Strategic Advisor Pegasus Capital Advisors, L.P., New York 5 Chairman of the Advisory Board Chicago Climate Exchange, Chicago

6 Member of the Board Glitnir Globe – The Sustainable Future Fund, Iceland

7 Member Global Board of Advisors, Siderian Ventures, San Francisco, CA, USA

8 Member, Advisory Group Rockefeller Foundation, USA





S.No. Position Organisation 9 Chancellor TERI University

10 Patron KHUSHII (Kinship for Humanitarian, Social and Holistic Intervention in India), New Delhi

11 Chairman The Darjeeling Himalayan Railway Heritage Foundation, Darjeeling

12 President Asian Energy Institute (AEI) 13 Member, Advisory Board Green Commandos, India

14 Member

International Steering Committee, National Climate Change Adaptation Research Facility (NCCARF) and the CSIRO Climate Adaptation Flagship, Australia

15 Member Global Advisory Committee for Earth Day 2010, Earth Day Network, USA

16 Member Honorary Committee, The H. John Heinz III Centre for Science, Economics and Environment, USA

17 Member-MDP-International Advisory Board (IAB) The Earth Institute at Columbia University, USA

18 Member- External Advisory Board The University of British Columbia, Canada

19 Honorary Member World Innovation Foundation (WIF) Charity, Bern, Switzerland

20 Member Expert Committee, UGC-Swami Pranavananda Saraswati Awards, University Grant Commission, New Delhi

21 Member Summit’s Senior Advisory Group, The National Bureau of Asian Research (NBR), USA

22 Member The National Economic and Social Council (NESC), Kenya

23 Member Saltire Prize Challenge Committee, Edinburgh, 24 Honorary Member The Old Martinians Association UK

25 Member, Advisory Board International Research Institute of Climate and Society, New York

26 Chairman Indo-China Sustainable Infrastructure Fund, LP, Vietnam

27 Member

Governing Board, UNESCO International Science, Technology and Innovation Centre for South-South Cooperation (ISTIC), Kuala Lumpur, Malaysia,

28 Honorary Member National Museum of Emerging Science and Innovation (Miraikan), Tokyo, Japan,

29 Member Economic Policy and Reforms Council, Chaired by the Chief Minister of Government of Rajasthan, India

30 Member Executive Council of the Doon University, Dehradun, Uttarakhand





S.No. Position Organisation

31 Board Member of the Governing Council Youth4Gandhi Foundation, India

32 Member of the Jury for the award on sustainable environment and climate change

JSW Foundation, India

33 Member Board of Advisors of the NIIT University, Delhi, India

34 Chair High Powered Committee of Indian Council of Medical Research, India

35 Member Advisory Panel of the Ocean Project, Zee Network & the Essel Group, Mumbai

36 Patron Commonwealth Games Delhi 2010 Green Council (CWG 2010 GC)

37 Chairman of the Governing Council National Agro Foundation (NAF)

38 Member, Board of Directors The Institute for Global Environmental Strategies (IGES), Environment Agency, Government of Japan,

39 Goodwill Ambassador UNIDO, Vienna , Austria





5 Review of books of account of TERI 5.1.1 We were informed that TERI uses an in house developed Oracle based Project Management

System (PMS) for managing and accounting for projects.

5.1.2 We were informed that all expenses and incomes pertaining to Dr. Pachauri’s projects are usually recorded in following two sub ledger account codes:

• 2007 DG 11 – for the period 1 April 2007 to 31 March 2009

• 2009 DO 01 – for the period 1 April 2009 to 31 March 2010

5.1.3 We performed an analysis of the above mentioned account codes and reviewed transactions on a sample basis. It was noted that transactions were appropriately recorded in the books of TERI and were adequately supported by the underlying documents.

5.1.4 Certain instances were noted where reimbursements for travel expenses of family members of Dr. Pachauri were recorded into TERI’s books of account. These transactions were recorded in an appropriate manner in the books of TERI and no exceptions were noted. Details of such transactions have been given below:

Expenses incurred and received by TERI


Voucher number and date

Remarks

23-Apr-08

Reimbursement received in respect of Dr. R K Pachauri and Dr. Saroj Pachauri's travel to Mumbai during 12-13 March 2008.

67,524 BR-0231 23 Apr 08

Expenses for tickets and local travel for Dr. Pachauri and Dr. Saroj Pachauri (wife of Dr. Pachauri) incurred by TERI for attending the Award Ceremony of Yashwant Rao Chavan Pratishthan, Mumbai (YRCP). This amount has been reimbursed directly to TERI by YRCP.

28-Oct-09

Reimbursement received in respect of Dr. R K Pachauri, Dr. Saroj Pachauri and Dr. Ash Pachauri's travel to Mumbai on 27.9.2009.

131,936 BR-2023 28 Oct 09

Expenses for tickets and local travel for Dr. Pachauri, Dr. Saroj Pachauri and Dr. Ash Pachauri incurred by TERI for attending the Global Indian of Year Award Ceremony by Conde Nast India Private Limited, Mumbai (CNIPL) This amount has been reimbursed directly to TERI by CNIPL.





Expense incurred by Dr. Pachauri but received by TERI


Voucher number and date

Remarks

18-Sep-08

Travel Reimbursement in respect to travel to New York during 28-30 June 2008

280,336 BR-3080 11 Feb 09

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. However, reimbursement for full travel expense for both the persons was received by TERI from Yale University. TERI paid back cost pertaining to Dr Saroj Pachauri's travel to Dr Pachauri to his personal account.

5.1.5 TERI has opened specific account codes for recording medical expenses, annuity payments and water and electricity expenses of Dr. Pachauri. Expenses recorded in these accounts were noted to be consistent with Dr. Pachauri’s terms of appointment and policies of TERI.





6 Restrictions and Limitations

6.1 Limitations 6.1.1 This report is based on information provided to us by TERI, Dr. Pachauri and his tax counsel,

Mr. Ashok Khurana (M/s A.K. Khurana & Associates, Chartered Accountants). Work done by us was as considered necessary at the given point in time. Third party evidence has not been verified. We have relied on both oral and documentary evidence.

6.1.2 In accordance with its policy, KPMG advises that neither it nor any Partners or employee undertakes responsibility arising in anyway whatsoever, to any person other than our client in respect of the matters dealt in this report, including any errors or omission therein, arising through negligence or otherwise, however caused.

6.1.3 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.

6.2 Restrictions 6.2.1 Our reports and comments are confidential in nature and not intended for general circulation or

publication, nor are they to be reproduced or used for any purpose, in whole or in part, except as set out in our engagement letter dated 12 February 2010. This report is exclusively for its intended use for the purpose of the engagement and should not be used for any other purpose. It is also not for general circulation or publication nor is it to be reproduced, either in part or in full, for any other purpose without our prior written consent, except in circumstances in which it is in accordance with any requirement of law or statute or if called for by any statutory or regulatory authority. We disclaim all responsibility for any costs, damages, losses, liabilities, expenses incurred by anyone as a result of circulation, publication, reproduction or use of our reports contrary to the provisions of this paragraph. Should additional information or documentation become available which impacts upon conclusions reached in our reports, we reserve the right to amend our findings and reporting accordingly.

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