January 24th, 2025 – GS4

Ramesh works in an auditing firm XYZ Corp. The firm audits the accounts of many international companies. Over the years it has developed a reputation as one of the preferred firms for auditing by the companies.

One day, Ramesh found out irregularities in accounts of a multinational company. The company was transferring a large amount to its subsidiary based in a low tax country in order to reduce its tax liabilities. He then searched the accounts of other companies and found out that the practice was being followed by many of them. 

Ramesh confided in a coworker Suresh and discussed the matter with him. Both of them decided to raise the matter with the manager of the firm. However, the manager asked both of them to remain silent as the majority of the revenue of the XYZ Corp is coming from these companies. He also told them that many state authorities were also involved in that matter. Consequently, both of them decided to take external help to reveal the fraud.

They supplied the required copies of the documents, audited statements and other proofs to a journalist of a national news channel. The journalist revealed the involvement of firm management, state authorities and many politicians in the fraud. 

Facing the reputational loss, the XYZ Corp filed cases against Ramesh and Suresh for theft, fraud and disclosure of business secrets. The Journalist was also charged with violation of confidentiality and business secrecy.

The revelations and counter cases by XYZ Corp. created a large public debate on the matter. The Government sets up a committee under your chairmanship to investigate and redress the whole case and later present a report on the whole matter.

1. Discuss the ethical issues involved in the case.

2. What course of action would you take in this situation?

3. What measures will you suggest in your report for early detection of tax evasion by companies and protection of the whistleblowers?