Published: Sun, January 14, 2018
Worldwide | By Isabel Fisher

No intentional wrongdoing in Satyam fraud: Price Waterhouse

No intentional wrongdoing in Satyam fraud: Price Waterhouse

The bench also batter two former Price Waterhouse partners, S Gopalakrishnan and Srinivas Talluri, from issuing audit certificates to listed companies for three years, The Times of India reported.

In addition to barring PwC, Sebi has also ordered PwC and its two erstwhile partners who worked on the Satyam audit to pay Rs 130.9 million, along with interest at 12 per cent per annum from January 2009 on account of wrongful gains.

According to Sebi, it needs to be borne in mind that PW firms have benefited from the relationship from Satyam Computer Services by having collectively received a fee of over Rs23 crore during 2000-2008 period. Of this, Rs 13.09 crore was paid to PW Bangalore for Satyam's audit. Currently, PW network firms carry out auditing activities for about 75 listed companies, an official in the know told the news agency.

The order comes into force with immediate effect.

The SEBI order comes nearly seven years after the U.S. Securities and Exchange Commission (SEC) agreed to a $6 million settlement over charges against Indian affiliates of Price Waterhouse related to deficient auditing of Satyam. In the light of that stand, it is expected to challenge the Sebi order.

Soon after the SEBI order, Price Waterhouse Network issued a statement saying, "We are disappointed with the findings of the Sebi investigations and the adjudication order".

It also noted that the order relates to a fraud that took place almost a decade ago in which it played no part and had no knowledge of.

"As we have said since 2009, there has been no intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary", Price Waterhouse said in a statement. On January 7, 2009, Raju confessed the largescale financial manipulation in the books of Satyam.

Satyam was an IT services company which has ceased operations after an accountancy scandal in 2009. While there would be no direct impact, SEBI's ruling could also raise questions about PW network entities' auditing of unlisted and other entities.

The auditors did not act upon the whistle blower's letter warning them about company's bank balances being inflated and also failed to respond which a prudent auditor would have done on sudden exposure of fraud. The public had no reason to believe that the audit reports were false and misleading.

In a 108-page statement, SEBI said that the manner in which various entities bearing the PwC name had been registered in India in a "nebulous way", made it hard not to take notice of the "loss of faith of the investors in the brand name".

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