PwC stands by Satyam partners

PricewaterhouseCoopers is standing by its partners who have been caught up in India’s Satyam Computer Services scandal, despite them being formally charged by India’s Central Bureau of Investigation (CBI).

In a statement released today, Price Waterhouse India (the firm’s name in India) said it was 'disappointed' that the two partners who worked on the audit of Satyam’s financial statements have again been denied bail.

It said: 'The fraud perpetrated by Mr Raju and his cohorts was designed to, and did, circumvent PW India's audit process. The two partners were also victims of that substantial and elaborate fraud.

'The two partners, who are committed to cooperating with all investigating authorities, have now been held in custody for over 10 weeks. During this time, the partners have consistently denied any criminal wrongdoing.'

The exact charges against the auditors have yet to be confirmed, although they have been lodged with a Hyderabad court and are expected to be made public within two days.

The CBI noted that the charges against all the accused included the falsification of accounts and it is understood that this is a charge that has been laid against the accountants, amongst other book-keeping –related allegations.

Former Satyam chairman B.Ramalinga Raju has already admitted his involvement in an accounting fraud estimated to be worth at least US$1billion.

Speaking after the filing of the charge sheet earlier this week, Price Waterhouse again backed their partners, saying it was 'surprised and disappointed that the Central Bureau of Investigation has pressed charges…'

It said its executives 'have not come across any evidence of criminal wrongdoing on the part of either partner and both partners continue to vigorously deny any wrongdoing.'

In the meantime, PW India stressed that it had suspended both partners from all duties in January, adding that one, S Gopalakrishnan retired from PW India when he reached the mandatory retirement age at the end of March. The other, [Srinivas] 'Talluri remains suspended, pending resolution of the Satyam investigations,' it added.

It is anticipated that further bail applications will be made or the Price Waterhouse pair, probably in the lower court where the charge sheet has been filed. If it refuses the application, there is an option for appeal to a high court and even the Supreme Court of India for bail. Meanwhile, the criminal court proceedings would continue in the lower court.

Speaking to Accountancy Age, Hinesh Dosh, an Indian chartered accountant and a member of country’s Investors’ Grievances Forum stressed that there could be changes or amendments to the charge sheet filed to the court: 'Many agencies are still working on the case like Institute of Chartered Accounts of India, Securities and Exchange Board of India, ministry of company affairs. There is no doubt that CBI is the ultimate authority but what happens to those investigations carried out by these other agencies independently.'

He said the CBI charges were 'a basic charge which is not dependent on the investigation of those authorities.'

Price Waterhouse stressed that it has been established in India for over 125 years 'and is committed to the highest standards of quality and service for its clients and stakeholders.'