Satyam scandal casts shadow over PwC India

The PricewaterhouseCoopers partners arrested in connection with the $1bn (£700m) Satyam fraud were expected to make fresh applications for bail today, as industry experts warned of a gloomy future for the firm if it fails to salvage lucrative work for the Indian government.

Subramani Gopalakrishnan and Talluri Srinivas, the two PwC partners who signed off on Satyam audits, were refused bail on Tuesday ­ but were expected back in court in another effort to be released from custody.

Last month, the Satyam chairman resigned after admitting to inflating profits at the Indian outsourcing giant.

The partners were arrested last week as PwC International chief executive Sam DiPiazza flew to New Delhi for talks with Prem Chand Gupta, the government minister in charge of corporate affairs, to discuss the firm’s involvement in the scandal.

Observers viewed the meeting as an effort to shore up PwC’s business in the country and maintain its position as a key supplier of services to government.

According to Amarjit Chopra, chairman of the Accounting Standards Board at the Institute of Chartered Accountants in India: ‘If the government decides against giving any consultancy work to PwC, until the investigations [in the Satyam affair] are completed, then it [the firm] will have problems.’

PwC refused to comment though those close to the situation are said to be dismissive of some of the comments emerging from India. It is understood the firm has so far lost no clients following the Satyam scandal.

The Indian firm has seen impressive growth in recent years. Though PwC International releases no specific figures it is believed the Indian business grew by 44% last year.

PwC International reports revenues of $2.6bn for Asia, its category which includes India, China and a number of other countries.

PwC has audited Satyam since 2000. Gopalakrishnan signed off all audits during that period bar the last one which was signed off by Srinivas. Both were arrested last week and both have denied allegations that they were involved in criminal activity while working on the audit.

A PwC statement said there is ‘not an iota of material to link them with the accusations levelled against them’.