Satyam scandal casts shadow over PwC India
Gloomy future for PwC India if it fails to salvage lucrative work for the Indian government
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’.