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

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.’

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