In one of the most stringent orders passed by any regulator against a
Big Four auditor, SEBI had on Wednesday Jan 10,2018 found PwC guilty in the Satyam Scam and barred its network entities from issuing audit certificates to
any listed company in India for two years.
SEBI has also ordered the disgorgement of over Rs 13 crore of wrongful
gains from the auditing firm and its two erstwhile partners who worked
on the IT company’s accounts.
Price Waterhouse Bangalore and its two erstwhile partners — S.
Gopalakrishnan and Srinivas Talluri — have been directed to jointly and
severally disgorge the wrongful gains of “Rs 13,09,01,664 with interest
calculated at the rate of 12 per cent per annum from January 7, 2009
till the date of payment”.
They have to pay the amount within 45 days.
Coincidentally, SEBI order has come in the same month as the then Satyam
chief Ramaliga Raju’s admission of guilt to SEBI on January 7, 2009.
The order comes nine years after the scam at Satyam Computer Services
first came to light and after two failed attempts by PwC to settle the
case through the consent mechanism.
“We are disappointed with the findings of the SEBI investigations and
the adjudication order... we are confident of getting a stay before this
order becomes effective,” PwC said in a statement.
SEBI has said its order will not impact the audit assignments relating
to the fiscal year 2017-18 undertaken by the firms forming part of the
PwC network.
The regulator said the objective of insulating the securities market
from such fraudulent accounting practices perpetrated by an
international firm of repute will be ineffective if the directions do
not bring within its sweep the brand name PwC. The network structure of
operations adopted by the international accounting firm should not be
used as a shield to avoid legal implications arising out of the
certifications issued under the brand name of the network, the order
said.
Satyam Scam - All You Need To Know
The Satyam scandal was a Rs 7,000-crore corporate scandal in which chairman Ramalinga Raju confessed that the company’s accounts had been falsified.
On January 7, 2009, Ramalinga Raju sent off an email to Sebi and stock exchanges, wherein he admitted and confessed to inflating the cash and bank balances of the company. Weeks before the scam began to unravel with his famous statement that he was riding a tiger and did not know how to get off without being eaten. Raju had said in an interview that Satyam, the then fourth-largest IT company, had a cash balance of Rs 4,000 crore and could leverage it further to raise another Rs 15,000-20,000 crore.
Ramalinga Raju also manipulated the books by non-inclusion of certain receipts and payments, resulting in an overall misstatement to the tune of Rs 12,318 crore, shows an analysis of findings of Sebi’s probe. As many as 7,561 fake bills which were even detected in the company’s internal audit reports and were furnished by one single executive. Merely through these fake invoices, the company’s revenue got over-stated by Rs 4,783 crore over a period of 5-6 years. The probe itself continued for almost six years and found that fictitious invoices were created to show fake debtors on the Satyam books to the tune of up to Rs 500 crore.
Ramalinga Raju was convicted with 10 other members on 9 April 2015. The 10 people found guilty in the case are: B Ramalinga Raju; his brother and Satyam’s former managing director B Rama Raju; former chief financial officer Vadlamani Srinivas; former PwC auditors Subramani Gopalakrishnan and T Srinivas; Raju’s another brother B Suryanarayana Raju; former employees G Ramakrishna, D Venkatpathi Raju and Ch Srisailam; and Satyam’s former internal chief auditor V S Prabhakar Gupta. Ramalinga Raju and three others given six months jail term by SFIO on 8 December 2014.
Finding PwC guilty in the Satyam scam, India’s capital markets regulator SEBI on 10 January 2018 barred its network entities from issuing audit certificates to any listed company in India for two years. SEBI has also ordered the disgorgement of over Rs 13 crore of wrongful gains from the auditing firm and its two erstwhile partners who worked on the IT company’s accounts.
After the fraud came to the light, the government had ordered an auction for sale of the company in the interest of investors and over 50,000 employees of Satyam Computers.
It was acquired by Tech Mahindra and was then renamed as Mahindra Satyam, and was eventually merged into the parent company. The Satyam saga eventually turned out to be a case of financial misstatements to the tune of approximately Rs 12,320 crore, as per Sebi’s probe then. Citibank froze all its 30 accounts in 2009.
Satyam Scam - All You Need To Know
The Satyam scandal was a Rs 7,000-crore corporate scandal in which chairman Ramalinga Raju confessed that the company’s accounts had been falsified.
On January 7, 2009, Ramalinga Raju sent off an email to Sebi and stock exchanges, wherein he admitted and confessed to inflating the cash and bank balances of the company. Weeks before the scam began to unravel with his famous statement that he was riding a tiger and did not know how to get off without being eaten. Raju had said in an interview that Satyam, the then fourth-largest IT company, had a cash balance of Rs 4,000 crore and could leverage it further to raise another Rs 15,000-20,000 crore.
Ramalinga Raju also manipulated the books by non-inclusion of certain receipts and payments, resulting in an overall misstatement to the tune of Rs 12,318 crore, shows an analysis of findings of Sebi’s probe. As many as 7,561 fake bills which were even detected in the company’s internal audit reports and were furnished by one single executive. Merely through these fake invoices, the company’s revenue got over-stated by Rs 4,783 crore over a period of 5-6 years. The probe itself continued for almost six years and found that fictitious invoices were created to show fake debtors on the Satyam books to the tune of up to Rs 500 crore.
Ramalinga Raju was convicted with 10 other members on 9 April 2015. The 10 people found guilty in the case are: B Ramalinga Raju; his brother and Satyam’s former managing director B Rama Raju; former chief financial officer Vadlamani Srinivas; former PwC auditors Subramani Gopalakrishnan and T Srinivas; Raju’s another brother B Suryanarayana Raju; former employees G Ramakrishna, D Venkatpathi Raju and Ch Srisailam; and Satyam’s former internal chief auditor V S Prabhakar Gupta. Ramalinga Raju and three others given six months jail term by SFIO on 8 December 2014.
Finding PwC guilty in the Satyam scam, India’s capital markets regulator SEBI on 10 January 2018 barred its network entities from issuing audit certificates to any listed company in India for two years. SEBI has also ordered the disgorgement of over Rs 13 crore of wrongful gains from the auditing firm and its two erstwhile partners who worked on the IT company’s accounts.
After the fraud came to the light, the government had ordered an auction for sale of the company in the interest of investors and over 50,000 employees of Satyam Computers.
It was acquired by Tech Mahindra and was then renamed as Mahindra Satyam, and was eventually merged into the parent company. The Satyam saga eventually turned out to be a case of financial misstatements to the tune of approximately Rs 12,320 crore, as per Sebi’s probe then. Citibank froze all its 30 accounts in 2009.
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