Outcome of Sebi’s probe into Satyam audit firm soon
The Securities and Exchanges Board of India (Sebi) is soon expected to take action against the statutory auditors of scam-hit Satyam Computer Services for their role in the ~7,000-crore accounting fraud committed by the promoters between 1999 and 2009.
In January, the market regulator was directed by the Supreme Court to conclude the matter by July this year. It was widely speculated that Sebi may bar audit firm PriceWaterhouse and its partners from dealing with any listed entity for a specified period.
On April 9, 2015 a Hyderabad trial court had convicted all the 10 accused in the Satyam fraud case, including PriceWaterhouse partners S Gopalakrishnan and Srinivas Talluri with rigorous imprisonment for a period ranging from two to seven years under various sections of the Indian Penal Code.
The company’s founder and chairman B Ramalingaraju was handed down a seven-year jail sentence while the two auditors were given a maximum jail-term of three-years, though all the convicted were given time to appeal against the judgment.
The court had delivered a 971- page judgment following six year-long process of investigation and case trial.
The Central Bureau of Investigation (CBI) took over the case soon after the state CBCID filed an FIR against Ramalinga Raju and his associates after Raju had admitted to wrongful actions through an open letter on January 9, 2009.
In its chargesheet, CBI alleged that S Gopalakrishnan (A4) and Srinivas Talluri (A5) had actively participated in the conspiracy by auditing the fudged balance sheets and certified the same as correct and thereby connived with the other accused. They signed off the accounts of Satyam Computers till the accounting fraud came to light in January.
Citing its investigation findings in a supplementary chargesheet in November, 2009, CBI stated that both Gopalakrishnan and Srinivas had received a higher remuneration as percentage of revenue compared to other IT majors while the audit fee paid by the company had gone to another firm called Lovelock and Lewes and all the audit team members who assisted the two PriceWaterhouse partners were also from Lovelock and Lewes.
The basic premise of the case was that the promoter and other accused lured the investors under deception into buying the shares of the company during 1999-2009 by publishing false and inflated balance sheets to show a healthy picture about the company.