The chief metropolitan magistrate of Hyderabad has put two Price Waterhouse auditors, S Gopalakrishnan and Srinivas Talluri, in to judicial custody till February 6. This will unfortunately mean that, just like the Securities and Exchange Board of India (Sebi) and the Serious Fraud Investigation Office (SFIO) haven?t been allowed to question the Raju brothers ?safely? sequestered in custody, the auditors will also be shielded from these agencies? scrutiny. At least for now.
While Sebi and SFIO wait for the court to accede to their requests for questioning the arrested personnel, they are losing precious time. Obviously, this is not helping an investigation already marred by delays. After all, although Satyam founder B Ramalinga Raju confessed to his accounting antics on January 7, the state?s Criminal Investigation Department only seized documents from his auditors on January 13.
Price Waterhouse had admittedly been saying that it would co-operate with the authorities, but the above time lag gave it enough time to emulate their extinct peer?Arthur Andersen. The most enduring image of Andersen?s last days was its massive document-destruction exercise in October 2001, after the Securities and Exchange Commission asked it for financial records pertaining to a certain Enron. Whether Price Waterhouse deployed its paper shredders on its Satyam files or not, the multiplicity of regulators and agencies now roped in to uncover the Satyam fiasco means that nobody seems to be accountable for the overall investigative outcome, even as everybody seems to be working towards it.
It?s not just in the auditor?s case that the authorities have taken too long to act. Both the Centre and the state took a full 24 hours to gather their wits after Raju?s manic missive, reminiscent of the inertia in the country?s security apparatus after the 26/11 terror attacks began.
Consider the various agencies already involved in the probe. Apart from SFIO and Sebi, the Registrar of Companies, the state CID (which has an economic offences wing to boot), the Institute of Chartered Accountants of India (ICAI) have all been probing the hows and whys of the Satyam fraud. Of course, each of them is looking at separate aspects?the SFIO is probing the accounts and general affairs of Satyam and its eight related firms, ICAI is examining Price Waterhouse?s role and Sebi is trying to (not with much success so far) investigate any instances of insider trading. At the same time, the interim board led by HDFC chairman Deepak Parekh has asked Deloitte Haskins Sells and KPMG to restate the firm?s accounts and appointed a new auditor. There are other agencies that are not yet part of the probe but could be roped in as they could add value to the investigation process?the direct and indirect tax authorities, the Reserve Bank of India, the Directorate of Revenue Intelligence, Enforcement Directorate, the Financial Intelligence Unit, and of course, the Central Bureau of Investigation?s Economic offences wing. Like the Mumbai attacks made the government wiser and forced the setting up of the National Investigation Agency, Satyam?s numerous simultaneous probes need to be combined into a single, coherent Special Task Force.
Incidentally, the SFIO, to whom the Centre has assigned the lead role in the case, was meant to be an omnibus investigative agency to unravel corporate frauds with experts on loan from agencies like Sebi and RBI. But not only is the SFIO understaffed (32 posts out of its sanctioned strength of around 100 are vacant), it has no autonomous powers. After the three months allotted to it, SFIO will have to furnish its findings to the minister of corporate affairs. Whether the minister approves its report in totality or in parts, all the agency can do is file a complaint at the local police station in Hyderabad.The paper shredders may not have been used. But the convoluted damage control exercise currently underway will leave us doing just that?literally pick up the pieces from Satyam?s shredded past.
?surabhi.prasad@expressindia.com