Consulting giant PricewaterhouseCoopers is off the hook in the Rs 7,800-crore Satyam scam as Securities Appellate Tribunal or SAT has overturned SEBI's 2-year audit ban order.
Consulting giant PricewaterhouseCoopers is off the hook in the Rs 7,800-crore Satyam scam as Securities Appellate Tribunal or SAT has overturned SEBI’s 2-year audit ban order. Last year, market regulator Sebi’s had placed a 2-year ban on PricewaterhouseCoopers (PwC) in India, following its role in fraud hit B Ramalinga Raju-led Satyam fiasco. However, the Securities Appellate Tribunal has partly allowed disgorgement of the Rs 13 crore fee from the auditor. The tribunal has set aside ban on PwC, saying that only the national auditors watchdog ICAI (Institute of Chartered Accountants of India) can take any action against its members and fraud cannot be proved on the basis of negligence in auditing. “Sebi has no authority to look into the quality of audit and auditing services. Sebi can only take remedial and preventative action. The direction issued is neither remedial nor preventive. But punitive,” PTI reported SAT as saying.
The SAT has set aside the ban citing three important reasons–SEBI has no authority to look into quality of audit standards and services; it (SEBI) can only take remedial or preventive action and direction issued to ban PWC is neither remedial nor preventive, just punitive. While the ban has been overturned, SAT has ordered that the entire fee of Rs 13 crore can be taken back with interest from PwC, as there has been breach of duty.
Earlier in 2009, India witnessed one of the biggest scam of the decade after B Ramalinga Raju, the founder Chairman of Satyam Computer Services confessed to large-scale financial manipulations to the tune of over Rs 5,000 crore. Later, a SEBI probe found the scam was much higher at Rs 7,800 crore, according to a PTI report. 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. The process led to IT giant Tech Mahindra, taking over the company, 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.