Sebi bans Value Waterhouse for two years in Satyam case

MUMBAI: Markets regulator late on Wednesday banned global biggie Price Waterhouse (PW), from engaging in audit work with any listed company for two years for its role in the nine-year old, Rs 8,000-crore fraud. The regulator also asked PW to disgorge Rs 13.09 crore, along with interest at 12% per annum from January 2009. It also banned the two former PW partners__S Gopalakrishnan and Srinivas Talluri__from issuing audit certificates to listed companies for three years. These two senior chartered accountants were responsible for auditing when the fraud came to light.
This is the first time an audit firm has been banned by the markets regulator.

“Listed companies and intermediaries registered with SEBI shall not engage any audit firm forming part of the PW Network, for issuing any certificate with respect to compliance of statutory obligations which Sebi is competent to administer and enforce, under various laws for a period of two years,” the 108-page order said. This order could impact PW‘s audit business in India. The audit firm was yet to offer any statement at the time of going to press.

In September 2017, PW had moved a consent plea with the markets regulator to settle the investigations relating to PW‘s role in the nine-year old, Rs 8,000-crore Satyam Computers fraud. The latest consent plea has been filed under a recent rule change that came into effect in February this year. In 2009, PW had filed the first consent plea with Sebi which was rejected by the regulatory body.

For more than eight years, Sebi investigated the role of the auditing firm, Price Waterhouse Bangalore, which worked for Satyam Computers between 2000 and 2008. The regulator has been investigating if two of PW‘s partners had played a role in concealing the scam that came to light in January 2009 when Satyam founder B , through letters to the bourses, admitted to have fudged the books for years.

After the Satyam fraud was out in the open in early 2009, Sebi had issued show cause notices to PW and some of its partners and associates and subsequently started an investigation against those entities. The regulator‘s main objectives were to prove fraud or connivance of the PW‘s partners with the promoters of Satyam in fudging the company‘s books. Subsequently, PW had moved the challenging Sebi‘s jurisdiction and authority in starting an investigation against the audit firm. The apex court, however, allowed Sebi to go ahead with its investigations against PW.

In 2017, Sebi got two extensions from the SC to complete its investigations in the case.

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