Satyam Fraud: 2 PwC auditors arrested

By Aditya Mhatre at 25 January, 2009, 12:51 am

In one of my earlier post, I had questioned the lack of action against PwC, Satyam’s Audit firm. And finally, 2 PwC partners who had signed the Satyam audit reports have been arrested by the Crime Investigation Department (CID) of the Andhra Pradesh police on Saturday on charges of conspiracy, failure to scrutinize records and connivance.

S. Gopalakrishnan and Talluri Srinivas, had negligiently signed Satyam’s annual statements of accounts. They failed to verify the fake fixed deposits with the Bankers. PwC was being paid Rs. 5 crore (a little more than $1 Million) for heir audit report as compared to Rs 2 crores that other IT companies in India were paying.

CID is sharing inforamtion with the Serious Fraud Investigation Office (SFIO) which has also seized documents of firms owned by Raju’s son, Maytas Infra and Maytas Properties. In its investigations, the SFIO found a mismatch between the trial balance (the balance in the account after a transaction) and what was claimed by Satyam in the current account number 00120559 New York branch of the Bank of Baroda. The difference was Rs. 1,733 crore.

I have a feeling that this is just the beginning and who knows how deep the water is.

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Categories : Technology