PwC seeks settlement with SEBI – Satyam scam
PricewaterhouseCoopers has consented to cooperate with markets regulator SEBI in the Satyam scam to attempt a fast-track settlement. The consent application is a significant step ahead to clear the protracted legal cases surrounding India’s largest-ever accounting fraud.
The firm, whose Hyderabad-based arm Price Waterhouse is being probed for its role in the Rs 
7,800-crore scam, will cooperate with SEBI “to explore and bring to a close” the issues it has with the markets regulator as a fallout of the scam. However, a spokesperson for the firm said it was not possible to say if similar consent proceedings could be undertaken with the other prosecuting agencies like the Central Bureau of Investigation and Serious Fraud Investigation Office.
Government sources said it might be difficult to replicate the consent format as the CBI cases, for instance, were against two auditors of the firm. Also, there was no clarity whether such recourse was available in their prosecution rules.
Price Waterhouse was the auditor for Satyam, whose CEO Ramalinga Raju doctored its accounts for several years. The scam came to light when Raju sent a confession letter to SEBI on January 7 this year.
A statement issued by Price Waterhouse said “it has decided to pursue consent proceedings (with SEBI) relating to the audit of Satyam Computer Services Ltd”. But the statement adds that this is not an admission of guilt. “The pursuit of a potential settlement is not in any way an acknowledgment that there was any wrongdoing (by Price Waterhouse) in relation to the audit of Satyam”.
It is understood that SEBI had made the offer early this year, one it a routinely makes whenever it sends out a show-cause notice. But the audit firm had declined at that time. A spokesperson said the feeling that it would be better for all parties to settle the proceedings to arrive at mutually acceptable terms now prompts the change.
The firm’s statement said it “is aware of the impact that the fraud perpetrated by the former chairman of Satyam has had on business confidence in India” and hence the desire to settle.
SEBI has only a limited role vis-à-vis an entity like Price Waterhouse, which is not a market participant. It will not be able to impose a fine, but it can recommend punishment by other agencies. The consent proceedings will enable the audit & consultancy firm to avoid a damaging order that could seriously impact its reputation.
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