Satyam, the Indian outsourcing company at the center of a massive fraud investigation continues to be mired in confusion and controversy.
Earlier in the week, the company’s former CFO appeared to give two PricewaterhouseCoopers audit partners a pass, saying:
…that auditors S Gopalakrishnan and Talluri Srinivas of audit firm Price Waterhouse had no role to play in the fraud, as they were given forged documents by the company management.
At the time I thought it unusual as a fraud case is often characterized as one of rats deserting sinking ships, with people taking everyone down with them. Then the story took a fresh twist when the New York Times asserted that the CBI, the Indian equivalent of the FBI had concluded its investigation and is charging nine people with fraud related offences including the PwC auditors:
After a 45-day investigation, the bureau said it was charging six people from Satyam Computer Services, two suspended auditors from PricewaterhouseCoopers and an outside adviser with “criminal conspiracy, cheating, cheating by personification, forgery of valuable security, forgery for the purpose of cheating, using a forged document as genuine, falsification of accounts and for causing disappearance of evidence.”
Not surprisingly, PwC was said to be ‘disappointed.’ I am confused. It seems that despite the exhortations of the former CFO, the CBI doesn’t believe him and consider PwC to be complicit in the affair.
Our sister title in Asia now reports that:
…the investigations have concluded, it is a matter of days before Satyam is likely to be sold. The company already has a list of suitors including Wilbur L. Ross Jr., the New York-based investor and rehabilitator of distressed assets globally, construction and engineering conglomerate Larsen & Toubro, Tech Mahindra, and private equity firm Apax Partners.
But bidders have complained about a lack of transparency and the need for access to Satyam’s books. Like everything concerning Satyam, even the sale is mired in controversy.
[My emphasis added]
In my last Satyam post, I considered the disposal as one characterized by indecent haste with political overtones. Commenters thought I was nuts and/or over reaching. They won’t be the first, or the last to hold that opinion. It now seems that my concerns about the ability to undertake proper due diligence were justified.
Regardless of the sale which some of my sources now believe will take the form of an auction, the Satyam story is far from over. It has been a blow to the Indian outsourcing industry at a time when the global economy is in poor shape and where confidence is everything. The real tragedy is for the many fine people who work or worked at the company.
