More Litigation for Satyam & trouble for their ex-CFO & PWC
What you can learn from a court filing and some news stories
This weekend, I read about (by my count) the fourth class action suit being filed against Satyam, its management and PriceWaterhouseCoopers (PWC). This particular filing Satyam court filinghas a very up-to-date and complete chronology of events in it and provides a great backgrounder for anyone just catching up on the Satyam situation. This case is being filed by the law firm of COTCHETT, PITRE & McCARTHY of San Jose, California.
This document is a very good read especially to see the issues raised about Satyam's auditor: PriceWaterhouse (or parent PriceWaterhouseCoopers). PWC may have a multi-billion dollar liability to pay someday as a result of this case. Granted this is very premature since the totality of the fraud nor a trial have not been conducted yet but if former Satyam Chairman Raju's resignation letter is to be believed, then this is a massive fraud that took place over a number of years. Basic auditing would require auditors to validate bank balances and, unless the banks are co-conspirators, then the apparent audit failure could be a real problem for PWC. Again, let's wait for the discovery process to be completed before any judgments are made.
On a related note, there was some discussion this weekend that Satyam's former CFO may have recently attempted suicide. It's hard to get a straight story on this but if you read this piece by the Times of India, the former CFO may have insider trading problems in addition to the fraud matter.
Satyam's competitors aren't waiting around to scour Satyam's customer list for new clients. Satyam customers are also second-guessing things, too. Here's what Wachovia Capital Markets said in its Wachovia Weekly publication this Friday:
Given tainted brand, expectation of likely a long period of management turmoil, and disclosure of limited financial strength, we suspect that clients would likely embrace alternatives for their offshore IT/BPO needs.
To quote Morton Salt, "when it rains, it pours".