Price Waterhouse Network in India
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Malpractices
2018: Sebi bans PW from auditing any listed co in India for 2 yrs
Sebi bans PW from auditing any listed co in India for 2 yrs, January 11, 2018: The Times of India
Markets regulator Sebi banned global auditing firm Price Waterhouse Network from engaging in audit work with any listed company in India for two years starting April 2018 for its role in the Rs 8,000-crore Satyam scam of 2009.
The regulator also asked PW to pay Rs 13.09 crore, along with interest at 12% per annum from January 2009 (approximately an additional Rs 14 crore). Two former PW partners, S Gopalakrishnan and Srinivas Talluri, have also been barred from issuing audit certificates to listed companies for three years. The two chartered accountants were responsible for auditing Satyam when the fraud came to light.
Price Waterhouse Network of firms are the auditing arms of PWC India. PW is considered one of the ‘Big Four’ in auditing along with KPMG, EY and Deloitte.
This is the first time Sebi has banned an audit firm.
“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... for two years,” the order said. The ban will come into effect from 2018-19 and won’t affect the auditing work for the year 2017-18.
Sebi order not in line with HC directions: PW
PW issued a statement saying, “We are disappointed with the findings of the Sebi investigations and the adjudication order. The Sebi order relates to a fraud that took place nearly a decade ago in which we played no part and had no knowledge of. As we have said since 2009, there has been no intentional wrong doing by PW firms in the unprecedented management perpetrated fraud at Satyam, nor have we seen any material evidence to the contrary. We believe that the order is also not in line with the directions of the Bombay High Court order of 2011 and so we are confident of getting a stay before this order becomes effective.”
In September 2017, PW had moved a consent plea with SEBI to settle the investigations relating to its role in the Satyam scam. In 2009 too the firm had filed a consent plea with Sebi which was rejected by the regulatory body. A consent plea is a process within Sebi rules through which an entity that is being investigated by the market regulator can approach the regulator to settle the case after paying a monetary penalty but usually without accepting or denying any guilt.
The PW statement also said: “We have learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice, as also confirmed in 2015 by an independent monitor appointed by the US SEC."
Sebi has been investigating the role of the auditing firm, Price Waterhouse Bangalore, which audited Satyam Computers between 2000 and 2008. The regulator was probing 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 Ramalinga Raju, through letters to the bourses, admitted to have fudged the books for several years.
The regulator’s objective was 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 Supreme Court challenging Sebi’s jurisdiction and authority in starting an investigation against the audit firm. The apex court allowed Sebi to go ahead with its investigations.
In 2017, Sebi got two extensions from the SC to complete its investigations in the case.
