PwC needs to be questioned, says Anil Singhvi

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Terming it the Enron of India, Anil Singhvi, Vice-Chairman, RNRL-also an auditor himself-accused the company's auditors of being hand-in-glove with Raju. "How can PricewaterhouseCoopers say they were not aware of it, and how does the company say today that the same auditors will restate the balance sheet?"

Singhvi pointed out: "As per Saytam's six-monthly audited balance sheet signed by PricewaterhouseCoopers, the balance sheet comprises Rs 5,700 crore cash and Rs 2,600 crore debtors-Rs 8,300 crore is the size of the balance sheet then." He added, "How can auditors say they have not verified the assets constituting 65% of the balance sheet? The first and the foremost thing is you have got to verify the assets to say that your balance sheet is giving a true and fair picture. How could you even rely on this Rs 3,300 crore which is shown as a fixed deposit and Rs 1,800 crore shown as current assets?"  

The second loophole, Singhvi said, was current asset. "There is Rs 376 crore worth of interest accrued but not paid by the bank. How can there be a situation when you put a fix deposit in the bank and the latter not pay you interest. This was running for five quarters. I see exactly the same entry for five quarters. Rs 67 crore every quarter credit on account of interest and Rs 3,300 crore deposit."

 

He feels the Institute of Chartered Accountants of India (ICAI) has not done much by going after chartered accountants or audit firms responsible for negligence. "This should go down the history as an example how the institute has come down heavily. First, the partner who has signed this should be suspended forthwith today. Second, PwC should be asked to explain how it happened. They should not carry on any audit and a standstill should be issued. Some drastic measures have to be issued because this is not a small thing. They are one of the largest companies. It's a question of reputation in eyes of the world at large."

 

Anand Mahindra of Mahindra and Mahindra said the Satyam fraud has damaged the image of Indian IT abroad and he hopes the new board/task force will takes charge of the situation. He said one should not look only at the government for answers. He said, "I am very angry at this development because, I think, it's done an incalculable and unjustifiable damage to the image of India abroad in a generic sense, particularly to the image of Indian IT, which was ironically what led the creation of Brand India in the past decade."

 

Mahindra added, 'It's done damage to the credibility of corporate governance of independent directors in India's boards. What's most distressing I think is that these people have been role models for the new entrepreneurs in India. These were role models of people who came from no family business backgrounds who started with nothing and they were role models for the whole generation of people and you created perhaps cynicism and disillusionment with that same segment. So I have to say, it's a strong word, but I am angry."         

 

Mahindra feels the speed with which the issue is dealt with could be a factor in salvaging Satyam's image. He however feels that there is a need to ensure that Satyam board is allowed to rectify the situation.

 

KV Kamath, CII President, said there is a need to examine loopholes in the Audit Regulatory and Accounting Practices. He feels that based on Raju's disclosures it would be inappropriate to doubt other companies' governance standards. He said corporate India must reflect on ways to demonstrate quality of governance.

 

An ICICI Bank Spokesperson said that it doesn't have any fund-based or non-fund based exposure in Satyam. He said that it has a marginal exposure of about Rs 3 crore on forward contract. He added that Satyam has a deposit in a current account.