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2AuditorsHeldinIndiaFaultSystem
ByHEATHERTIMMONS Published:May28,2009 CHANCHALGUDA,IndiaHyderabadsCentralPrisonisnocountryclubjail.

MaheshKumarA./AssociatedPress SrinivasTalluri,left,andSubramaniGopalakrishnan,auditorsofSatyamComputerServices,arein prison,chargedwithmultipleoffenses,includingfalsificationofaccounts. Theprison,openedinthe1800s,issurroundedbyhighwatchtowersandaconcretewall.Behindits hulking,metalstuddedfrontdoorlivemorethan900men,heldforcrimeslikepickpocketingand murder.Thentherearethetwoaccountants. FourmonthsaftertherevelationofamajorfraudatSatyamComputerServicesshockedcorporate India,marketsherehavepracticallydeclaredthescandalover.Satyamstopmanagersconfessed andwerejailed,theboardwasfired,andthegiantoutsourcingcompanywassold. ButSatyamsindependentauditors,twopartnersfromtheIndianofficeof PricewaterhouseCoopers,saytheyareinnocentandremaininprison,chargedwithmultiple offenses,includingdishonesty,cheating,falsificationofaccountsandusingforgeddocuments. Theauditors,whoaretechnicallyinjudicialcustody,areluckierthanmostprisonershere.Their wivescanbringthemfoodfromoutsideduringtheirtwiceweeklyvisits.Buttheyreceivefewother privileges.Theysleeponthefloorinacellwithotherinmates,intemperaturesthatoftenexceed 100degrees. Inaninterviewintheprisonsdim,noisy,concretevisitorshallthisweek,theaccountantssaidthey werescapegoatsforasystemthatfailedtocatchyearsofwrongdoing. Ivebeen31yearsinthisprofession,andIhaveneverseenauditorsbeingbooked,saidSubramani Gopalakrishnan,oneofthejailedauditorsandthefounderofthePricewaterhouseCoopersofficein Hyderabad. Heyelledthroughthreefencesintheroom.Prisonerspushedagainstonefence.Visitorslawyers andwiveswithbabiespressedagainstanother,andathirdoccupiedagarbagestrewnnomans landbetweenthefirsttwo.

PricewaterhouseCoopersauditedSatyamsbooksworldwidefrom2001untilthecompanys founder,B.RamalingaRaju,confessedinJanuarythathehadbeenmanipulatingtheaccountsfor yearsandthatmorethan$1billioncashonthecompanysbalancesheetdidnotexist. Subsequentinvestigationsrevealedfalsifiedbankbalances,depositoryreceipts,invoicesandeven bankletterheadusedtobolsterthefakeaccounts.Mr.Rajuandsomeoftheothertopmanagers, whohaveconfessedtocrimesandareawaitingtrial,arealsoinHyderabadsprison,butinseparate quartersfromotherprisoners. PricewaterhouseCoopers,facingnumerousshareholderclassactionsuitsandinvestigations,is underintensepressuretoprovethatitspartnerswerenotcomplicit.Butapreliminaryreportfrom IndiasCentralBureauofInvestigationaccusestheauditorsofconsciouslyoverlookingaccounting irregularitiesandknowinglycertifyinginflatedandfalsifieddata. Inapetitionforbailforthepartners,PricewaterhouseCooperssaidthatthegovernmenthadno materialoriotaofevidencetoevenremotelysuggestthatthepartnershadanyknowledgethat Satyamdocumentswerefalsified. Mr.Rajuscarefullycraftedimageandpoliticalconnectionsfooledthecompanysboard,Indias regulatorsandeveryoneelse,Mr.Gopalakrishnansaidfromprison.Inretrospect,theonlythinghe mighthavedonedifferently,hesaid,wouldbetobemoreawareofthepressureonIndian outsourcingcompanieslikeSatyamtogrow,andrelylessontheiremployeestoprovidecopiesof thecompanysbankbalances.TheotherPricewaterhouseCooperspartner,SrinivasTalluri,a youthful48yearoldwithwirerimglasses,istryingtomaintainhisprofessionalmienbehindbars.In theinterview,hishairwasneatlybrushed,hecarriedanotepadandaplasticwaterbottleandhisT shirtwassosmoothitseemedironed. Hesaidhistwochildrenhadnotvisitedhimduringhisfourmonthprisonstintbecausehedidnot wantthemtoseehimbehindbars.Herecentlyofferedtochecktheaccountsattheprisons canteen,justtokeephismindsharp. Thewholeworldbelievesthatpreventinganddetectingfraudismyresponsibility,heyelled throughthewirefence.Noconcernswereeverbroughttousbyanyone.Hesaidhecouldnot imaginethecompanywouldforgedepositoryreceipts,orbalancesonfakebankletterhead.Banks inIndiaarenotrequiredtogivebalancesdirectlytoauditors,headded. AccountingexpertssaythatwhileauthoritiesmaybetreatingthePricewaterhouseCooperspartners particularlyharshly,makinganexampleofthemmaypreventmoreseriousrepercussionsforthe countryseconomyandeventheauditfirmitself. Youcansayitisalittleunfairtheyareawaitingtrialinprison,butatthesametimeitispartofa systemofactionthatseekstopreserveinvestorconfidenceandlimitcollateraldamage,said

SudhakarBalachandran,anassociateprofessorofaccountingatColumbiaBusinessSchoolinNew York. Mr.TalluriandMr.Gopalakrishnanprovidedmorethan50,000pagesofdocumentsfromtheiroffice toinvestigatorsandsatfornumerousinterrogations,accordingtotheirbailpetitions. PricewaterhouseCoopersmaintainsthatthetwopartnersarenotaflightriskandkeepingthemin prisonconstitutesapretrialpunishment,thebailpleasaid. Theauditorswivessaytheyhavebeendoingtheirbesttokeepabravefacefortheirhusbands,and spendalotoftimepraying. Rightnow,evenGodisnotwithus,saidMr.Gopalakrishnanswife,JayaLakshmi. HariKumarcontributedreportingfromNewDelhi.

SatyamChiefIsAccusedofFalsifyingSizeof
ByHEATHERTIMMONS Published:January22,2009 NEWDELHITheheadofSatyamComputerServicesconfessedtomakingupmorethan10,000 employeestosiphonmoneyfromthesoftwarecompanyandtousinghiselderlymothersnameto buylandwiththecash,aprosecutorsaidinacourtappearanceThursday.

MaheshKumarA./AssociatedPress B.RamalingaRaju,thefounderandchairmanofSatyam,hasbeenheldincustodysincehisarrest twoweeksago. B.RamalingaRaju,thefounderandchairmanofSatyam,anIndianinformationservicesoutsourcing company,alsoconfessedtoforgingdocumentsrelatedtobankdeposits,K.AjayKumar,a prosecutorwiththeCrimeInvestigationDepartmentoftheIndianpolice,toldacourtinthe southerncityofHyderabad. Mr.Rajuslawyer,S.BharatKumar,toldthecourtthattheprosecutorsclaimswerefalseand reiteratedthedenialafterward,newsagenciesreported.Theaccusationofdiversionoffundsis nothingbutimagination,BloombergNewsreportedthelawyerassaying.Allthroughthe interrogationtherewerenoquestionsaboutanydiversionoffunds,launderingoffunds.Andthere werenoadmissions.

TheprosecutorarguedthatMr.Raju,hisbrotherandthechieffinancialofficerofSatyamshould remaininpolicecustody,whichajudgeextendeduntilFriday. AjayKumar,theprosecutor,toldthecourtthatSatyamhad40,000employees,farfewerthanthe nearly53,000itclaimed.Themoneyrecordedashavingbeenpaidtothoseemployeeswasactually usedbyMr.Rajutobuylandinotherpeoplesnames.Mr.Rajuhadconductednearly400such benamilanddealsordealsunderafakenameincludingsomeunderhismothersname,Mr. Kumarsaid. Satyam,whichisbasedinHyderabad,hasglobalclientsandlistingsontheNewYorkStockExchange andEuronext.ItbecamethefocusofthehighestprofilefraudcaseinIndiaafterMr.Rajusaidon Jan.7thathehadfabricatedabout$1billionincashatthecompanyandpaddedprofitmargins thoughconversationswithinvestigatorsandtheprosecutorsaccountappearedtoindicatethatthe extentofthefraudwasmuchmoreseverethanthat. Makingupemployeesmightsoundcomplicated,butinvestigatorssaiditwasnotthatdifficult. Employeesarejustcodenumbersinyoursystem,explainedonepersoninvolvedinthe investigation,whowasgrantedanonymitytoprovidedetailsaboutit.Youcancreateanyamount ofthem.Allyouneedtodoismakesuretheincometaxisdeductedproperlyandinsuranceispaid. SatyamsnewstateappointedboardhashiredKPMGandDeloitteToucheTohmatsutorestatethe accounts,Bloombergreported.Thegrowingsizeandscopeofthefraudisforcingmanyofits corporateclientstorethinktheirsoftwareandbackofficeoperations,analystssay.Therevelation thatemployeenumbersmayhavebeenfudgedcouldintensifysuchreevaluations,asclients questionwhethertheirinvoiceshavebeenpadded. SatyamclaimsathirdoftheFortune500companiesasclients;GeneralMotors,GeneralElectricand NestldobusinesswithSatyam.Sofar,justoneclient,StateFarmInsurance,haspubliclybrokenties withSatyam. Thecompanysgloballinks,anditsinternationalstocklistings,meanthatprosecutorsand investigatorsfromIndiaarejoiningforceswiththosefromtheUnitedStatestodeterminehowfar thefraudwentandhowitwascommitted.InvestigatorsinIndiasaythattheSecuritiesand ExchangeCommissioninWashingtonisworkingwiththeIndianmarketregulator,theSecuritiesand ExchangeBoardofIndia.

InIndia,CluesUnfoldtoaFraudsFramework
ByJEREMYKAHN Published:January26,2009 NEWDELHIHowdidB.RamalingaRaju,thechairmanofoneofIndiaslargestinformation technologycompanies,carryoutthebiggestfinancialfraudinthiscountryshistory?Apparentlyit doestakeavillage.

MaheshKumarA./AssociatedPress ManagersfromPriceWaterhouseIndia,SrinivasTalluri,left,andS.Gopalakrishnan,beingtakentoa prisonafterhavingbeendetainedinconnectionwiththeaccountingatSatyam. AndalthoughthebilliondollarfraudatSatyamhasbeencalledthiscountrysEnron,anexamination ofthecompanysaccountingsuggeststhescandalmaymorecloselyresemblethefraudcasesat HealthSouthandPeregrineSoftware. Alittleovertwoweeksago,Mr.Rajuconfessedtopaddingthecompanysbalancesheetby$1billion incash.Butinvestigatorsnowsuspecthewaslessforthcomingthanitfirstappeared. Accordingtoapersoninvolvedinthecase,investigatorsthinkatleastsomeofSatyamscash reservesweregenuinebutweresiphonedofftoawebofcompaniescontrolledbyMr.Rajuandhis family. ThisexplanationismoreplausiblethanMr.Rajusversionofevents,accountantsandanalystssaid. Salesfiguresandearningsstatementsarerelativelyeasytomanipulate,butlyingaboutacompanys cashpositionisconsidereddifficult. Itishardtobelievethatwhatheissayingisright,saidSaurabhMukherjea,ananalystforthe NobleGroup,aBritishinvestmentbank.Thescaleofthecashmanipulationisbreathtakingand withoutprecedentanywhereintheworld. InSeptember,Mr.MukherjeausedacomputermodeltoexamineIndias500largestpublic companiesforsignsofaccountingmanipulation.Hefoundthatmorethan20percentofthemwere potentiallyengagedinaggressiveaccounting,butSatyamwasnotonthelist. ThisisbecausetheautomatedscreensthatanalystslikeMr.Mukherjeausetopickupsignsoffraud beginbysearchingforlargediscrepanciesbetweenreportedearningsandcashflow.InSatyams case,thecashseemedtokeeppacewithprofits.

ButKawaljeetSaluja,ananalystfromKotakSecurities,anIndianinvestmentbank,spotteda puzzlingphenomenon.FromDecember2006throughSeptember2008,thecompanystotalIndian bankdepositsremainedmoreorlessflat.Butoverthatperiodtheportionofthatmoneykeptin currentaccounts,whichalloweasyaccesstocashbutearnlittleinterest,increasedmorethan sevenfold. Mr.SalujaquizzedthecompanysmanagementduringaSeptemberconferencecall.Satyams formerchieffinancialofficer,SrinivasVadlamani,saidthemoneywouldsoonbetransferredto higherearningaccounts. Mr.Salujapointedoutthatforthelastfourquartersmostoftheincrementalcashflowshavebeen parkedincurrentaccountsandaskedMr.Vadlamaniagaintohighlightareasonforit.Mr. Vadlamanibrushedthequestionaside. Today,Mr.Vadlamaniisinjail,chargedalongwithMr.Rajuandhisbrother,B.RamaRaju,aformer Satyamdirector,withconspiracytocommitfraud,cheatingandforgery. S.BharatKumar,thelawyerforthemen,couldnotbereachedforcomment. Thepresenceoflargesumsofcashincurrentaccountscouldbefurtherevidencemoneywasbeing siphonedfromthecompany,accordingtoMayurJoshi,anIndianforensicaccountant. TheSatyamscandalbearsonlypassingsimilaritytoEnron,wheretopexecutivesusedamazeof specialpurposevehiclesandrelatedpartytransactionstomoveliabilitiesoffthecompanysbalance sheet. Instead,SatyammayhavemoreincommonwithHealthSouth,therehabilitationservicescompany thatbarelysurvivedanaccountingfrauduncoveredin2003,andPeregrineSoftware,whichinflated revenueandearningsbyhundredsofmillionsofdollarsuntilprosecutorscaughtupwiththe company,alsoin2003. AtHealthSouth,accordingtoprosecutors,seniorexecutivesengagedinaconspiracyfrom1996 through2002thatinflatedthecompanysprofitsby$2.7billion.Executivesusedavarietyof techniques,includingfalsifyingentriesinthecompanysaccountingsystem.Theyalsoresortedto outrightforgery,generatingbankstatementsfor20fakeaccountsthatallowedthecompanyto overstatecashreservesbymorethan$370million.AtPeregrine,prosecutorssaid,executivesalso falsifiedaccountingentriestorecordnonexistentsales. AtSatyam,investigatorssaytheyarebeginningtoseesignsofsimilartactics. (Page2of2) K.AjayKumar,apublicprosecutor,saidthatinvestigatorshadfoundoneforgeddepositreceiptfor anaccountwiththeIndianbankHDFC.Otherforgedbankstatementsalsohavebeenfound, accordingtoIndiannewsreports.SuchforgeriesmayexplainwhySatyamsauditors,Price

Waterhouse,theIndianarmoftheaccountinggiantPricewaterhouseCoopers,failedtoraisethe alarm. InHealthSouthscase,itsauditor,Ernst&Young,contendeditwasdupedbythecompanys management,whichpresenteditwithfraudulentdata.Anumberofinvestorgroups,however,are stillsuingtheaccountantsforfailingtodetectthescam. PriceWaterhousehassaiditwasunawareofSatyamsinflatedfinancialfiguresuntilMr.Raju revealedthem.Investigatorsarenotsosure.Overtheweekend,policearrestedtwoPrice WaterhouseaccountantswhooversawtheauditofSatyamsbooks,chargingthemwithcriminal conspiracyandcheating. ElaboratefraudslikethoseatHealthSouthareextremelydifficultforinvestorstodetectsimplyby readingpublishedfinancialstatements.Butwhenseveralaccountingprofessorsanalyzed HealthSouthsstatementstotheSecuritiesandExchangeCommissionafterthatscandal,theydid findsomeirregularitiesandsomeofthesearepresentinSatyamsS.E.C.filings,too.(Becauseits stockwaslistedontheNewYorkStockExchange,aswellasinIndia,Satyamhadtofilefinancial statementswiththeS.E.C.). Oneiserraticfluctuationsintheamountacompanyreservesforuncollectiblecreditsales.In2005, accordingtoSatyamsS.E.C.filings,itsrevenuegrewabout40percentanditsallowanceforbad debtsgrewabout9percent.Thecompanyreportedsimilarnumbersthenextyear.Butin2007,the companyreportedthatrevenueincreasedbyasmalleramountonly33percentandyetthe companysallowanceforbaddebtsuddenlyrose19percent.Itleapedanother36percentlastyear. Theamountofbaddebtthecompanyactuallywroteoffannuallyvariedwildly,butaswith HealthSouth,itwasalwaysonlyafractionofwhatthecompanyhadestimated. SuchdatahintsthatattheveryleastSatyamsmanagementmighthavebeenmassagingthe companysearningstomeetstockmarketexpectations. AfootnoteinSatyams2007and2008financialstatementsmighthaveraisedeyebrowstoo.It warnedofanunquantifiedincreaseinthecollectionperiodforcreditsales.ThefraudatPeregrine begantounravel,inpart,whenthecompany,whichhadbeenbookingfakecreditsales,wentto desperatelengthstoconcealthegrowthintheamountofuncollectiblerevenueitwasbookingand thelengthoftimecustomersweretakingtopay. ThereareotherodditiesinSatyamsbooks,likefluctuationsintheamountofunbilledrevenuethe companyrecorded.Unbilledrevenueisworkdoneforacustomerbutnotyetinvoiced.Analystswho followoutsourcingcompaniesliketoseeunbilledrevenuebecauseitrepresentsfutureearnings.But thereislittledocumentationassociatedwiththenumber,sounbilledrevenueiseasytofudge.

OneofthecentralpiecesofthePeregrinefraudwasthesaleofreceivables,manyofthem fraudulent,tobanks.Thistechnique,sometimescalledfactoring,generatedcashonthecompanys books.ButinPeregrinescase,thecompanywassellingreceivablesitknewtobefake,anditoften promisedthebankstowhichitwassellingthemthatitwouldcoveranynonpaymentfromits customers.Thismeantthemoneythecompanyreceivedshouldhavebeenbookedasaloanandnot asoperatingcash. Again,atSatyamthereissomeevidencethatfactoringmayhavebeenusedtoinflatesalesand profitsaswellasgeneratecash.Mr.Rajuhastoldinvestigatorsthathehadsecretlypledged SatyamsreceivablesfromJanuarytoMarch2009toraise$245million,accordingtoaccountsinthe Indianpress. Inhisresignationletter,Mr.RajutookpainstosaythatSatyamsdirectorsandseniorexecutiveshad noknowledgeofthefraud.ButifthereisafinallessonoftheHealthSouthandPeregrinescandals,it isthatsuchelaboratefinancialgamesareusuallytheworkofalargeconspiracy.Thechiefexecutive oreventhechieffinancialofficerrarelyactsalone.AtPeregrine,thegovernmentultimatelycharged 18peoplewithinvolvementinthescam.AtHealthSouth,morethan17executives,includingfive formerchieffinancialofficers,pleadedguiltytofraudrelatedcharges. InwhatmightbeaninstructivetaleforMr.Raju,whoisaspoliticallyconnectedinhishomestateof AndhraPradeshasRichardM.Scrushy,HealthSouthscharismaticfounder,wasinhishomestateof Alabama,Mr.Scrushyfoughtthefraudchargesandwasultimatelyacquittedbyajuryin2005.Buta yearlater,hewasfoundguiltyofbribingAlabamasgovernorforaseatonastatehospitalboard andwassentencedtonearlysevenyearsinprison.

SatyamNamesChiefandSecuresBankLoans
ByTHEASSOCIATEDPRESS Published:February5,2009 MUMBAI(AP)SatyamComputerServices,thecomputeroutsourcingcompany,hasappointeda chiefexecutiveandsecured$130millioninbankloansinthewakeofa$1billionfraudscandal,the companysboardsaidThursday. TheboardnamedA.S.Murthy,whohasworkedatthecompanysince1994,aschiefexecutive.Mr. Murthycurrentlyservesasseniorvicepresidentinchargeofglobalsoftwaredeliveryandleadership training. Inourinteractionsoverthepastfewweeks,weareconvincedthatSatyamneedsaninternalleader tosteeritatthiscriticaljuncture,adirector,DeepakParekh,saidinastatement.

Satyam,oneofIndiaslargestoutsourcingcompanies,hasstruggledsinceitsfounder,B.Ramalinga Raju,admittedonJan.7tofalsifyingthecompanysbooksforyears. Mr.Raju,alongwithtwoothertopSatyamexecutives,andtwoauditorsfromPriceWaterhouse,the IndiaunitofPriceWaterhouseCoopers,havebeenarrested. Ihavenomisgivingsabouttheenormityofthetaskinfrontofus,buttogetherwithmycolleagues, Iamconfidentwecanaccomplishtheimpossible,Mr.Murthysaid. Hesaidthathecouldnotmakeimmediatefurthercommentbecauseofcontinuinginvestigations. Thepromisedbankloanswillhelpthecashstarvedcompanymeetworkingcapitalneeds,andthe boardsaidThursdaythatFebruarysalarieswouldbepaidontime. SatyamhasappointedWachtell,Lipton,Rosen&Katz,aNewYorklawfirm,toaddressaspateof classactionlawsuitsfiledintheUnitedStates,whereitssharesarealsotraded. Theboardsaidithadbroughtontwoadditionaladvisers:HomiKhusrokhan,whohasservedas managingdirectorofTataChemicals,TataTea,GlaxoLaboratoriesIndiaandWellcomeIndia;and ParthoDatta,acharteredaccountantwhowillfocusonrestatingthecompanysscrambledthird quarterresults.

IndiaOpensHighLevelInquiryinFraudCase
ByHEATHERTIMMONS Published:February18,2009 NEWDELHIIndiashighestlevelinvestigativeagencyagreedWednesdaytoopenaninquiryinto thesoftwareoutsourcingcompanySatyamComputerServices,amovethatmightcomplicatea quicksaleofthecompany. TheCentralBureauofInvestigation,analogoustotheFederalBureauofInvestigationintheUnited States,willtakeoverfromthepoliceinthestateofAndhraPradesh,whereSatyamis headquartered,andapatchworkofministries,regulatorsandagenciesthatarelookingintothevast fraudattheoutsourcingcompany. B.RamalingaRaju,thefounderofSatyam,confessedinJanuarytopaddingthebooksandsaidhe hadfabricatedholdingsofsome$1billionincash. TheC.B.I.,astheagencyisknown,proposestoundertakeanallencompassinginvestigationinto thescam,itsaidinastatement.Thebureauisestablishingamultidisciplinaryinvestigationteam inHyderabad,thecapitalofAndhraPradesh,andwillbeconsultingdailywithmarketregulators,the nationalDepartmentofRevenue,thestategovernmentandtheMinistryofCorporateAffairs. Meanwhile,SatyamispullinghundredsofemployeesoutoftheUnitedStatesasbusinessslows,a companyspokeswomansaidWednesday.Thespokeswoman,ArchanaMuthappa,saidseveral

hundredemployeeshadbeenmovedbacktoIndia,wheretheycontinuedtoworkforthecompany. Shesaidlocalnewspaperreportsthat1,500employeeshadbeenrelocatedwerefalse,butwould notspecifyhowmanyemployeeshadbeenmoved. TheemployeeshiftcomesasSatyam,underanew,governmentappointedboard,iscuttingcosts whereverpossible.IthashiredGoldmanSachstohelpitfindabuyer. Thenewinvestigationdoesnotautomaticallymeanthatbuyerswillstayaway,analystssaid. Theimportantthingiswhetherthecompanywasmakingprofitsornot,saidHiteshKuvelkar, associatedirectoratFirstGlobal,aresearchfirmwithofficesinMumbai,LondonandNewYork.If theyhavemarginsandturnover,therewillbeatakerforthiscompany. InvestorshavefiledseveralsuitsagainstSatyamandthecompanysauditor,whichcouldalso complicateasale. Mr.Rajuandhisbrother,B.RamaRaju,aformerSatyamdirector,areinjailinHyderabad.Alocal courtonWednesdaydismissedtheirpetitionsforbail,thePressTrustofIndiareported.Thecourt willallowtheSecuritiesandExchangeBoardofIndiatoquestionS.GopalakrishnanandTalluri Srinivas,formerpartnersforPriceWaterhouse,Satyamsformerauditor.ThefirmistheIndianarm oftheaccountinggiantPricewaterhouseCoopers. SatyamwasthemostactivelytradedstockontheBombayStockExchangeonWednesday,whereits sharesfell3.3percent.ExecutivesfromseveralIndiancompanies,eventhoseunrelatedtothe softwarebusiness,havesaidpubliclyinrecentdaysthattheywouldbeinterestedinbuyingallor partofSatyam.

PricewaterhouseRevampsIndianUnit
ByHEATHERTIMMONS Published:March5,2009 NEWDELHITheauditorPricewaterhouseCoopersisoverhaulingitsoperationsinIndiatwo monthsafterstartinganinvestigationintofraudatoneofitsIndianclients. Theauditor,whichhasnineofficesandthousandsofclientsinIndia,saidThursdaythatitwould makesweepingchangestoreemphasizequality.Theyincludeaddingafivememberadvisory boardinIndia,appointinganewheadofriskmanagementfromoutsideIndiatooverseeworkinthe countryandanewauditingteaminIndia,andchangingthemanagementinitsofficeinHyderabad. PriceWaterhouse,asPricewaterhouseCoopersisknowninIndia,auditedSatyamComputer Services,asoftwareandoutsourcingfirmwhosechairmansaidinJanuarythathehadfalsely claimedassetsof$1billionincashandoverstatedoperatingmargins.TwoofPriceWaterhouses

partnersarebeingheldwithoutbailinaHyderabadjailonchargesofcriminalconspiracyand cheating. PriceWaterhousehassaidthattherewasnoevidencethatthetwoauditorswerecomplicitinthe suspectedfraud.Still,thechangesannouncedThursdaymayraisequestionsaboutwhetherquality problemsaremorewidespreadinIndia. Whileweareconfidentintheoverallqualityofourservicesandourpeople,theproblemsat Satyamhavecreatedadifficultenvironment,andthereforewearetakingallthenecessarystepsto demonstratetoourclientsandotherstakeholdersourcommitmenttothehigheststandards, RameshRajan,thechairmanofPriceWaterhouseIndia,saidinastatement. PriceWaterhousesnewadvisoryboardwillcomprisefourexecutivesfromoutsidethecompanyand onePricewaterhouseCoopersexecutivefromoutsideIndia.Anewheadofqualityassuranceandrisk management,whowillreviewthecompanysworkinIndia,willalsocomefrom PricewaterhouseCoopersoperationsoutsideIndia. ApartnerfromIndia,SharmilaKarve,wasnamedthenewheadofauditingforthefirmandhas appointedanewteamofseventooverseeauditsinIndia. TheglobalfirmfullysupportsthenewstepstakeninIndia,SamuelA.DiPiazzaJr.,chiefexecutiveof PricewaterhouseCoopersInternational,saidinastatement.Itisessentialthatthequality,expertise andbehaviorofpartnersinPwCmemberfirmsallaroundtheworldare,andareclearlyseentobe, ofthehigheststandards,hesaid. AboutadozenPricewaterhouseCoopersexaminersfromoutsidethecountryhavebeeninspecting auditsandpracticesatthefirminrecentweeks.PriceWaterhouseistheonlyforeignauditingfirm allowedtosignoffonthebalancesheetsofIndiancompaniesbecauseitspresenceinthecountry predatesalawforbiddingthepractice.

PotentialBiddersStepUpforSatyamofIndia
ByHEATHERTIMMONS Published:March12,2009 NEWDELHIForsale:oneoutsourcingcompany,itsreputationseverelydamagedbyfraud. Certifiedsalesfiguresunavailable,lawsuitspending,customersheadingoutthedoormustgo immediately. ThesaleofSatyamComputerServicesmaybeoneofthemorebizarrecorporateauctions. TheIndiangovernmentandanewcorporateboard,scramblingtosaveSatyamfrombankruptcyor dissolution,askedbiddersinterestedinbuyinga51percentstaketomakethemselvesknownby Thursdaynight,eventhoughthecompanysnumbersareinfluxanditsfutureuncertain.

ByThursdayafternoon,afewpotentialbiddershadraisedtheirhands,includingtheIndian engineeringcompanyLarsen&Toubro;theIndiantelecommunicationscompanySpice;andTech Mahindra,aventureofMahindraGroupandBTGroupofBritain. Althoughotherbiddersmaystepforward,thedealhasnotattractedbignameforeignbuyersor privateequityfirms. Whoeverdoessealadealmaygetabargain,someanalystssay. SatyamsmarketcapitalizationontheNewYorkStockExchangewas$7billionlastMay;itisnow slightlymorethan$600million.SatyamscofoundersaidinJanuarythathehadmadeup$1billionin cashandinflatednumbersonthebalancesheet.Satyam,thefourthlargestIndianoutsourcing company,claimssome53,000employees,butthosenumbers,salesandprofits,areunderreview. Spiceschairman,B.K.Modi,toldTheTimesofIndiathathethoughtthelawsuitscouldcost$440 millionto$840million,butanalystsintheUnitedStatessaythosefiguresmightbehigh. Thesituationmaymakeclosingadealextremelydifficult.

SatyamOfficersHadHelpinFraud,InvestigatorsTold
ByHEATHERTIMMONS Published:April6,2009 TopexecutivesatthelargeIndianoutsourcingcompanySatyamComputerServicesdidnotact alonewhentheycommittedamultibilliondollarfraudthatleftthebusinessstrugglingforsurvival: Theyapparentlytappedateaminthecompanysfinancedepartmenttohelpthem. Severalmanagersandabout10juniorstaffmembersinthefinancedepartmentofthecompany createdapapertrailtocoverupthefraud,theformerchieffinancialofficertoldinvestigatorsover theweekend. Thisteamfabricatedandpreparedfalsedocumentslikesalesinvoices,bankstatementsandbank confirmations,theformerchiefexecutive,SrinivasVadlamani,toldIndiastopaccountingbody.He saidthathealsohadtakenpartinthefraud. Mr.Vadlamani,whoisnowinjail,saidthathehadtriedseveraltimestoresisttheinstructionsto committhefraudbutthathecouldnotbecauseofamasterservantrelationship. Hisdescriptionindicatesthatthescamhadoccurredowingtoacarefullycraftedfraudbycreating normaltrailsandbackupsupportdocumentsandrecords,theInstituteofCharteredAccountants ofIndiasaidinastatementMonday.TheaccountingbodysaidithadquestionedMr.Vadlamaniinits efforttodeterminewhetherSatyamsauditingfirm,PricewaterhouseCoopers,hadbeeninvolvedin thefraud.

TwooftheglobalaccountingfirmsauditorshavebeenarrestedinconnectionwiththeSatyam fraud.Neithertheauditorsnorthecompanysindependentdirectorswereinvolvedinthefraud,the formerchieffinancialofficertoldhisquestioners.TheIndianaccountinggroupspresident,Prakash Agarwal,saidtheinterrogationhadvindicatedhisbeliefaboutthecredibilityoftheauditing profession. InJanuary,B.RamalingaRaju,theSatyamchairman,shockedIndianmarketsandhiscompanys hundredsofglobalcustomerswhenhesaidhehadfakedoperatingmarginsatthecompanyand falsifieditsbooks. Atthetime,Mr.Rajusaidhehadactedwithouttheknowledgeofthecompanysboardandmany topmanagers.Hehasbeenjailed. Theformerfinancechiefsstatementcomesasthegovernmentandanewboardaretryingtosella majoritystakeinSatyam.Severalcompaniesareplanningtobidfora51percentstake. Awinneristobeannouncednextweek. EvenbeforeMr.VadlamanisdescriptionofeventswasmadepublicMonday,analystswere questioningwhetheralloftheeightpotentialbidderslookingatSatyamwouldactuallynamea price.Webelievethatsomeofthekeybidderswillexitdiscussionsquickly,ForresterResearch saidinareportFriday. AsMr.Vadlamanisaccountofeventsbecamepublic,theCentralBureauofInvestigationsaidthree additionalpeoplefromthefinancedepartmenthadbeenarrested.TheywereidentifiedasG. Ramakrishna,avicepresident;SrisailamChetkuru,anassistantmanager;andDanthuluriVenkatpati Raju,aseniormanager;itwasnotclearwhetherhewasrelatedtothechiefexecutive. Atitsapex,SatyamservedmorethanathirdoftheFortune500companies;itsclientshaveincluded GeneralElectric,GeneralMotors,NestlandtheUnitedStatesgovernment.Itassertedithadawork forceof53,000. SatyamsmarketcapitalizationontheNewYorkStockExchangewas$7billionattheendofMay 2008;itisnowaround$835million.

IndiaCharges9AfterInquiryofOutsourcingCompany
ByHEATHERTIMMONS Published:April7,2009 NEWDELHIIndiasCentralBureauofInvestigationconcludeditsinvestigationoftheoutsourcing companySatyamComputerServicesonTuesday,andchargedninepeopleincludingauditorsfrom PricewaterhouseCooperswithforgeryandfraud.

 MaheshKumarA./AssociatedPress PoliceofficerscarriedaboxofdocumentsonTuesdayinthe45dayinvestigationofSatyam ComputerServices.Itsfounders,B.RamaRajuandB.RamalingaRaju,faceforgerycharges. Aftera45dayinvestigation,thebureausaiditwaschargingsixpeoplefromSatyamComputer Services,twosuspendedauditorsfromPricewaterhouseCoopersandanoutsideadviserwith criminalconspiracy,cheating,cheatingbypersonification,forgeryofvaluablesecurity,forgeryfor thepurposeofcheating,usingaforgeddocumentasgenuine,falsificationofaccountsandfor causingdisappearanceofevidence. Satyam,oneofIndiastopoutsourcingcompanies,hasbeenstrugglingsinceitschairmanadmitted inJanuarythathehadfakedsome$1billiononthecompanysbalancesheetandinflatedoperating margins.Indiasgovernmentandregulatorshavebeenunderpressuretobringchargesquicklyto preventcustomersfromdesertingthecountryscrucialoutsourcingindustry. ThebureausaidthatchargeswerefiledagainstSatyamfoundersandbrothersB.RamaRajuandB. RamalingaRaju,aswellasthecompanysformerchieffinancialofficerSrinivasVadlamani,andthree otherSatyamemployeesfromthefinancedivision.Itwasnotknownifthosethreepeoplehavealso leftthecompany. SatyamstwoauditorsfromPricewaterhouseCoopersS.GopalakrishnanandTalluriSrinivas werealsocharged,aswasB.SuryanarayanaRaju,thedirectorofSRSRAdvisoryServices,whoisthe brotherofthecofounders. PricewaterhouseCooperssaidinastatementitwassurprisedanddisappointedthatthebureau hadpressedchargesagainstthetwopartnerswhoauditedSatyam,andthatithadfoundno evidenceofcriminalwrongdoingonthepartofeitherpartner. ThefraudperpetratedbyMr.RajuandothersatSatyamwasdesignedtoanddidcircumventPW IndiasauditprocessPricewaterhouseCooperssaid,andtheauditorswerevictimsofthatfraud. SeverallawsuitshavebeenfiledbySatyaminvestorsagainstPricewaterhouseCoopers,sayingthat theauditorshouldhavenoticedthefraud.

Thebureau,akintotheF.B.I.intheUnitedStates,completedtheinvestigationinarecordtimeof 45daysitassertedinastatement,andfileda300pagechargesheetciting433witnesses.

IndianGroupWinsBigStakeinOutsourcingCompany
ByHEATHERTIMMONS Published:April13,2009 NEWDELHITechMahindra,ajointventurebetweentheBTGroupandtheIndianconglomerate Mahindra&Mahindra,wasthehighbidderforSatyamComputerServiceswithanofferof$1.2 billion.

GautamSingh/AssociatedPress Satyamschairman,KiranKarnik,hailedapendingdeal. TechMahindramadethehighestbidforSatyamat58rupees,or$1.16,ashare,theboardofSatyam saidMonday.TheoffertoppedbidsfromtheIndianengineeringcompanyLarsen&Toubro,which alreadyownsa12percentstakeinSatyam;andfromtheAmericanventurecapitalinvestorWilburL. RossJr. TechMahindra,whichprovidesinformationtechnologyservicestothetelecommunications industry,wouldbetakingoveracompanyabouttwiceitssize.Satyamreported$2.1billionin revenuein2008,versus$935millionatTechMahindra.(Satyamisintheprocessofrestatingits financials,sothosenumbersmaychange.)TechMahindrasworkforceisabouthalfthesizeof Satyamsmostrecentcountof53,000. Thepriceisa23percentpremiumoverSatyamsmostrecentclosingbutrepresentsafractionof Satyamsworthayearago.Thecompanyhasbeenlosingclients,investorsandemployeessinceits chairmanadmittedtoaccountingfraudinJanuary.

Theselectionofthehighestbidder,inafair,openandtransparentprocess,signalsanewstagefor thecompanyinitsprogresstowardsstabilizationandgrowth,thechairmanofSatyamsboard, KiranKarnik,said.Wehopethiswillinfusegreaterconfidenceandcomfortamongstcustomers. TechMahindrasbidisfor31percentofSatyam.UnderthetermsofTechMahindrasbid,itwould makealaterofferforanadditional20percentofSatyamsharesontheopenmarket,whichwould giveitacontrollingstake. TechMahindrasbidbeatLarsen&Toubrosofferof49.50rupeesashare,andMr.Rosss20rupees ashare. CognizantTechnologies,basedinTeaneck,N.J.,performedaduediligenceinvestigationintoSatyam butdidnotmakeabid,peopleinvolvedinthedealsaid.AspokesmanforCognizanthadno comment. SatyamwasoneofIndiaslargestinformationtechnologycompanies,withmorethan50,000 employeesandmarketcapitalizationofmorethan$7billion,beforethechairman,B.Ramalinga Raju,saidinJanuarythathehadfalselyclaimedassetsofabout$1billionincashandinflatedthe companysoperatingmargins. Indianinvestigatorshavesincesaidthatmorethanadozenpeopleinthecompanysfinance departmentwereinvolvedinthefraud,includingateamthathadchurnedoutfakeinvoicesand bankstatements. Satyamservesasthebackofficeandinformationtechnologyproviderforhundredsofcompanies, includingNestlandGeneralElectric.TheIndiangovernmenttookcontrolofthecompanyafterthe fraudwasrevealedandpushedthroughaquicksaletopreventlossesinthecountrys$71billion outsourcingindustry. ThebidannouncementMondaycame13weeksafterSatyamschairmanadmittedtotheaccounting fraud.Satyamstillfacesseveralclassactionlawsuitsfrominvestors,mainlyintheUnitedStates,and anybuyerwouldbeliableforanydamagesawardedinthosesuits. MorethanhalfofTechMahindrasbusinessisservingoneclient,theBritishtelecommunications companyBT,whichowns31percentofTechMahindra.LastMay,TechMahindrasigneditslargest outsourcingdealever,a$700millioncontractwithBT. TheSatyamdealwouldbringTechMahindraintonewindustries,frommanufacturingtofinancial services,andmakethecompanyIndiasfourthlargestoutsourcingfirm,byemployeecount,behind TataConsultancyServices,WiproTechnologiesandInfosysTechnologies. TechMahindrahasabroaderplanforexpansion,saidSudinApte,ananalystwithForrester ResearchinPune.Thewinningbidderisseeinganopportunity,ratherthanjusttakingover Satyamsclients.

Mr.AptesaidthatsomeSatyamclients,however,mightbeconcernedaboutTechMahindraslack ofexperienceinindustriesoutsideoftelecommunications. IndiasCompanyLawBoardmustreviewthebidandapprovethetransaction.SharesofSatyam sharesclosedup3.2percentinIndianmarketsonMonday,to48.75rupees.SharesofTechMahindra closedup11.9percent,at358.35rupees.

ReportDetailsBroadScopeofFraudatSatyam

KrishnenduHalder/Reuters B.RamalingaRaju,center,oneofthefoundersofSatyam,isamongtheexecutivesaccusedoffraud attheoutsourcingfirm. ByHEATHERTIMMONS Published:April21,2009 NEWDELHIManagersattheoutsourcingcompanySatyamComputerServicesspunanelaborate weboffraudtoattractcustomersandinvestors,whileusingstakesinthecompanytoraisecashfor themselves,accordingtoareportfiledbyIndiastopinvestigationagency. Thedeceptionplayedoutoveratleasteightyears,involveddualaccountingbooks,morethan7,000 forgedinvoices,dozensoffakebankstatements,thousandsofunnecessaryemployeesandauditors whoreceivedfeesseveraltimesthemarketrate,accordingtoachargesheetfiledbytheCentral BureauofInvestigationinacourtinHyderabad.

The77pagedocumentdetailsthescopeofthefraudatSatyam,andlaysoutthebureauscasefor chargingsixcompanymanagers,theirPricewaterhouseCoopersauditorsandanadviserwith cheating,forgeryandfalsificationofaccounts. Satyammanagers,includingthefoundingbrothersB.RamalingaandB.RamaRajuwereableto attractprospectivecustomersandinvestorsbymakingthembelievethatthecompanywas carryingouthugevolumesofbusiness,thereportsaid. Thedetailsofthebureausinvestigationcouldbolsterastringofclassactionsuitspendingagainst Satyammanagersandauditors. TechMahindra,ajointventurebetweentheIndianconglomerateMahindra&MahindraandBT Group,wonanauctiontotakeoverSatyamonApril13withabidvaluingthecompanyat$1.1billion. ThedealmaystillneedtoclearregulatoryhurdlesintheUnitedStatesandEurope. TheRajufamilyandtheirfriends,whichheld19percentofSatyamwhenitwentpublicin1992, madehaywhenthesunwasshiningbysellingsharesastheycarriedoutthefraud,thebureau saidinitsreport.Morethan300investmentcompanieswerestarted,someofwhichusedloans backedbysharestoinvestinrealestateandagriculture,thereportsaid.Banksissuingtheloans includedDeutscheInvestmentsIndia,GECapitalServicesandDSPMerrillLynch. Likemanycompanies,Satyamhadamultistepprocessfortakingcustomerorders,calculatingwhat theworkwouldcostandgeneratinginvoices.Managersindifferentdepartmentscheckedand crosscheckedthefiguresastheypassedthroughthesystem. Butemployeesintheaccountsreceivableteamcouldalsopracticeemergencygeneratingof invoiceswhichbypassedmostofthesteps,thebureaureportsaid. FromthebeginningofApril2003totheendof2008,nearly75,000ofthesespecialinvoiceswere created.Ofthese,7,561werefraudulent,generatedtomakeSatyamlookasifithadmorebusiness thanitdid. Theinvoicesnamed11differentIndiancompaniesbutwereneverreceivedbythosecustomers,the reportsaid,basedonconversationswiththecompanies.From2004untilthefraudcametolight whenB.RamalingaRajuconfessedinJanuary,saleswereinflated18percentaquarteronaverage, foratotalofabout42.6billionrupees($840million). SatyamhasclaimedthattheinvoiceswerepaidthroughtheNewYorkbranchofBankofBaroda,on ParkAvenueinManhattan.Butthebanksaiditreceivednosuchpayments,accordingtothereport. Tobacktheinvoices,themanagersfalselyinflatedthepercentageofemployeesthatitsaidwere workingonsite,oronprofitableprojects,thebureausaid.

ApartoftheinflatedsaleswererecordedinSatyamsbooksasdebteveryquarter,usingforged monthlybankstatements,thebureausaid.BythequarterendedSeptember2008,thatfictitious debttotaledabout$100million. Everyquarter,theRajubrothersandtwofinanceexecutivesreceivedboththeactualandfalsified salesfigures,thebureausaid.Acopyofthedualreportswasretrievedfromtheemailboxofthe chieffinancialofficer,SrinivasVadlamani. Thecompanysauditors,S.GopalaKrishnanandSrinivasTalluri,whohavebeensuspendedfrom PricewaterhouseCoopers,bothreceivedfiguresfromSatyamsbanksthatwereingreatvariance withthefiguresprovidedbythemanagementbutcertifiedSatyamsaccountsanyway,thebureau said.Inreturn,thebureauclaims,theauditorsreceivedanexorbitantauditfeeoverandabove themarketrate. Inanemailedstatement,theglobaldirectorofcommunicationsforPricewaterhouseCoopers,Mike Davis,saidWeareawarethatchargeshavebeenleveledagainstthetwoPWpartners.Weareyet toengagewiththepartnersonthecontentsofthechargesheetandthereforewearenotableto commentatthisstage. Bothbrothersareaccusedofforgingreceiptsforbankdepositsanddestroyingtheforgeries. Satyamsfoundingbrothers,thecompanyschieffinancialofficerandthetwo PricewaterhouseCoopersauditorsremaininjailinHyderabad. Investmentcompaniescreatedinthenamesofthebrotherswives,childrenandeventheirmother wereusedtoholdproceedsfromsellingsharesandfromborrowing17.4billionrupees($350million) fromfinancecompanies.

IndianAccountingFirmIsFined$7.5MillionOverFraudatSatyam
ByFLOYDNORRIS Published:April5,2011 TheIndianaffiliateofPricewaterhouseCoopersroutinelyfailedtofollowthemostbasicaudit procedures,theUnitedStatesSecuritiesandExchangeCommissionsaidTuesdayasitpenalizedthe firmforitsfailedauditsofSatyamComputerServices,theIndiancompanythatfalselyreported morethan$1billioninprofits.

MaheshKumar/AssociatedPress ThepolicesearchedofficesofaPricewaterhouseCoopersaffiliateinHyderabad,India,in2009. TheS.E.C.andthePublicCompanyAccountingOversightBoardfinedtheaffiliate,PWIndia,$7.5 millioninwhatwasdescribedasthelargestAmericanpenaltyeveragainstaforeignaccountingfirm. TheSatyamfraud,whichwasexposedinearly2009whenthecompanyschairmanadmittedit, stunnedIndiaandAmericaninvestorswhohadrelieduponthecompanysstatements.The companyssecuritiestradedontheNewYorkStockExchange,aswellasinIndianmarkets.Former Satyamofficials,aswellastwopartnersinPWIndia,facecriminalchargesinatrialunderwayin India. TheS.E.C.saidtheauditorshadfailedtoindependentlyconfirmcashbalancesinbankaccountsthat supposedlyrosetoover$1billionbythetimethefraudended.Hadthebalancesbeenreal,they wouldhaveaccountedformorethanhalfthecompanysassets.Thecompanylatersaidthatits actualcashbalancesattheendofSeptember2008were$66million,notthemorethan$1billionit claimed. Theauditors,legallypartoffiveseparatefirmsthat,togetherwithfiveothers,dobusinessasPW India,didnotseekconfirmationofcashbalancesfromthebanksinvolved,butinsteadreliedon managementtoprovidethem,theS.E.C.said,addingthatthatwasaviolationofauditingstandards. ThefailuresintheconfirmationprocessontheSatyamauditwerenotlimitedtothat engagement,theS.E.C.statedinaceaseanddesistorderissuedagainstthefirm,butwere indicativeofaqualitycontrolfailurethroughoutPWIndia.Thecommissionaddedthataudit engagementteamsthroughoutPWIndiaroutinelyrelinquishedcontrolofthedeliveryandreceipt ofcashconfirmationstotheirauditclientsandrarely,ifever,questionedtheintegrityofthe confirmationresponsestheyreceivedfromtheclients. Insomecases,bankssentconfirmationstotheauditfirmdirectlydespitenotbeingaskedtodo soandthosestatementsdifferedmarkedlyfromtheonesthemanagementprovided.BNP ParibasadvisedtheauditorsthatSatyamhadacashbalanceonMarch31,2007,of$11.2million,while thecompanyclaimed$108.6million.Ayearlater,Citibankreported$330,172initsSatyamaccount, only2percentofthe$152.9millionSatyamclaimed.Theauditfirmdidnotfollowuponthe discrepancies. PWIndiaviolateditsmostfundamentaldutyasapublicwatchdogbyfailingtocomplywithsome ofthemostelementaryauditingstandardsandproceduresinconductingtheSatyamaudits,said RobertKhuzami,thecommissionsdirectorofenforcement. Althoughauditfirmsaroundtheworldusesimilarnamesandarepartofglobalnetworks,thefirms saytheyarelegallyindependent.Theinternationalnetworkssaytheyhaveprocedurestoassure

thattheiraffiliatesperformhighqualityaudits,butthoseproceduresappeartohavebrokendown inthiscase. Thoseproceduresincludehavingpartnersfromdifferentfirmsinthenetworkreviewaudits.While the2008auditwasbeingconducted,theS.E.C.said,apartnerfromadifferentPwCfirmalerted membersoftheSatyamengagementteamthatitscashconfirmationproceduresappeared substantiallydeficient,buttheIndianfirmdidnothingtocorrecttheprocedures. Hadthefirmdoneastheforeignpartneradvisedwasproper,thecommissionsaid,Satyamsfraud couldhavebeenuncoveredinthesummerof2008. Satyamisnowundernewmanagementandcontinuesinbusiness.Itagreedtopaya$10millionfine tosettlearelatedS.E.C.caseregardingthefraud. ThePublicCompanyAccountingOversightBoard,whichlicensesandinspectsauditfirms,was establishedbytheSarbanesOxleyActin2002aftertheEnronandWorldComscandals.ItfinedPW India$1.5million,inadditiontothe$6millionpenaltyleviedbytheS.E.C. Inastatement,PWIndiasaidthatithadneitheradmittednordeniedwrongdoingandemphasized thatneitheroftheAmericanregulatorsfoundthatPWIndiaoranyofitsprofessionalsengagedin anyintentionalwrongdoingorwasotherwiseinvolvedinthefraudperpetratedbySatyam management. TheaccountingboardbarredtwoPWIndiaaccountantsfromtakingpartinauditsofAmerican companiesbutsaiditdidsobecausetheyhadrefusedtocooperatewithitsinvestigation. AnofficialinPwCsglobalnetwork,DonaldA.McGovernJr.,saidthataftertheSatyamfraudwas revealed,thePwCnetworktookstepstoverifythatprofessionalstandardsrelatingto confirmationswerebeingmetthroughoutthenetwork.Mr.McGovern,whosetitleisglobal assuranceleader,saidthefirmalsoinstitutedanenhancedassurancequalityreviewprocessforall networkfirms.

SkandalSatyammengguncangdunia
http://mukhsonrofi.wordpress.com/2009/02/09/skandalsatyammengguncangdunia/ Mempunyai50ribukaryawanyangtersebardiberbagaipusatpengembanganITnyadinegaranegara Asia,Amerika,Eropa,danAustralia.Menjadirekanandari654perusahaanglobal,termasukGeneral Electric,Nestle,QantasAirways,Fujitsu,dan185perusahaanFortune500lainnya.Sahamnyalisteddi IndiasNationalStockExchange,TheNewYorkStockExchangedanEuronextdiEropa.Merupakan perusahaanpenyediaperangkatlunakresmidieventFIFAWorldCup2010diAfrikaSelatandan2014di Brazil.

PadaMaret2008,Satyammelaporkankenaikanrevenuesebesar46,3persenmenjadi2,1milyar dolarAS.DiOktober2008,Satyammengatakanbahwarevenuenyaakanmeningkatsebesar1921 persenmenjadi2,552,59milyardolarpadabulanMaret2009. Melihatsemuareputasinya,pantassajajikaSatyamdinobatkanmenjadiraksasaITterbesarkeempat diIndia. SatyamdidirikandandipimpinolehRamalingaRaju,lulusanMBAOhioUniversitydanalumnus HarvardUniversity.RamalingaRajumendapatkanberbagaipenghargaandiantaranyaErnst&Young EntrepreneuroftheYearforServices(tahun1999),DataquestITManoftheYear(2000),dan CNBCsAsianBusinessLeaderCorporateCitizenoftheYearaward(2002).Pada2004,jumlah kekayaanRamalingaRajumencapai495jutadolar.

Ridingatiger Sungguhironis,pada7Januari2009,RamalingaRajutibatibamengatakanbahwasekitar1,04milyar dolarsaldokas&bankSatyamadalahpalsu(jumlahitusetaradengan94%nilaikas&bankSatyamdi akhirSeptember2008). DalamsuratnyayangdikirimkankejajarandireksiSatyam,RamalingaRajujugamengakuibahwadia memalsukannilaipendapatanbungaditerimadimuka(accruedinterest),mencatatkewajibanlebih rendahdariyangseharusnya(understatedliability)danmenggelembungkannilaipiutang(overstated debtors). Thegapinthebalancesheethasarisenpurelyonaccountofinflatedprofitsoveraperiodoflastseveral years.Whatstartedasamarginalgapbetweenactualoperatingprofitandtheonereflectedinthe booksofaccountscontinuedtogrowovertheyears.Ithasattainedunmanageableproportionsasthe sizeofcompanyoperationsgrewsignificantly. Padaawalnya,Satyamfrauddilakukandenganmenggelembungkannilaikeuntunganperusahaan. Setelahdilakukanselamabeberapatahun,selisihantarakeuntunganyangsebenarnyadanyang dilaporkandalamlaporankeuangansemakinlamasemakinbesar.Begitukompleksnyasituasiyang dihadapiRamalingaRajukarenafraudyangdilakukannya,iamengatakandalamsuratnya..

Itwaslikeridingatiger,notknowinghowtogetoffwithoutbeingeaten. Pada14Januari2009,auditorSatyamselama8tahunterakhirPriceWaterhouseIndia mengumumkanbahwalaporanauditnyaberpotensitidakakuratdantidakreliablekarenadilakukan berdasarkaninformasiyangdiperolehdarimanajemenSatyam.InstitusiakuntandiIndiaICAI, memintaPwCmemberikanjawabanresmidalam21hariterkaitskandalSatyam. InibukanpertamakalinyaPwCtersangkutmasalahdiIndia.Pada2005,TheReserveBankofIndia melarangPwCuntukmengauditbankselama8tahunkarenamelakukanaudityangtidakmemadai atasnonperformingassetdariGlobalTrustBank.PwCmenghadapiinvestigasiterkaitkegagalannya mengidentifikasifraudsenilai21jutaeurodidivisiairmineralgrupperusahaanGreencore. Satyamkini MenyusulskandalfrauddalamlaporankeuanganSatyam,pada10Januari2009hargasahamSatyam jatuhmenjadi11,5rupees,atauhanyasenilai2%darihargasahamtertingginyaditahun2008sebesar 544rupees. SatyamadalahpemenangpenghargaanthecovetedGoldenPeacockAwardforCorporate GovernanceunderRiskManagementandComplianceIssuesditahun2008.Gelaritukemudian dicabutsehubungandenganskandalfraudyangdihadapinya. AdapunRajudansaudaranya,B.RamaRaju,yangjugaterkaitSatyamfraud,kemudianditahan dengantuduhanmelakukankonspirasikriminal,penipuan,pemalsuandokumen,danmenghadapi ancamanhukuman10tahunpenjara. BelajardarisejarahkejayaandankejatuhanSatyam,lebihironislagiketikamengetahuibahwakata SatyamberasaldaribahasaSanskirtyaituSatya,yangartinyakejujuran. wahkebetulansayanumpanglewat,daninginsedikitberpendapatmengenaimengapaPWCtidak terseretdalamkasussatyamsepertiArthurAndersenyangikutterseretdalamkasusEnron. yangsayaketahui,posisiPWCdanArthurAndersendlmkeduakasusiniberbeda: 1.SatyamsudahmelakukanwindowdressinglaporankeuangansejakpertamakaliIPO,halituberarti bahwasemuadataSatyamyangdiauditolehPWCterbuktisudahdibuatbuat.DanPWCsendiritidak menemukankeanehankarenamemangsemuadatapalsuitusudahdirancangsedemikianrupa DARIAWAL. Selainitu,auditorjugahanyaberhakmengauditlaporankeuanganberdasarkandatayangdiberikan olehmanajemenperusahaan,dansepertiitulahdatayangdiberikanolehmanajemenSatyamke PWC.DataSatyamtidakadakeanehansamasekali,namunternyatadataituPALSUsemua. 2.BerbedadenganEnrondanArthurAndersen,ArthurAndersenterbuktimemberikanjasa konsultasidisampingjasaaudit.KebanyakanjajarankomisarisEnron,termasukKomiteAudit,adalah orangorangArthurAndersen.DanEnronmelakukanoutsourcesepenuhnyakeArthurAndersen.

JadiAAmengetahuiselukbelukpemalsuanyangdilakukanEnron,bahkanAAsendiriketahuan menghancurkandatadatayangberhubungandenganEnron. KarenaPWCtidaktahumenahumengenaipemalsuanyangdilakukanSatyam,makaPWCbebasdari jeratkriminal. DemikianperbedaanantaraAAdanPWCdalamkasusdiatasyangsayatahu,semogasedikit memberigambaran.