Jan 12, 2009

Business - Satyam ex-CFO Vadlamani blames PwC, Raju for fraud

HYDERABAD: Satyam Computer Services CFO Vadlamani Srinivas on Monday blamed the firm's statutory auditors Pricewaterhouse Coopers and the disgraced
founder of Satyam B Ramalinga Raju for perpetrating the Rs 7,000 crore financial fraud.

In his confessional statement to the police, Srinivas said the auditors never pointed out any "deficiencies" during their discussions. But the most startling revelation was that fixed deposits were unreal and fictitious which were managed with an understanding between the audit section and management.

"The bank deposits were handled directly by Raju and I was specifically asked not to look into it", Srinivas said. This was corroborated in Raju's confessional statement which said "myself and my brother used to take decisions and instruct our CFO to do as instructed". He admitted that the accounts were manipulated about seven years.

His confession is perhaps a pointer to the fact that the promoters could have forged bank documents to show fictitious deposits. This puts a question on the possible involvement of banks in the scam.

Those who should have a pretty clear idea by now are the software company's main bankers — ICICI Bank, Bank of Baroda, BNP Paribas, Citibank, HDFC Bank and HSBC.

In the normal course, Satyam's statutory Auditor PricewaterhouseCoopers would have demanded certificates from banks attesting to the existence of money in the IT firm's accounts. Did the banks indeed certify that they had the money? Or were certificates forged and presented to PricewaterhouseCoopers?

Srinivas has pointed fingers at his assistant Rama Krishna who has been working him for about ten years. "Prior to quarterly board meetings Ramakrishna will prepare balance sheet with the assistance of his team with internal employees. I do not pay much attention to the details of that balance sheet.

On his part, Raju said "we wanted to show more income in the account to avoid others from involving in the company affairs and any other possible hostile takeover situation, and hence, manipulated the balance sheet to attract more business and show unavailable amount as available cash in hand", said Raju.

The police confession comes four days after Raju claimed that the account books of the software company were manipulated to make it look much bigger than it actually was. Raju, whose son runs Maytas Infra, said sales, profit and cash balances were inflated and that he had pledged his shares to raise some Rs 1,230 crore and keep the company running.

Raju, his younger brother B Rama Raju and V Srinivas are now under judicial custody at the Chanchalguda jail in Hyderabad. The hearing on their bail application was deferred till January 16. Multiple agencies including the market regulator Sebi and the Serious Fraud Investigation Office (SFIO) are scrutinizing the books of the scam-tainted firm. The Sebi team today sought the court's permission to question Raju.

The fact now is that Satyam has almost no cash in either it current or deposit accounts with banks. So the questions being raised are whether the money diverted into companies connected possibly with the Raju family. Were the deposits with banks used as security to enable loans for entities controlled by the Rajus?

1 comment:

Anonymous said...

The froud by satyam by the help of PWC is really not good indication for all indians. I know PWC team is not good. CA of PWC and marketing team is always involved into money making for him and for company. In my company PWC come for audit and our management always give them all facilities right from hotel to a girl for night or a hill station tour during Audit. Even the marketing/ business team of PWC is also come with the girl manager to attract management people and some cases are there where girl went in hotel over night with the managers too. I am senior official so i know how they do this.