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Satyam scam rocks Rajya Sabha
February, 17th 2009

Premier investigating agency CBI has been ordered to probe the accounting fraud in Satyam Computer, whose founder Ramalinga Raju had disclosed cookings books over 40 days ago, the Rajya Sabha was informed on Tuesday.

Replying to supplementaries during Question Hour in the Rajya Sabha, Corporate Affairs Minister Prem Chand Gupta said while the Serious Fraud Investigation Office (SFIO) under his ministry had been given three-months to wrap up its probe into the Satyam scam, no time-frame has been set for CBI.

"Yesterday, the government ordered CBI investigation into the whole issue," he said.

Gupta evaded replying to demands for setting up a Joint Parliamentary Committee to go into all aspects of the Satyam scam, including allegations of political patronage to its disgraced founder B Ramalinga Raju.

He also did not say if investigation would be launched into accounts of the companies audited by Price Waterhouse, the statutory auditors for Satyam.

"The SEBI has ordered peer audit review of companies listed on Sensex and Nifty. Once peer review is over, government will decide what to do," he said.

Gupta said RBI had in October 2004 issued advisory to banks not to engage Price Waterhouse for audits after unearthing of accounting deficiencies in Global Trust Bank (GBT), whose account it was auditing.

Three years later the advisories were withdrawn, Gupta said but did not give the precise reason for withdrawal.

"RBI has no legal power to blacklist any audit firm," Gupta said, adding that only ICAI as the regulator has the authority to do so.

Asked if ICAI had been asked by RBI to look into the role of Price Waterhouse in the audit of GTB accounts and submit its report, he said ICAI has completed inquiry into the audit of accounts for 2001-02 while the same for 2002-03 financial year was under process.

"Proper (and) due action will be taken against the erring officers," he said, adding that ICAI had found three persons guilty and they are in the process of punishing them.

Asked about the previous probes into Satyam, Gupta said after the Ketan Parekh scam, the government had on September 12, 2001 ordered inspection of books of Satyam. RoC submitted its report in April 2002.

The then Government compounded some offences and levied some penalties and closed the case, he said.

Gupta said the collapse of Satyam is not in the interest of the country. "The case of Satyam is a very unfortunate case... (but) this is only an aberration."

All investigating agencies including Income Tax Department, SEBI, Enforcement Directorate and SFIO were conducting inspection in a "very coordinated" fashion.

Although the Andhra Pradesh police arrested Raju and others and launched its own probe, the state government yesterday said it has issued an order recommending a CBI probe into the scam.

"We are concerned about 53,000 employees of Satyam," Gupta said, adding that the Institute of Chartered Accountants of India was also examining the role and the conduct of the statutory auditors for the company.

Raju, the former chairman of Satyam Computer Services Ltd, on January 7 disclosed that he had falsified accounts and financial statements of the company over the past several years.

 
 
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