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Satyam ex-CFO gives clean chit to PwC in fraud
April, 06th 2009

In a significant development, former Satyam Computer CFO Vadlamani Srinivas has told representatives of the Institute of Chartered Accountants of India (ICAI) the apex regulatory body for chartered accountants in India that auditors S Gopalakrishnan and Talluri Srinivas of audit firm Price Waterhouse had no role to play in the fraud, as they were given forged documents by the company management.

Mr Srinivas admitted that the fraud at the software company, which rocked the Indian corporate world, was entirely perpetrated by former chairman B Ramalinga Raju, with the active involvement of the CFO (Mr Srinivas himself), the companys managing director B Rama Raju and cost accountant G Ramakrishna.

Mr Srinivas was interrogated on Sunday by a committee set up by the ICAI at Hyderabads Chanchalguda jail. We heard his (Mr Srinivas) admission today (Sunday) and we also spoke to the auditors. The high-powered committee will continue with its investigation and come out with its report later, ICAI president Uttam Prakash Agarwal told ET after interrogating the former CFO and the two auditors.

Audit firm Price Waterhouse and the two auditors had been pulled up due to their alleged complicity in the Rs 7,000-crore fraud, ever since disgraced Satyam founder B Ramalinga Raju admitted on January 7 that accounts at his company had been falsified. When contacted, a Price Waterhouse spokesperson declined to comment.

The fraud at Satyam turned the spotlight on auditors and has now made the audit process in India Inc more stringent, with existing auditors of various companies delaying the finalisation of accounts in order to verify all statements given by managements. ICAI was given permission by the Andhra Pradesh High Court to question Mr Srinivas and the two auditors.

The ICAI president said the auditors were questioned mainly on accounting and auditing aspects and to check whether they followed the right methods of accounting.

According to Mr Srinivas, the accounts were allegedly tampered by the chairman and the managing director, along with cost accountant G Ramakrishna. I regret the whole affair. I was just following the orders of my master, Mr Srinivas is believed to have told the ICAI committee, which also consisted of ICAI central council member Shantilal Daga.

I twice offered to resign, but was asked to stay back by the chairman, as it would have affected the interests of the over 54,000 employees, Mr Srinivas added.

According to the CFO, sales invoices and bank statements were falsified, and interactions between Satyam auditors and the companys banks were limited, as the correspondence was routed through the chairman and the MD.

Mr Ramakrishna implemented the fraud under the direction of the chairman himself, Mr Srinivas is reported to have said in his admission to the ICAI members.

The Central Bureau of Investigation (CBI), which is currently spearheading the investigations into the Satyam fraud case, jointly with Sebi and the Serious Fraud Investigation Office. CBI had recently said it was planning to file the first chargesheet on April 9. It also said B Ramalinga Raju and his brother B Rama Raju were not co-operating in the investigations, and that the agency was planning to put them through a lie-detector test.

The fraud came as a surprise to the entire corporate world, as Satyam Computer is an SEC-registered company. The accounting fraud, reportedly spread over five years, escaped the attention of SOX committees (panels that oversee the implementation of the Sarbanes-Oxley norms), Sebi, the stock exchanges and most regulatory agencies.

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