PricewaterhouseCoopers in $25.5 mn settlement over Satyam audit
May, 03rd 2011
PricewaterhouseCoopers affiliates agreed to pay $25.5 million to former Satyam Computer Services Ltd investors to settle US litigation over the audit of the Indian outsourcing company.
The settlement came four weeks after PwC agreed to pay a record $7.5 million US penalty over its auditing work for Satyam.
In papers filed late Friday in the US District Court in Manhattan, lawyers for the investors wrote that the accord followed mediation and was an "excellent result" for their clients.
Satyam's founder and former chairman Ramalinga Raju had in January 2009 revealed that what was once India's fourth-largest outsourcing company had fraudulently inflated revenue, income and cash balances by more than $1 billion over five years.
The fraud is sometimes known as "India's Enron ," referring to the US energy company that collapsed in 2001.
The PwC settlement with investors requires court approval. Satyam agreed in February to pay $125 million to settle litigation with the investors and $10 million to settle a separate US Securities and Exchange Commission lawsuit.
PwC spokeswoman Caroline Nolan confirmed the auditor's settlement with the investors.
On April 5, the SEC and the Public Company Accounting Oversight Board fined various PwC affiliates in India $7.5 million over their work on Satyam.
The SEC accused PwC of "failing to comply with some of the most elementary auditing standards and procedures."
It called its $6 million accord its largest with a foreign-based accounting firm. The PCAOB called its $1.5 million accord its largest civil money fine.
Satyam has overhauled management and is now known as Mahindra Satyam Ltd.
Friday's accord covers PricewaterhouseCoopers International Ltd, PricewaterhouseCoopers LLP , Price Waterhouse (Bangalore), PricewaterhouseCoopers Private Ltd and Lovelock & Lewes.
Lead plaintiffs are the Public Employees' Retirement System of Mississippi, Britain's Mineworkers' Pension Scheme, Norway's Skagen AS, and Denmark's Sampension KP Livsforsikring A/S.
The case is In re: Satyam Computer Services Ltd Securities Litigation, US District Court, Southern District of New York, No. 09-md-02027.