CBI given clean chit to PricewaterhouseCoopers (PwC)

The Central Bureau of Investigation (CBI), which is probing the multi-crore Satyam accounting fraud, has given a clean chit to PricewaterhouseCoopers (PwC), the firm’s erstwhile statutory auditors. The CBI, in its supplementary chargesheet filed on November 24 at the XIV Additional Chief Metropolitan Magistrate Court, revealed that the auditors S Gopalkrishnan and Srinivas Talluri, were employees of Lovelock & Lewes (L&L) and that the remuneration, which Satyam paid to the auditors, reached the accounts of L&L instead of PwC, which was appointed as the statutory auditor in 2001.

“The actual statutory audit of Satyam was in fact conducted by a firm called L&L and not by PwC, who was appointed by the investors during the AGM,” said the CBI in its supplementary report, a copy of which is available with Express. It added that the audit team members who assisted Gopalakrishnan and Srinivas were employees of L&L and not that of PwC and thereby steering clear of PwC’s role in the entire scam.

It must be noted that PwC acquired L&L almost a decade ago. However, technically, L&L operated as a PwC network firm in India and hence L&L partners weren’t allowed to sign anything on behalf of PwC.

Earlier in June 2009, Ramesh Rajan, Chairman and CEO, PwC India, too informed CBI regarding the acquisition made by PwC and that partners of L&L weren’t authorised to sign on behalf of PwC.

In January 2009, both Gopalakrishnan and Srinivas were arrested on charges of alleged involvement in fudging the books of accounts of Satyam. Subsequently, the Institute of Chartered Accountants of India, regulatory body of accountants, removed membership of Gopalakrishnan from all the eleven non-standing committees. Auditing firms Deloitte and KPMG are currently restating the books or accounts and likely to complete the process by July 2010.