The New Jersey-based auditing giant, Price Waterhouse, which was auditor for Satyam computers, has been banned from serving Indian clients. The ban by Indian market regulator the Securities and Exchange Board (Sebi) will come into effect on March 31st. Price Waterhouse has said that it will appeal the decision in court.
Satyam was being audited by the US- company for several years, when company owner Ramalinga Raju admitted to inflating earnings.
Price Waterhouse’s Indian arm, PW Bangalore, was Satyam’s auditor during this period. The collapse of Satyam Computers in 2009 cost shareholders more than $2bn and rocked India’s IT industry. Analysts said it was the biggest fraud at a listed company in India.
The group’s audit functions are under the brand Price Waterhouse in India. The broader PwC entity handles consulting, tax advisory and other businesses. Auditing services constitute around 40% of its overall business in India.
It added that “there has been no intentional wrongdoing by [PwC] firms in the unprecedented management perpetrated fraud at Satyam”. In January 2009, Raju stunned the corporate world by admitting to accounting malpractices to inflate earnings and assets for years.
Analysts say the Sebi order is a big setback for the firm which never quite recovered from the fallout of the case. It could very well lead some of the firm’s 70-plus listed clients, which include corporate giants like Tata Steel, to shift their business.
That would mean not only a loss of revenues but it would also impact the jobs of some 2,500 workers. Price Waterhouse lost its leadership position in the Indian market soon after Raju’s confession and it has struggled to compete with other global companies like Deloitte.
