No Bail for Indian PwC Partner, Internal Auditor Tagged in Satyam Computers Scandal
By end of the month PricewaterhouseCoopers partner Subramani Gopalakrishnan and Satyam Computers internal auditor V S Prabhakar Gupta should surrender to auhtorities as the Supreme Court has cancelled their rights to bail following fraud allegations in the Indian IT services provider, sending them back to jail.
Justices P Sathasivam and B S Chauhan have cancelled the bail of the PwC partner and Satyam auditor after reserving their decision last April 18. The court’s decision to cancel the bail came after a chargesheet filed by the Central Bureau of Investigation that challenges the order issued by the Andhra Pradesh High Court.
Five PwC units in India have previously agreed to pay a total of $7.5 million to settle charges of violating audit rules and standards. The lawsuit was filed separately by the US Securities and Exchange Commission and the Public Company Accounting Oversight Board.
The bench agreed that the bail should not have been granted since the accused were part of a serious allegation of fraud in the accounts of the Indian IT services firm that tampered the figures to inflate the cash and bank balances for a couple of years.
CBI’s plea was submitted to the court on June 2010. Gopalakrishnan and Gupta were implicated in the alleged Rs 14,000 crore accounting fraud that hit Satyam Computers.
But according to the legal counsels of Gopalakrishnan and Gupta, the CBI investigators had met with the panel of judges ten months after the court issued the order, thereby questioning the investigating agency’s plea to trash the bail.
In a submitted document to the Supreme Court, the counsels questioned the investigators’ intent of arresting Gopalkrishnan while the court had already granted bail to Talluri Srinivas, a PwC auditor implicated in the scandal.
The CBI investigators argued that the roles of Srinivas and Gopalkrishnan were different.
According to Additional Solicitor General H P Rawal for the CBI, Srinivas only “followed the principles of Gopalkrishnan.”
Rawal claimed that Gopalkrishnan collected “exorbitant fee” from the Indian IT services firm in addition to the charges for other services.
Meanwhile, the Supreme Court was unanimously of the opinion that Gopalkrishnan and Srinivas were “on different footing” that it cannot be a “precedent.”
On October 26, 2010, the Supreme Court had also cancelled the bail for B Ramalinga Raju, the founding chairman of Satyam Computers, and five others.
Raju sent a confessional letter to Satyam board of directors on January 2009 admitting that Satyam’s accounts and balances were inflated by Rs 5,040 crore. Raju further disclosed a liability understatement by Rs 1,230 crore and debtors position overstatement by Rs 490 crore.