Mumbai, May 4, 2017
The capital market regulator will soon come out with a ruling against Price Waterhouse India on their alleged role as the auditor of the erstwhile Satyam Computer Services. The Securities and Exchange Board of India (Sebi) will pass an order on the audit firm based on its findings on whether the auditor had acted in collusion with the promoters in the country's biggest accounting fraud.
If the regulator is able to establish the alleged conduct of the auditor under securities laws, it could bar them from the market for a certain period of time, said a person close to the development.
The ruling will be as per the directions of the Supreme Court, which had asked the regulator to conclude the matter by July .
In response to an email query on the matter, a Price Waterhouse spokesperson said, “This is an old matter of 2009 which has recently seen traction basis Supreme Court order allowing us access to information.“ While the regulator was able to pass orders barring former Satyam Computer Services founder-chairman B Ramalinga Raju and four others from the market for 14 years, it was unable to proceed against the company's auditors as the matter was pending before the Supreme Court for long as Sebi had denied cross-examination of documents to Price Waterhouse. Sebi had also barred Raju's brother B Rama Raju, the former MD of Satyam, Vadlamani Srinivas, former CFO of the company , G Ramakrishna, for mer VP (finance) and VS of the company , G Ramakrishna, for mer VP (finance) and VS Prabhakara Gupta, former head of internal audit at the company .
At present, Price Waterhouse is examining all the evidences the regulator has gathered during the investigation. They will be heard by Sebi's whole-time member G Mahalingam.
Price Waterhouse had in the past challenged Sebi's jurisdiction in taking action against it as they are not governed by the regulator. This was set aside by the Bombay High Court in its order saying Sebi could proceed against them if they are able to prove the fraud.
“Although Sebi doesn't have jurisdiction on auditors as such, in case of a proven fraud, Sebi can always issue unique directions against an auditor,“ said Sumit Agrawal, part ner, Suvan Law Advisors. “Some foreign regulators have also prohibited professionals from advising and issuing certificates in their regulated space. These are some of the indirect ways of regulating and ensuring compliance from professionals.“
[The Economic Times]