Satyam Auditor Price-WaterHouse Allowed To Cross Examine Execs In Fraud Case
June 8, 2011
Price-WaterHouse (PW) has won a significant struggle with capital markets regulatory body, Securities and Exchange Board of India over Satyam Computer Ltd.’s falsification of funds, which led to a scandal in 2008.
An appellate body has overruled the declaration made by SEBI. PW has been given permission to cross examine top executives involved in the Satyam fraud case. They are ex- managing director RamaRaju, ex-chairman Ramalinga Raju, ex-chief financial officer (CFO) Vadlamani Srinivas and ex-VP of Finance G Ramakrishna.
According to media reports, the Securities Appellate Tribunal has ordered the Securities and Exchange Board of India to permit Price-Waterhouse, Satyam’s auditing firm, to question individuals named in PW’s appeal to the Tribunal regarding the Satyam fraud case.
Satyam, the beleaguered Indian IT outsourcer was the fourth biggest exporter of software allegedly inflated its stock price.
SEBI has requested that PW provide statements from the persons involved. SAT has asked SEBI to finish the PW investigation in four months.
PW challenged the Tribunal’s decision after SEBI revoked access to full documents in an order dated to December 2010. SEBI granted limited access to documents and witnesses in the Satyam case. However, PW appealed the decision since SEBI had denied the opportunity to cross examine witnesses.
Normally, the Tribunal does not intercede in these inquiries, but this was one that included a natural justice violation. A basic tenet of law involved in the case stipulates that an individual required to respond to charges needs to know about the testimony that supports the testimony.
Despite the fact that the three SAT members found that PW should be given a chance to cross examine witnesses, the Tribunal’s presiding member noted that all required documents should be provided by SEBI. This is regardless of whether the documents are referred to or not, reports the businessline.com.
The act of bypassing PW was done because SEBI was trying to make a case supporting itself, rather than one supporting PW. In addition to the recommendations made by two non-judicial Tribunal members, the presiding-judicial member ordered SEBI to offer PW full inspection rights to material gathered during the Satyam fraud investigation.