/ 13 January 2009

Indian police search offices of auditor

Indian police on Tuesday searched the offices of PricewaterhouseCoopers, the auditors of the troubled outsourcing giant Satyam Computers, whose founder last week admitted to doctoring the company’s accounts for years, an official said.

Satyam’s balance sheets were riddled with ”fictitious” assets and ”non-existent” cash and contained a $1-billion gap that could no longer be concealed after a deal intended to save the struggling company was abandoned, the company’s founder and former chairperson B Ramalinga Raju admitted in a letter to the company’s board.

A senior police official VS Kumudi said the offices of PricewaterhouseCoopers in the southern Indian city of Hyderabad were being searched. He gave no other details. Satyam is also headquartered in Hyderabad.

As the accounting scandal unfolded, the auditing firm said in a statement last week that they had worked ”in accordance with applicable auditing standards and were supported by appropriate audit evidence”.

”Given our obligations for client confidentiality, it is not possible for us to comment upon the alleged irregularities. Pricewaterhouse will fully meet its obligations to cooperate with the regulators and others,” the statement said.

The auditors said on Tuesday that there was no ”raid” at their Hyderabad office.

”We are in discussion with different agencies for providing information requested by them. We are fully cooperating with the agencies and providing whatever information, documents, materials that have been asked for.”

The international accounting firm, PricewaterhouseCoopers International Ltd, is based in London.

Some investors in Satyam are considering suing the auditing company, according to Ravi Nath, a lawyer with the Rajinder Narain law firm, which has been contacted by several investors.

Satyam Computer Services Ltd employs 53 000 people — among the two million Indians working in the country’s booming high-tech industry, which last year brought in an estimated $40-billion. Satyam’s clients include a slew of Fortune 500 companies including Nestle, General Electric and Ford Motors. – Sapa-AP