PwC unhappy with Sebi action, sees short-term impact

Mumbai, Mar 30: PwC global chairman Robert E Moritz said the firm seemed to have been punished twice over for its role as auditor of Satyam Computer Systems when chairman B Ramalinga Raju publicly admitted to an accounting fraud in 2009. The Securities and Exchange Board of India (Sebi) banned PwC network firms from auditing listed companies for two years in January.
“I do believe it’s appropriate that they take action,” he told ET in an interview. “In our case, I’m disappointed that the action they took did not reflect both the implied penalty that we had from the past and the progress that we made previously.”
Sebi had launched investigations into Price Waterhouse at the time and the Institute of Chartered Accountants of India (ICAI) had cancelled memberships of the two partners involved besides imposing a fine of Rs 5 lakh each against them.
In 2011, PwC agreed to pay $25.5 million to former Satyam investors to settle US litigation and also paid $7.5 million in US penalties after the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCOAB) fined the firm over its auditing work for Satyam.
Moritz said the January ban will be a short-term hindrance and that it wouldn’t really change clients’ perception of the firm. He also pointed out that PwC had received a “clean bill of health” from the SEC in 2015. Mortiz, who was in India on a review trip, said the Satyam fraud led to loss of business opportunity at the time.
“The incident happened nine years ago, and clearly, there was a bit of an implied penalty because the market saw the problem then,” he said.