PwC auditors held, to be produced in court

New Delhi: The Andhra Pradesh police on Saturday arrested two top officials of auditing firm PricewaterhouseCoopers who worked on the Satyam account, in connection with the financial fraud disclosed by the IT firm's founder Ramalinga Raju.

The state CID arrested PwC's Chief Relationship Partner S Gopalakrishnan and Engagement Leader Srinivas Taluri.

Both Gopal Krishnan and T Srinivas will be produced in the court on Saturday evening. Hyderabad Police sources say that both were arrested by the CB-CID Police on Friday night.

The Special Fraud Investigation Office had also questioned both the auditors before they were arrested by the CB-CID.

The President of the Institute of Chartered Accountants of India, Ved Jain said on Saturday that an arrest of PwC auditors by the state CID cannot be merely for being negligent, but could point to complicity. Jain also said the companies and corporate houses should avoid giving audit work to the chartered accountants against whom ICAI had taken action.

Former Satyam chairman, B Ramalinga Raju, his brother Rama Raju and Satyam's former CFO Vadlamani Srinivas are already in judicial custody awaiting charges to be filed in connection with the Rs 7,800 crore accounting fraud in the IT company.

Meanwhile SEBI, which was earlier denied permission to record Raju's statement, will approach the Andhra Pradesh High Court again for permission.

On January 14, auditors PricewaterhouseCoopers said their opinion on the financials of the beleaguered company may be rendered "inaccurate and unreliable".

In a letter to the new board of Satyam, the audit firm said the statement by the former chairman of the company B Ramalinga Raju, admitting to a multi-crore fraud, may have material effect on the veracity of the firm's financial statements.

"Consequently, our opinions on the financial statements may be rendered inaccurate and unreliable," the three-page letter by the audit firm said.

"We wish to advise that the company should promptly notify any person or entity that is known to relying upon our audit report that our audit opinion should no longer be relied upon."

The letter was sent to the new board comprising Deepak Parekh, chairman of Housing Development Finance Corp (HDFC), Kiran Karnik, former president of the National Association of Software and Service Companies, and C Achuthan, former member of the Securities and Exchange Board of India (SEBI), the markets watchdog.

The three-member board has appointed Deloitte and KPMG as the new joint auditors for Satyam in place of PricewaterhouseCoopers.

After Raju's admission to the major fraud, the inability of PricewaterhouseCoopers in detecting it came under scrutiny with state investigation agencies conducting a raid on its premises at the upscale Jubilee Hills in Hyderabad.