After the fall

Sir — Just as Satyam has tainted the Indian information technology industry, PricewaterhouseCoopers, the auditing firm, has tarnished the profession of chartered accountancy (“Closed games”, Jan 26). PwC has neglected its commitments so that in spite of its presence, Satyam’s balance sheets were cooked up for the last few years. In 2005-2006, the same firm was involved in the accounting fiasco in the Global Trust Bank. It is time that at least an interim ban is put on PwC. The Institute of Chartered Accountants of India should now punish the offenders to redeem the image of chartered accountants. It should ask PwC to bring out the real balance sheets of Satyam. Till the Satyam case is resolved, the firm, along with all its associates, must not be allowed to work in India.

Also, shareholders should be given a bigger role to play in selecting auditors at the annual general meetings of companies. Even if the company fails owing to the misappropriation of funds by its management, as happened in Satyam, the auditors must be held responsible for the company’s and shareholders’ loss and should be legally bound to compensate for it. At the same time, the income tax department must scrutinize Satyam’s tax returns of the last few years. This may unravel many more evidence of PwC’s carelessness.

Yours faithfully,
M. Kumar, New Delhi

Sir — The government’s keenness to revive Satyam is a mere cover-up operation. It is not the government’s business to worry about a failed company’s investors, employees, pending projects and suppliers. It is, rather, supposed to ensure that institutions entrusted with the supervision of fair practice in corporate houses are doing their duty so that investors can trust them.

The Securities and Exchange Board of India assured investors that it monitored hundreds of listed companies. Then how did it fail to detect Satyam’s malpractices? There is also the ICAI. Investors trust a company assuming that its audits are strictly supervised by the ICAI. But despite this, PwC auditors failed to prevent the Satyam scam. Ramalinga Raju may have masterminded the fraud, but these regulatory bodies had promised investors to ensure fair trade. Since they failed, they should compensate for all losses.

If an auditing firm is not confident about its scrutiny, it is bound to come up with vague statements such as that the auditor ‘believes’ there is a ‘certain’ amount in the bank. This evasiveness allows auditors an escape route if the company is found guilty of fudging accounts. The ICAI and Sebi should make it mandatory for all audit firms to issue assertive statements such as “the auditor confirms the presence of so and so amount”. Auditors who cannot ascertain what a company really has in the bank are redundant. The fraud must be laid at the auditors’ door too. And Sebi and ICAI should make only those promises on which they can deliver.

Yours faithfully,
Rajeev Bagra, Hooghly

Sir — We are adept at conducting post mortems of all events. Now we are doing the same for the Satyam fraud case. All government bodies have gone into a huddle. The government of Andhra Pradesh has initiated a probe by the Central Bureau of Investigation for proving itself guiltless. The Centre has asked the Serious Fraud Investigation Office to conduct investigations. Parallel inquiries are being run by the company’s law board, Sebi and the ICAI. The ICAI is also issuing guidelines to auditors. All these are sure to make a mess of the whole thing. Only if the agencies expose the true picture in the end, showing the involvement of state ministers, government officials and the PwC auditors in the scandal, can there be a silver lining. Earlier scandals had been forgotten after the submission of reports. Let us ensure that the same story does not repeat itself. Our national pride has got the worst jolt. Will we ever recover our self-respect?

Yours faithfully,
M.M. Kale, Kakinada, Andhra Pradesh

Sir — The assets of Ramalinga Raju have surpassed that of the last Nizam, Mahboob Ali Pasha (“30-villa Raju dethrones Nizam”, Feb 2). His 30 villas in 62 countries, the Swiss telescope worth Rs 1.12 crore or the donation of 340 kilograms of gold to temples in Andhra Pradesh seem to be the stuff of fairy tales, although Raju piled up the assets by jeopardizing Satyam’s investors. This would make a perfect case study for all B-schools. It may also be worthwhile to map his brain for the investigation of similiar scandals in the future. However, corporate crime is a cooperative venture. I wonder if government watchdogs also played a role in the scandal. Now law enforcement officials may have splendid foreign tours to investigate Raju’s ownership of the 30 villas.

Yours faithfully,
Asit Kusari, Calcutta