In its 108-page order - seen as the most strident ruling by the market regulator against any auditing company so far - Sebi said the company's entities/ firms practicing as chartered accountants in India under the brand and banner of Price Waterhouse are banned from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with the regulator. PwC is tthe auditor, testing the security of India's famed Aadhar network. Currently, PW network firms carry out auditing activities for about 75 listed companies, an official in the know told the news agency.
Though the order comes into effect immediately, it will not be applied to any audit assignments relating to the 2017-18 financial year undertaken by firms in the PriceWaterhouseCoopers network, to ease "operational difficulties", SEBI said.
Price Waterhouse Bangalore and its two erstwhile partners - S. Gopalakrishnan and Srinivas Talluri - have been directed to jointly and severally disgorge the wrongful gains of "Rs 13,09,01,664 with interest calculated at the rate of 12 per cent per annum from January 7, 2009 till the date of payment".
"As laid down by the Hon'ble Supreme Court, it is incumbent on Sebi to take stern view of market abuse and fraudulent practices, particularly when persons tasked with protecting the interest of investors are themselves hand-in-glove with the main perpetrators of the fraud", Sebi said.
Sebi said PW firms benefited from the relationship with Satyam Computers by having collectively received a fee of Rs 23.31 core during 2000-08. "The order also does not apply to any of our other businesses - be it advisory, tax, risk assurance or audit of unlisted entities.PW audit firms will be appealing this decision and believe that there are strong grounds to get a positive outcome", Mukherjee wrote.
Price Waterhouse has, expectedly, rejected the charges brought out against it by Sebi while expressing its disappointment on the ban.
It also noted that the order relates to a fraud that took place almost a decade ago in which it played no part and had no knowledge of.
The Securities and Exchange Board of India said that PwC was complicit with the main perpetrators of the accounting fraud at Satyam Computer Services nine years ago, and it was found that audit firm did not comply with the auditing standards and norms. In 2012, Satyam was sold to rival Tech Mahindra which dropped the brand.
At the time, chairman Byrraju Ramalinga Raju confessed he made up about $1bn of the company's cash on its books.
The auditors did not act upon the whistle blower's letter warning them about company's bank balances being inflated and also failed to respond which a prudent auditor would have done on sudden exposure of fraud.