PwC to fight SEBI audit ban to limit franchise impact

Nine years after 7000 Cr Satyam Scam Sebi bans PwC for 2 years

In a 108-page statement, SEBI said that the manner in which various entities bearing the PwC name had been registered in India in a "nebulous way", made it hard not to take notice of the "loss of faith of the investors in the brand name".

Experts, however, said even if Price Waterhouse manages to get a court to issue a stay order on the SEBI ban, it faces the risk of losing clients.

The Sebi order said they would be "liable, jointly and severally, to 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".

The network structure of operations adopted by the global accounting firm should not be used as a shield to avoid legal implications arising out of certifications issued under the brand name of the network, the order said.

Gopalakrishnan and Talluri have also been restrained from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with Sebi for three years.

The order issued by SEBI stated: "Listed companies and intermediaries registered with Sebi shall not engage any audit firm forming part of the PW Network, for issuing any certificate with respect to compliance of statutory obligations which Sebi is competent to administer and enforce, under various laws for a period of two years".

The SEBI order comes nearly seven years after the U.S. Securities and Exchange Commission (SEC) agreed to a $6 million settlement over charges against Indian affiliates of Price Waterhouse related to deficient auditing of Satyam. While Mr. Gopalakrishnan signed the accounts between April 2000 and March 2007, Mr. Talluri did it between April 2007 and September 2008.

The order has been passed under the Prevention of Fraudulent and Unfair Trade Practices regulations and Section 11 of Sebi Act, Livemint added.

SEBI had in February 2009 issued a show-cause notice to Price Waterhouse, among other entities, after it emerged that Satyam's accounts were falsified. "Their interests are fully protected and we are hopeful of a positive verdict when we appeal against the Sebi order", said a senior PW executive.

Price Waterhouse today said there has been no intentional wrongdoing by its firms in the Satyam case and expressed confidence of getting a stay on the Sebi order.

Further, the statement said that Price Waterhouse Network firms in India has learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice.

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