Mon, Jan 26, 2009 - Page 5 News List

Pricewaterhouse officials in custody

UNDER THE SPOTLIGHT: The accounting giant is being probed by India’s accounting board for its failure to detect a fraud at Satyam Computer Services

AFP , NEW DELHI

Indian police have arrested two senior officials of global accounting firm PricewaterhouseCoopers over fraud-hit Satyam Computer Services, reports said on Saturday.

The Press Trust of India (PTI) and other Indian media said the pair were taken into custody in connection with fraud at the outsourcing firm based in the city of Hyderabad.

The arrests came after B. Ramalinga Raju, founder of Satyam, was arrested earlier this month, days after owning up to the scandal that has shaken corporate India.

Pricewaterhouse audited Satyam’s finances and is now being probed by India’s accounting board for its failure to detect the fraud.

The Press Trust of India and other media identified the two arrested Pricewaterhouse officials as the company’s chief relationship partner in India, S. Gopalakrishnan, and engagement leader Srinivas Taluri.

The accounting firm confirmed on Saturday that two of its partners had been detained by Indian police.

“We do not know the basis for them being detained,” Pricewaterhouse said in a statement. “Over the last [two weeks], the firm has fully cooperated in all inquiries and has provided the documents called for by the Indian authorities.’’

A Pricewaterhouse spokesman called the arrests “unfortunate” and said it had not seen “any evidence of any wrongdoing” by the men, PTI said.

The accounting house had been “shocked by the massive fraud at Satyam and by the elaborate efforts undertaken to conceal the fraud from the board of directors, shareholders and the auditors,” the spokesman said.

Raju remains in custody as investigations continue into his declaration that US$ 1 billion in cash on the company’s books did not exist.

Earlier, India’s biggest engineering company Larsen and Toubro almost tripled its stake in Satyam Computer Services to 12 percent, edging closer to a possible takeover bid as Satyam’s largest single shareholder.

If Larsen hikes its stake further, India’s takeover rules will oblige it to make a full-scale offer for the company.

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