SATYAM Computer Services and its former auditor PwC agreed to pay a combined $17.5m (£10.7m) to settle US probes into an accounting fraud that in 2009 became India’s biggest corporate scandal.
Satyam, an outsourcing company now known as Mahindra Satyam, will pay $10m to settle US Securities and Exchange Commission (SEC) charges it fraudulently inflated revenue, income and cash balances by more than $1bn over five years.
Separately, India-based affiliates of PwC agreed to pay $7.5m in record settlements of related charges by the SEC and the Public Company Accounting Oversight Board (PCAOB).
The SEC called its $6m accord with five PwC affiliates its largest involving a foreign-based accounting firm, while the PCAOB said the $1.5m payment by two of those affiliates represents its largest civil money penalty.
Satyam founder and former chairman Ramalinga Raju surprised investors in January 2009 when he said the company had overstated earnings and assets for several years, in a fraud dubbed “India’s Enron.” The revelation caused Satyam’s shares to plummet. Satyam agreed to pay $125m to settle US shareholder litigation over that decline.
“The fact that Satyam’s former top officers were able to maintain a fraud of this scale represents a company-wide failure of extreme proportions,” Cheryl Scarboro, chief of the SEC’s foreign corrupt practices act unit, said.
City A.M. Reporter