"[SCSL], the Indian outsourcer embroiled in a fraud scandal, used forged documents from at least four major banks to claim a cash balance in excess of $1 billlion, according to a person close to the investigation. Investigators have sent Satyam's account-balance statements and letters of confirmation of account balances to officials at HSBC Holdings PLC of the U.K., Citigroup Inc. of the U.S., and HDFC Bank and ICICI Bank Ltd. of India. Based on the banks' reviews, investigators have determined that the documents were forgeries, according to the person close to the investigation. Spokesmen for all four banks declined to comment", Geeta Anand and Romit Guha at the WSJ, 20 January 2009.
"The disgraced former chairman of [SCSL], B. Ramalinga Raju, used salary payments to 13,000 fictitious employees to siphon millions of dollars from the Indian outsourcer for land purchases, prosecutors said Thursday. Prosecutors said ... Satyam has only about 40,000 employees instead of the 53,000 it claims. ... 'The funds of Satyam have been diverted to many other companies,' K. Ajay Kumar, assistant prosecutor, told a packed courtroom. ... S. Bharat Kumar, a defense lawyer for the Raju family ... said it would be impossible for anyone to juggle 13,000 fake employee accounts", EB and Nirag Sheth at the WSJ, 23 January 2009.
"Satyam's former chairman had ticked all of the boxes normally associated with good governance. He had stacked his board with luminaries including professors from Harvard Business School and the Indian School of Business. He chose as his auditor one of the 'Big Four' international accountancies, PWC", Joe Leahy and James Fontanella-Khan at the FT, 23 January 2009.
"Prosecutors pursuing the fraud at [SCSl] said Tuesday the technology outsourcer's founder, B. Ramalinga Raju, should be denied bail because he could slow the investigation if released. Their assertions came after an employee of a company managed by Mr. Raju's familiy told police that he had been instructed to hide documents connected to land purchases by the Raju family, according to prosecutors and a court document reviewed by the [WSJ]. ... Meanwhile, Satyan's government-sponsored board hired Goldman Sachs and Aventus Capital to advise on strategic options", EB and JR at the WSJ, 28 January 2009.
Gupta's point is well taken. In 2008: Infosys paid KPMG $695,000; Satyam paid PWC $1,919,000 in fees. Infosys is slightly larger than Satyam. Did Satyam pay PWC say $600,000 for the (shoddy) audit and $1,319,000 to close its eyes? The ICAI suit is interesting. About 20 years ago, a plaintiff named the AICPA in an accounting malpractice case, alleging the AICPA's defective auditing standards gave rise to the plaintiff's damage. The suit was not permitted to proceed. We'll see if India's courts are more plaintiff friendly than America's.