The Satyam Saga – maybe PWC is not to blame?!

Posted: January 8, 2009 in Uncategorized
Tags: , , , ,

Okay, so “satyam” was trending on Twitter, and news channels and newspapers have been filled a plenty with all persepctives on the Satyam story.

Amongst other things, the two most asked questions have been:

– Why did Ramalinga Raju confess to his crimes, at this time?

– How did PWC allow such nonsense to be going on for so many years, even as they were the auditors who signed off the balance sheets?

So here is a contrarian thought – at least I have not read this view point so far.

What if PWC was not really wrong? What if they actually did the verification of the cash and bank accounts before confirming the balances?

What if the said balances were TAKEN OUT recently??

Rs. 5000+ crores is a large enough booty for any fraudster to make a major conspiracy for. Take out the money, invest in property, expect the property to appreciate even more than the kind of money that Satyam could make in it’s core business?

If he did that, PWC did not know about it, till the last annual balance sheet that they might haev signed off. And in which case, they were on the right path till that point. If Raju siphoned off this case more recently, this big confession, and dragging down of an asset where he had only 3.14% equity left – that too pledged out and borrowed against – was an easy way out to explain all his sordid crimes. And with a kitty like Rs. 5000 crores, plus the cash he would have stashed away earlier, there was enough money to keep prolonging the legal case, till it falls off public memory.

And in between, if he needs to go and spend a few nights in jail, it may not exactly be a bad price to pay.. Think about it…

On the other hand, as far as the Indian stock exchange is concerned, its jinxed out at this time.

First the global economic crisis hit. And the markets fell.

Once investors started realizing that India was not that bad off, they started picking up the stocks again. And the market was making small recovery.

Then the Mumbai terrorist strike happened. And the house came crashing down again.

Once again after about a month, the markets were gradually making their way up.

When Ramalinga Raju, the other “terrorist” struck!! And the free fall happened once more..

As I said.. markets are jinxed! 😦

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Comments
  1. Kaps says:

    If Raju had not confessed, DSP Merrill Lynch’s resignation as financial advisor would have come to light and they have expressed concerns about the financials. Ramalinga Raju could not have hid anymore.

    • wisdominhindsight says:

      Agree with you, Kaps.
      Except I still wonder what made DSP ML wake up so late in the day? You are aware that they have been involved with Satyam on several assignments, and have been working closely with them, for many deals. They would have seen the books often enough. Why the wake up call now??
      It is naive to accept a simplistic answer, I feel.

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