The long tentacles of the huge Satyam fraud will ultimately engulf not only the the auditors (Price Waterhouse) but also the banks where the cash deposits were claimed to have been kept. The answers are just not good enough, and the lies will soon engulf the banks. I trained as a chartered accountant, and in those days was part of many audit teams. One of the first things that is mandatory is for the auditor is to independently confirm the cash balances as shown in the balance sheet directly<\/u> with the banks, and not through the company being audited. If such a certificate was obtained by the auditors, as is mandatory, then it is possible that some one in the bank had been bribed to send the falsified statement to the auditors. But it is virtually impossible that just one person could do so at a bank. The computerized internal audit systems at the bank would show up the discrepancy almost immedietly. Even assuming that there was a group of people at the banks perpetuating this fraud, the cash reserves of a public limited company are public knowledge and are detailed in schedules to the published balance sheet.
\nSatyam was such a highly regarded and traded stock, that it is virtually impossible that the banks like HSBC and HDFC, all of who run their own wealth management funds for their clients would not be completely aware of the details of Satayam’s balance sheet. Someone would gave got up and said ” Hey ! these cash balances stated in our bank just do not exist !”
\nYet no one blew the whistle ? For seven years ? Either the banks and their fund managers are completely stupid, or were just willing to go along with the fraud. The accountants and the banks, both of which have a fiduciary and legal responsibility, have much to answer for. And perhaps the reason the the investigators are not going after the banks is that it would create a loss of faith in our banking systems. That would panic the entire financial system and might even led to a run on the banks.
\nCorporate India has a lot to answer for. It was these people that would go on and on about the corruption in the government, which incidentally they themselves would encourage on a much higher level. But now it is evident that even at its core, Corporate India sees itself as a private club that is free to dupe the middle class investor and depositor for its own gains.
\nSatyam is India’s sub prime crisis, and the effects will be long and painful as the corruption in the system is unraveled. It will reach the highest echelons of our corporate world, for Raju could not have perpetrated this fraud at this level and for so long, alone. It needed the collusion of the banks, the accountants, and the government. And I would bet that he knows that he will be let off lightly as the investigations will be somehow stopped before it engulfs the whole system.<\/p>\n","protected":false},"excerpt":{"rendered":"
The long tentacles of the huge Satyam fraud will ultimately engulf not only the the auditors (Price Waterhouse) but also the banks where the cash deposits were claimed to have been kept. The answers are just not good enough, and the lies will soon engulf the banks. I trained as a chartered accountant, and in […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-489","post","type-post","status-publish","format-standard","hentry","category-current-events"],"yoast_head":"\n