Business

Satyam and PwC are fined in US for accounting fraud

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Image caption Satyam was once the fourth largest outsourcing company in India

Satyam Computer Services and its former auditor PricewaterhouseCoopers (PwC) have agreed to pay a combined $17.5m (£10.7m) in fines in the US after one of India's biggest corporate scandals.

Satyam, an outsourcing company, will pay $10m for falsely reporting more than $1bn in profits over five years.

The company's chairman Ramalinga Raju admitted to the fraud in 2009.

Satyam's shares were indirectly traded on the New York Stock Exchange (NYSE) as well as in India.

The US Securities and Exchange Commission (SEC) said it had fined the Indian affiliate of PwC $7.5m, describing it as the largest American penalty against a foreign firm.

The SEC said the auditor, PW India, failed to independently verify cash balances in Satyam bank accounts.

Fake invoices

Satyam created false invoices to inflate cash balances that appeared to double the value of the company's assets from 2005 to 2009, the SEC said.

This misled holders of Satyam's American Depository Shares, which were trading on the NYSE, making it seem more profitable, it added. Satyam's common shares are traded primarily on Indian exchanges.

The company did not admit or deny the allegations when settling the charges.

Former executives of Satyam and two partners from PW India are facing criminal charges in an ongoing trial in India.

Satyam is now under new management and continues to do business.

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