Government sidesteps demand for JPC on Satyam scam (Lead)

February 17th, 2009 - 4:15 pm ICT by IANS  

New Delhi, Feb 17 (IANS) The government Tuesday sidestepped a demand to appoint a Joint Parliamentary Committee (JPC) to probe the Satyam Computers scam, even as the issue rocked the Rajya Sabha and dominated the entire question hour.

“The question is not clear,” Company Affairs Minister Prem Chand Gupta replied when asked why a Central Bureau of Investigation (CBI) probe had been ordered into the scam when what was required, given the enormity and ramifications of the crime, was a JPC enquiry.

With the Satyam scam figuring in parliament for the first time, Gupta, in fact, frequently found himself on the back foot fielding a barrage of questions from irate members as he repeatedly attempted to distance the government and the regulatory bodies from responsibility in the scam.

At the same time, Gupta admitted to shortcomings in the existing companies’ law and said a bill to address this had been introduced in the Rajya Sabha.

“It covers many issues where we thought there were shortcomings,” he said.

Member after member wanted to know why in 2007 the Reserve Bank of India (RBI) had withdrawn a 2004 advisory against auditing firm PriceWaterhouseCoopers, two of whose partners have been arrested for conniving to fudge Satyam’s accounts, and permitted it to resume its operations and also whether its audits of other firms were under the scanner.

“The RBI, in its wisdom, thought that three year’s punishment was good enough,” Gupta answered at one stage.

In Gupta’s scheme of things, it was for the Institute of Chartered Accounts of India (ICAI) and not the RBI to act against PWC for any wrongdoing. At one stage, he admitted: “If someone is determined to do wrong, then no amount of regulation can work.”

At the same, he assured the house that there was complete coordination between the various agencies probing the scam but refused to lay down a timeline.

“In situations like this, where millions of documents have to be examined, no timeframe can be laid down. However, the Serious Fraud Office of India has been asked to complete its probe within three months,” the minister maintained.

This did not satisfy Ram Jethmalani (Independent), who said the investigation was “being conducted with kid gloves and without seriousness”.

Referring to eight letters written to market regulator Securities and Exchange Board of India (SEBI) pointing to wrongdoing by Satyam, Jethmalani also sought an assurance from the minister that these would be traced and the house informed of the manner in which they had been dealt with.

“The entity (Satyam) has been under the scanner since 2002. The minister should table all the information relating to this in the near future,” Jethmalani contended.

With three questions posed on the Rs.70 billion (Rs.7,000 crore/$1.43 billion) scam and a number of members wanting to pose supplementary questions, Chairman Hamid Ansari first refused to club the questions and then, midway through question hour, offered a discussion on a call attention motion.

This, however, did not satisfy members from across the spectrum and Ansari reluctantly agreed to continuing with the question raised by Rajeev Chandrashekhar (Independent) who wanted a progress report on the Satyam investigations.

“Why has the government not moved against PWC? Why is there no ban on the firm?” Chandrashekhar asked in a supplementary.

“The company is called PriceWaterhouseCoopers in the US. In India it is registered as seven partnership firms. There is PriceWaterhouse, PriceWaterhouse and Co, PriceWaterhouse Bangalore. ICAI is authorised to take whatever action is required. It is for ICAI to do so,” Gupta insisted.

Asked why the RBI had permitted the auditing firm to resume its operations, the minister replied: “RBI has no legal power to blacklist a firm. It can only issue an advisory. Only the ICAI can take action.”

Pointing to the involvement of PWC in a scam involving stockbroker Ketan Mehta, Gupta said: “A probe was ordered on Sep 12, 2001. The report was received on April 19, 2002. On April 30, 2002, the government took a view, some penalties were imposed and the case was closed.

“Let’s not give this a political colour,” he added, mindful of the fact that the episode had occurred during the time of the Bharatiya Janata Party led National Democratic Alliance government.

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Politics |