Satyam scam: SAT over-rules SEBI, allows Price Waterhouse to cross-examine accused
02 Jun 2011
The Securities Appellate Tribunal (SAT) on Wednesday directed the Securities and Exchange Board of India (SEBI) to allow audit firm Price Waterhouse to cross-examine persons indicted in the Satyam Computer Services scam, including the now-jailed Satyam founder B Ramalinga Raju.
SEBI had relied on the statements of Raju and the other accused to issue show-cause notices to Price Waterhouse, the company's external auditor. Price Waterhouse had earlier challenged Seri's right to question an audit firm regulated by the Institute of Chartered Accountants of India (ICAI).
"It has become necessary to intervene because the violation of principles of natural justice is writ large on the face of the impugned (SEBI) order," SAT said.
Earlier, SEBI had rejected requests from Price Waterhouse (the Indian arm of international audit firm PricewaterhouseCooper) to cross-examine key witnesses, including Raju. This prompted Price Waterhouse to appeal to the SAT.
On Wednesday, a three-member SAT bench of justice N K Sodhi and members P K Malhotra and S S N Murthy directed SEBI to allow Price Waterhouse to cross-examine the persons named by it in an application given to SAT on 22 November last year. It also asked SEBI to furnish copies of their statements to Price Waterhouse if necessary.
The market watchdog was also directed to complete the inquiry within four months from the date of the order.
"I hold that the board (SEBI) was not justified in allowing partial inspection of the material to the appellants and that they should have been given access to the entire material collected during the investigations. Not having done this, the principles of natural justice have been violated," Justice N K Sodhi said.
