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PwC Auditors Arrested In Satyam Fraud Inquiry
theodp writes "Indian police arrested two employees from the affiliate of PricewaterhouseCoopers who audited Satyam Computer Services, the IT outsourcing giant at the center of the nation's largest fraud inquiry. The move comes after Satyam founder Ramalinga Raju said he had fabricated $1 billion of assets and confessed to making up more than 10,000 employees to siphon money from the software company. State Farm Insurance has severed its ties with Satyam, citing uncertainty about the company's future as 'the only factor responsible for the termination of the contract,' which will reportedly affect at least 400 on-site Satyam employees. Other customers, including GE, are standing by Satyam, one of the top recipients of H-1B and L visas (so much for those $500 Fraud Prevention and Detection fees!)."
Pricewaterhouse Coopers is a huge company and actually audits 40 percent of companies in the FTSE 100 Index. They audit everyone from aerospace & defence contractors to general retailers and chemical goods manufacturers. Scary news.
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We need a world-wide currency, world-wide wages, world-wide costs for raw materials, etc. Until then, it's always going to be fucked-up.
Wouldn't it be nice if we were all the same, and some world-wide authority to make sure none of us broke that golden rule.
Unless you plan on normalizing climate and remaking Pangaea, things will always have different costs in different countries. Japan will never have herds of free-range cattle; beef will always be more expensive there. Housing will never cost as much in West St. Bumblefuck as it will in Hong Kong. It will never be as expensive to heat your house in Florida as in Canada.
Global inequality and exploitation isn't exactly a good thing, but there has been real progress made over the last 40 years. Your ideas aren't going to help.
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As an East Indian, do these corporate assholes not realise the extent of their greed?
Due to the US Economy
1. Outsourcing is getting slashed as jobs need to to be retained on US soil.(rightfully so I guess)
2. Crap like above effing kills whatever reputation we have, there enough jokes flying around about the lack of quality or whatever from Indian work. This just made things worse.
Now this is not a flamebait, or troll post, I am not bashing my fellow Indians or the Americans/whoever.
I am however rightfully pissed at these corporate assholes who did this. There are folks who had purchased homes, property rates were rising, and now they'll plummet, people will be laid off.
Most of all, the company's name was Satyam (truth), and this came out of it. All of us Indians who work overseas have to deal with this in addition to the rest the usual crap.
To you effing lying executives, own up to your crap, you've put all of us in misery.
-Angry Brown Dude.
...confessed to making up more than 10,000 employees to siphon money from the software company.
This must be what Brooks meant about the best programmers being 10 times more productive.
tomorrow who's gonna fuss
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Indian police arrested two employees from the affiliate of PricewaterhouseCoopers who audited Satyam Computer Services, the IT outsourcing giant at the center of the nation's largest fraud inquiry.
Let's see, companies ship thousands of jobs to places that don't have the reporting and oversight capabilities we have here (or at least used to have) and are outside the jurisdiction of US courts in order to save a few bucks at the expense of several thousand local employees. They deal with the language barrier, the cost of travel, a culture where bribery can be a way of life, and time zone issues. Then said companies get taken to the cleaners because they can't audit their operations on that side of the world properly.
Hmmmm, let me be the first to say HA-HA! I guess we need new batteries in the sympathy meter because it's showing a big, fat ZERO right now.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Looks like the submtitter likes to bash on the H1B visas, but in this case where is the H1B fraud? Satyam seems to have brought in employees to work on-site and they seem to working there. I see no hint of H1B fraud anywhere in the links provided at all.
This space for rent.
is that "Satyam" is truth in Sanskrit - or even more, something like ultimate truth...
that the US is now even outsourcing corporate accounting fraud.
These folks are virtually a privatized branch of government. The US elites depend on companies like PWC to understand what is going on in big organizations. If PWC is compromised, that means the US elites are effectively flying blind.
Now, personally I think use of H-1b workers for critical financial infrastructure is stupid. It is impossible for an American to do a good background check on someone in/from India.
Nobody really knows how they will react when they have a chance to steal millions of dollars. Putting a young guy far from home into the position where he can do that-and the costs are born by citizens of a country he may not identify much with isn't doing that country or the young guy any favor.
One problem is that traditional audits really don't work very well as a rule. There are too many ways of beating an audit and the cost of an audit often is greater than the stealing it reveals.
It is hard to believe that companies that exist to sell auditing service are not well aware of these problems and therefore sort of corrupt in general as they often are not offering a reality based service.
PricewaterhouseCoopers is not actually a company. They are a network of partnerships across the globe that utilize each other to perform global audits. Just because one office is crooked doesn't mean that it is true in another office, as each one is managed by a separate partner who makes their own choices regarding how to run the office (in this case crooked as hell).
Spoke to someone in does IT compliance for her company and the one thing she did not understand was how an audit of Cash Balances could go so wrong. After all a lot of things can be faked, but the cash on hand can always be verfied (by calling up banks, etc). PWC's actions were either criminally negligent or just criminal. I hope they bite the dust.
Pricewaterhouse Coopers is a huge company and actually audits 40 percent of companies in the FTSE 100 Index.
Yepp, Pricewaterhouse Coopers is one of the Big Four: http://en.wikipedia.org/wiki/Big_Four_auditors., one of the best, without question.
But in these matters, I tend to wonder if the auditors are in cahoots with the company that they are supposed to br auditing.
On another note, an executive once told me: "I can't steal $100 from my company. We have enough controls in place to detect that. Now, $100,000,000, you can do that, and nobody would notice."
At "The Economist" quipped on the Bernard Madoff case, "if you are going to steal, steal big."
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
They were listed in US and have to follow SOX. And stop rubbishing the Indian laws already. The executives are already in prison. On the other hand isn't Bernie Madoff still in his penthouse.
There are differences in the real costs of some things. The problem is exchange rate differences. That is, work 40 hours in place A and you can live for a week there or then take that cash and live for a month in area B. Do that same 40 hours of work in area B and you can't even live for a day in area A.
The problem comes in because it's much easier to move a job overseas where labor is cheap than it is to move oneself overseas to where jobs exist.
Were the exchange rates equalized out, beef in Japan would still be more expensive due to shipping costs and houses in the middle of nowhere would still be cheaper, but there would be nowhere near the differences we see now between labor and living costs in (for example) New York and Mumbai.
In turn, that would lead to greater efficiencies overall. A pair of shoes takes X hours of human labor no matter where that labor happens. Currently it happens far away from the market they're sold in and then they get shipped halfway around the world. Were things equalized, they would still require X hours of labor but would only be shipped 1000 miles over land (much less resource intensive).
Economy is supposed to serve the people, not the other way around.
What's going on in India right now is no different than what went on the US in the late 90's with the dot-com boom. During the boom, demand far, far outstripped supply so people who could barely *spell* HTML were being hired as web designers and 90% of them were incompetent.
Same thing is happening in India right now, with approximately the same results. I have a feeling that one of the fallouts of this global credit crunch is that, just like the eventual dot-BOMB in 2000 and 2001, India is going face a major market correction.
The bottom line is that this is not an "India" thing or a "US" thing. It's a basic Economics 101 thing. Let's try not to make it too personal.
The
Having multiple currencies with floating exchange markets has a very, very important advantage: it helps to moderate the impact of inflation in one country on trading partners.
If you choose to have a single currency, you need to set a single supply regime. But what happens if one part of your economy needs cheap and easy money because it's stagnating, while another part needs its money supply tightened to avoid runaway inflation? It can't be done, you're screwed both ways.
Australia had this recently in the gap between New South Wales, the most populated state, which was stagnant, and Western Australia, much more lightly populated but in the midst of a mining boom. Our Reserve Bank chose to fight inflation. Now they're fighting recession. But either way the impact of their policies is uneven within a single currency.
The EU has a similar problem in the Eurozone. What is good for Germany can be bad for Spain, what is good for Greece can be terrible for France. With floating currencies each country can determine its own settings and the market will, more or less, adjust for it.
Of course the total dominance of the US Dollar means that we're all affected by Federal Reserve policy whether we like it or not, but some of the effect is soaked up in exchange rates. Until the crisis hit and everyone fled for US Treasury bonds, the US dollar was falling like a stone because it was too abundantly created by the Fed, which was driving up other currencies. The inflation in prices for US goods was offset by the increase in the price of other currencies.
The above analysis roughly holds in normal conditions. But these aren't normal conditions.
Classical Liberalism: All your base are belong to you.
I happen to be a Satyam employee and let me give you a clear picture on this entire story till now
1. Investigation is still going on the details of the fraud. There is still no clue on the missing cash and where did it go. The current numbers are just from the arrested's (Raju, Founder) mouth which cannot be trusted.
2. Within 5 days of scam the govt had stepped in. appointed new directors. Directors appointed audit and 2 new accounting firms to do complete audit of company from 2001. The 8 week audit will give a clear picture of the fraud numbers.
They are also hunting for new CEO and CFO. Even in US corporates are happy the way indian govt and intervened.
3. US employees have been paid their Jan month Salary. Indian employees wait for theirs and it will be announced next week (In India we get have monthly pay cycle)
4. The founder and his brother and CFO were arrested in 4 days after founder confessed to the scam. He is in an ordinary Jail along with his bro and CFO. Multiple agencies: SEBI, CID, CB-CID, CBI are investigating the case.
5. The lack of 10K employees is a baseless argument. Its currently under investigation though. One of the directors has also agreed that the 53K employee strength is true (http://www.thehindubusinessline.com/2009/01/26/stories/2009012651330100.htm)
6. Satyam like TCS, WIPRO, Infosys and other multitude companies operate on the outsourcing model. The working culture, people, environment and pay scale is extremely well compared to other indian jobs. Due to this indians are very professional, well mannered and living a better lifestyle. They have absorbed the american culture completely. Indian IT also has reflected into other industries with better pays and more professionalism and higher ambitions which is fueling india's growth.
This FSCK up is due to a bunch of family greed.
7. Many clients have shown support. They have personally called up project teams and shown support. People working on projects are continuing with their deliverables though the morale has fallen a little.
8. We have daily global calls where the entire company is addressed with the progress of company's future.
9. There are tons and tons of rumors flying around. I would suggest to wait and watch few weeks till all the investigation results comes out.