The cost of doing business is just lower in India – even if it’s fraudulent business.
That’s the takeaway from Tuesday’s announcement that the Securities and Exchange Commission has settled with an Indian computer services company and its auditors, both of which were charged by the agency in a billion-dollar fraud uncovered more than two years ago.
Without admitting or denying anything, Satyam Computer Services settled a charge of falsifying its books, and affiliates of PricewaterhouseCoopers settled charges they conducted deficient audits.
Deficient is one way of describing a series of audits that failed to catch on to the $950 million or so of fake bank deposits Satyam claimed on its books between 2000 and 2008.
Yet the settlement tab, to be shared by Satyam and its auditors at the Indian branches of PricewaterhouseCoopers, runs to — count it, PwC — just $16 million.
That’s not bad value for your fraudulent dollar, clocking in at less than 2 cents of settlement payments for every dollar of false cash Satyam booked. No wonder the SEC is in a world of budgetary hurt.
Satyam – which overhauled management after Indian prosecutors hauled the company’s chairman, Ramalinga Raju, off to court – agreed to pay $10 million and PwC’s Indian affiliates will kick in $6 million. Though a dollar surely goes further in Calcutta than it does here, that’s still not a bad bargain for the PwC affiliates. Consider that the SEC, which hasn’t exactly been winning awards for its aggressive pursuit of lax accounting, dinged Deloitte Touche for $50 million in the collapse of cable company Adelphia.
And how did Satyam get off for a penny on the dollar, after wiping out its U.S. shareholders by systematically inflating its cash position 15-fold during its long period of book-simmering?
Why, it looked in the mirror and decided it didn’t like what it saw. When man looks into the abyss, etc.
“In bringing this settled enforcement action, the SEC balanced the scope and severity of Satyam’s misconduct and harm to holders of Satyam’s American Depository Shares against the unique and significant remediation efforts made after the fraud became public in 2009,” the SEC said.
Maybe it’s time for the SEC to try some remediation of its own.
Also on Fortune.com:
- Why the Big 4 are in a hiring frenzy
- Ernst & Young vs. the Martin Act
- Lehman suit shreds auditors’ teflon coating
Follow me on Twitter @ColinCBarr.
