Satyam: Merrill Lynch knew

One of the recurring questions from yesterday’s shock revelations at Satyam was the nagging feeling that someone must have known what was going on. Late last night I started to see reports indicating that Satyam’s investment bankers Merrill Lynch knew what was going on. According to The Times of India:

There’s intense speculation as to what finally triggered Raju’s confession of wrongdoing. It’s clearly more than coincidence that it came hot on the heels of investment banker DSP Merrill Lynch’s letter to the company on Tuesday evening terminating its days-old agreement with Satyam to advise it on strategic options because of “material accounting irregularities’’

PwC issued a blunt statement this morning claiming that:

“The audits were conducted by Pricewaterhouse in accordance with applicable auditing standards and were supported by appropriate audit evidence,”

In the meantime, BusinessWeek is reporting that Raju has disappeared. The burning question remains. What did Merrill’s manage to uncover since 27th December, 2008, the date of its appointment and 6th January, 2009 the date of its resignation that PwC didn’t find over several years acting as auditor? This one has a long way to play out. In the meantime, I leave it to readers to ponder on debates around Indian corporate governance:

According to him [Jayant Rama Varma], the governance issue in the Anglo-Saxon world aims essentially at disciplining the management which has ceased to be effectively accountable to the owners. But in India the problem is different. Here it is of disciplining the dominant shareholder and protecting the minority shareholders.

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Tagged as: Audit, Merrill Lynch, PricewaterhouseCoopers, Satyam