ICAI PANEL PULLS UP BANKS FOR NOT DOING DUE DILIGENCE ON SAT

ICAI PANEL PULLS UP BANKS FOR NOT DOING DUE DILIGENCE ON SATYAM

5 Apr 2010, 0310 hrs IST,PTI

NEW DELHI: Accounting regulator ICAI’s probe panel has hit out at banks for not doing due diligence on Satyam Computer Services before giving loans,

and wondered why the government put Deepak Parkeh on its board despite his HDFC group being a major creditor to Ramalinga Raju’s company.

“There is no explanation as to why the banks... while sanctioning short-term loans did not seem to have posed any question as to why the company (Satyam), which was supposedly cash-rich as per its financial statement, was taking loans from them,” said the ICAI in its final report on the Satyam scam.

The banks that gave loans to Satyam during 2000-08, despite the company claiming huge surpluses, were HDFC Bank (Rs 530 crore), Citibank (Rs 223.87 crore) Citicorp Finance (Rs 222.28 crore), ICICI Bank (Rs 40 crore) and BNP Paribas (Rs 20 crore), totalling Rs 1,221.16 crore.

The high-powered group of Institute of Chartered Accountants of India (ICAI), headed by former president Uttam Prakash Agarwal, also questioned the appointment of HDFC chief Mr Parekh on the board of SATYAM to revive the IT company following the scam.

“...the Committee is unable to understand how the chairman of HDFC Bank was appointed as an independent director post Satyam fiasco,” said the report, which has been submitted to ICAI’s council for further action. Although Mr Parekh, who heads HDFC, is not the chairman of HDFC Bank, the reference in the report is to him only, said a member of the committee when contacted.