Auditing major Ernst & Young today said its valuation of controversial Maytas Properties was for a deal involving existing shareholders of the firm, but declined to comment on whether its report was misused by scam-tainted Satyam Computer.
"We were not given to understand by any party, explicitly or implicitly, during the valuation exercise, about Satyam's plans to acquire Maytas Properties," an E&Y spokesperson said.
Asked if the valuation, which it said was done in an "unrelated context" was misused by Satyam, also founded by Raju, and if E&Y would take any action against the IT firm, the spokesperson said "no comments".
The decision to acquire his family-promoted Maytas Properties and Maytas Infra, whose statutory auditor is also E&Y, proved to be the nemesis of Raju, who was arrested early this month after he disclosed a Rs 7,800-crore fraud.
"Ernst & Young was engaged by a law firm to undertake a valuation of Maytas Properties, as required under the guidelines of the Reserve Bank of India, for a proposed share transaction involving existing shareholders of Maytas Properties," the spokesperson said. "This valuation was done only to comply with the above regulatory requirement,”E&Y added and our engagement letter and valuation report clearly and unequivocally state the same," E&Y added.
The spokesperson also declined to comment on whether the valuation of Maytas Properties was done at Rs 6,500 crore, as mentioned by the now arrested Satyam CFO Vadlamani Srinivas in the company's board meeting on December 16, to push through the acquisition, a proposal that backfired within hours.
Satyam's then independent director and former Cabinet secretary T R Prasad had questioned the veracity of E&Y's valuation saying, "According to the formula proposed by the board, the company's actual value could come to less than half of Rs 6,500 crore."
The spokesperson also declined to take this query and reveal the basis of valuation citing customers' confidentiality agreement. The spokesperson also sought clarify that Ernst & Young was neither the advisor to the proposed Satyam-Maytas transaction nor "were we engaged by Satyam Computer Services or any of its subsidiaries to conduct the valuation of Maytas Properties".
