Satyam scandal rattles confidence in accounting Big Four

By George Chen

HONG KONG (Reuters) - A $1 billion (665 million pound) fraud at outsourcing firm Satyam Computer Services, dubbed "India's Enron," has shaken investor confidence in the world's Big Four accounting firms, which have expanded rapidly in Asia despite a general shortage of qualified accountants.

Ramalinga Raju, founder and chairman of India's fourth-biggest software services exporter, resigned on Wednesday saying profits were falsely inflated for years.

"This is shocking. I can't even let my thoughts go in the direction that there is another Satyam somewhere," said Shailesh Haribhakti, executive chairman of BDO Haribhakti, a consulting and management services firm based in Mumbai.

"I have very high respect for PricewaterhouseCoopers who are their auditors, but it's incredible that such gross things existed and were not discovered," he said.

PwC said it was examining Raju's five-page resignation letter and declined further comment, though one insider said the accountant was as shocked as anyone at the admission of years of financial deception at Satyam.

PwC staff in Asia said they had received internal emails on Thursday telling them not to discuss Satyam publicly.

"We are also shocked by the Satyam news and many of our colleagues and managers describe it as India's Enron, so you can imagine how big the impact will be to us," one PwC employee told Reuters on condition of anonymity.

PwC accelerated its Asia expansion in 2002 when it took over offices and staff from Arthur Andersen, which was auditor for Enron and once one of the "Big Five" global accounting firms, along with PwC, Ernst & Young, Deloitte & Touche and KPMG.