HYDERABAD, India — Indian police on Tuesday searched the offices of PricewaterhouseCoopers, the auditors of the troubled outsourcing giant Satyam Computers, whose founder last week admitted to doctoring the company's accounts for years, an official said.

Satyam's balance sheets were riddled with "fictitious" assets and "non existent" cash and contained a $1 billion gap that could no longer be concealed after a deal intended to save the struggling company was abandoned, the company's founder and former chairman B. Ramalinga Raju admitted in a letter to the company's board.

A senior police official V.S. Kumudi said that the offices of PricewaterhouseCoopers in the southern Indian city of Hyderabad were being searched. He gave no other details. Satyam is also headquartered in Hyderabad.

As the accounting scandal unfolded, the auditing firm said in a statement last week that they had worked "in accordance with applicable auditing standards and were supported by appropriate audit evidence."

"Given our obligations for client confidentiality, it is not possible for us to comment upon the alleged irregularities. Pricewaterhouse will fully meet its obligations to cooperate with the regulators and others," the statement said.

The auditors said Tuesday that there was no "raid" at their Hyderabad office.

"We are in discussion with different agencies for providing information requested by them. We are fully cooperating with the agencies and providing whatever information, documents, materials that have been asked for."

Story continues below

The international accounting firm, PricewaterhouseCoopers International Ltd., is based in London.

Some investors in Satyam are considering suing the auditing company, according to Ravi Nath, a lawyer with the Rajinder Narain law firm, which has been contacted by several investors.

Satyam Computer Services Ltd employs 53,000 people _ among the 2 million Indians working in the country's booming high-tech industry, which last year brought in an estimated $40 billion. Satyam's clients include a slew of Fortune 500 companies including Nestle, General Electric and Ford Motors.

Asked about the Satyam scandal, British Foreign Secretary David Miliband, in India on a three-day visit, told reporters in New Delhi on Tuesday: "I don't believe that one bad apple means the whole barrel is wrong. "

"I am sure that the Indian authorities would deal with the recent case very clearly and appropriately. The Indian laws in respect of corporate governance need to be implemented in a hardheaded and clear way."

Associated Press Writer Muneeza Naqvi in New Delhi contributed to this report.