The Andhra Pradesh government on Wednesday promised to render all possible assistance to the Central Bureau of Investigation (CBI) in probing the massive fraud in Satyam Computer Services after the High Court expressed its displeasure over the lack of cooperation with the investigating team.
On a direction from the court, the government filed a report within two and half hours, detailing the steps it would take to extend cooperation with the multi-disciplinary team of the CBI.
After being rapped by the judge for not cooperating with the CBI team, the government informed the court that it would provide the state-owned Dilkusha Guest House on Raj Bhavan road to the investigating officials.
It also promised to provide all necessary cooperation to the agency to complete the probe.
Earlier, in an extraordinary move the CBI approached the High Court, complaining that the government was not extending cooperation in the investigations.
Taking a serious note of the government’s attitude, Justice N.V. Ramana directed the state government to file its reply within two and half hours.
The CBI plea and the court’s displeasure have come as major embarrassment to the Congress government, which was already under fire from the opposition for being soft towards the disgraced founder and former chairman of Satyam B. Ramalinga Raju and other accused.
The government came under criticism for the delay in recommending to the central government to order a CBI probe. Opposition parties alleged that the probe by the Crime Investigation Department (CID) of the state police was aimed at shielding the accused.
The CBI last week took over the investigations into the Rs.70 billion accounting fraud, the biggest in India’s corporate history.
The premier investigating agency formed a multi-disciplinary team to probe the fraud, which Ramalinga Raju admitted to Jan 7.
It is heard from sources that the Satyam board has finally arrived at a decision on the sale process. The board may not need to meet again to discuss sale process. Lawyers are working on regulatory issues and proposal may soon be sent to the Sebi and the CLB. Details of the Satyam sale process will be made public over the next few days.
Industrialist B K Modi, whose Modi group is interested in acquiring Satyam Computer, said on Saturday that the stock market valuation could not be the basis for putting a reserve price for the sale of troubled IT firm.
Asserting that only action could determine the sale price for Satyam, Modi said that stock market price could not be considered a benchmark in this case, as the market was not fully aware about the firm’s actual assets and liabilities.
“The auction will determine the price… Why you require a reserve price … reserve price will only create controversy,” Modi told a news channel.
Besides Modi group, domestic engineering major L&T and Hinduja group are also interested in acquiring Satyam. A board member of L&T, which has already purchased about 12 per cent stake in Satyam from open market, yesterday said that the company was waiting for Satyam board’s decision on pricing mechanism to consider its next step.
Earlier this month, the Company Law Board allowed Satyam’s government-appointed board to go-ahead with a public auction plan to bring in new owners for the company. “What is the indicative figure…books are not there. It cannot be the market, because market is not even aware what are the assets and liabilities of the company,” Modi said.
The six-member Satyam Computer Services board is on a war-footing to find a strategic investor to buy out the fraud hit Indian software outsourcer, said Prem Chand Gupta, Corporate Affairs Minister, on the sidelines of a press conference on Sunday.
“The board will carry out the bidding process in the most transparent manner and any company bid for Satyam subject to the proceedings being laid down by the board,” the minister said.
Post, Ramalinga Raju’s Satyam scam, the company is seeing some signs of solidarity and encouragement as stocks of Satyam rose by almost 7% on Monday. Though still at a miserable rate of Rs. 25.45, the Satyam stock rose by 7% as most of Satyam’s clients showed faith in Satyam and stated that all deliverables were delivered as per timelines and requirements.
According to a stock exchange announcement, the newly-appointed board met on Jan 17 for the second time in six days to discuss the “immediate action plan”. This was, incidentally, the first board meet after the government’s decision to nominate three additional members. Read more
The Board is still to finalise who would handle the mantle of the CEO of Satyam. Rumors are rife that Vivek Paul is all set to don the post of the CEO for Satyam and help the company get out of the mess, it’s founder Ramalinga Raju put it through.
Vivek Paul has an impressive profile and surely seems the right man for the job. P.
Vivek Paul began his career working Bain & Company and PepsiCo. In 1990 Paul joined General Electric where he spent 10 years. During his tenure, he ran GE’s Global Computerized Tomography business, reporting directly to the current Chairman of GE. Paul also served as the CEO of GE’s medical equipment joint venture in India, known as IGE, recognized by the Economist as the best joint venture in Asia.
With a high profile board at the helm of Satyam, the stakeholders in Satyaam are seeing some ray of hope that all is not lost as yet.
The new board of fraud-hit Satyam Computer Services will meet again on Saturday to look for ways to raise new funds after both the government and the company rejected talk of a state rescue bid.
Media speculation of government aid has mounted as analysts questioned whether India’s biggest corporate fraud had left the outsourcing firm with enough money to pay its 50,000 staff.
But Economic Affairs Secretary Ashok Chawla told reporters on Thursday that the government was not looking at any direct support for the company or bailout “at this stage.”
Deepak Parekh, a senior banker and Satyam board member, said it had 17 billion rupees ($348 million) in receivables and may not need new funding if the money came in on time. But Parekh added the board would consider bank loans if necessary.
The government, which dissolved Satyam’s previous board last week, appointed three new directors on Sunday and another three late on Thursday to help steer the company out of crisis.
Company Affairs Minister Prem Chand Gupta said the first impression from the new directors about the company is that its operations are sound and that “by and large” major customers were willing to remain with the firm.
“All these are steps in the right direction but they need to get a CEO and CFO in place first to run the company’s daily operations. That should be a priority,” said Gajendra Nagpal, chief executive of Unicon Financial.
Satyam’s shares jumped as much as 40 per cent on Friday to 28.40 rupees after the government doubled the size of the board, but the stock has still lost over 80 percent of its value since the massive fraud was revealed.
Many questions about the accounting scandal remain to be answered: how large is it, who benefited, and how did the perpetrators manage to conceal it for so long?
Even if Satyam escapes a near-term cash crunch, it faces a long road to recovery. The new board will have to keep clients from defecting to Satyam’s rivals, fend off a growing number of lawsuits over the scandal and try to rebuild investor trust.
TCS seems to have made most out of the Satyam’s fiasco. The World Bank project which was lost by Satyam, who got banned for seven years for data theft reasons, has been awarded to TCS, Tata Consultancy Services.
In an unusually delayed disclosure, the World Bank said it has awarded Tata Consultancy Services a chunk of the projects that were earlier given to Satyam Computers.
The Bank had barred Satyam from doing business with it for eight years beginning September 2008, months before the IT company was shaken by a Rs 7,800 crore accounting fraud at home. “We have hired Tata Consultancy Services (TCS) to do much of the IT work that Satyam used to do,” a World Bank spokesperson said. The projects were awarded to TCS the same month through competitive bidding an indication that the Bank is not specifically targeting Indian IT companies.
The Bank recently disclosed names of companies worldwide that have been barred from doing business with it for violating fraud and corruption guidelines. The list of companies included India’s third largest software exporter Wipro and another company, Megasoft.
When contacted, a TCS spokesperson said, “We bagged the contract from World Bank a long time back… early September last year.” However, he declined to give further details as the company is scheduled to announce its quarterly results on January 15. Earlier, analysts had warned that after the fiasco, a large number of Satyam’s clients may desert it. The projects were awarded to TCS through competitive bidding but the details of the contract were not divulged by the Bank.
The task ahead for the new Satyam board is well cut out. In its first meeting in Hyderabad on Monday, the board will elect its chairman, New Satyam board membersand help find out a solution for creation of working capital and appoint new management of the company. The government on Sunday constituted a three-member board for Satyam. The members are HDFC chairman Deepak Parekh, former Nasscom president Kiran Karnik and former chief of Securities Appallate Tribunal C Achuthan.
The new board will meet with a mandate to ‘‘ take necessary immediate action to put the company back on the road,” taking it out of the present crisis, which started after its chairman B Ramalinga Raju revealed fudging of its accounts last week.
In its first meeting, the board is likely to elect Deepak Parekh as its chairman. It is learnt that the government has already sounded the members about Parekh as chairman. The other members will be appointed by the government with the consultation of the chairman and other appointed board members.
“I am going to Hyderabad for the board meeting tomorrow,” Parekh said. The first task of the board is to restore confidence in the clients and investors to continue business with Satyam, he said, refusing to answer any further question.
At present, Satyam has no cash reserves , despite the fact that the balance sheet prepared on March 31, 2008, shows a cash reserve of Rs 5,700 crore. To ensure smooth functioning of the company, a senior official said the company would require a new management, which could be trusted by clients and lenders, who have stopped giving Satyam money after the revealation of accounting fraud.
Read more
Satyam’s chief financial officer (CFO) Vadlamani Srinivas on Sunday claimed that he had no knowledge of fudging of over Rs 7,000 crore by former chairman B Ramalinga Raju.
According to sources, Vadlamani in his confession stated he wasn’t aware of the fraud as his 80-member team provided him documents and he blindly signed on them. “Team gave me documents, I blindly signed”, says Satyam’s ex-CFO.
In his confessional statement to the police, Srinivas said the auditors never pointed out any “deficiencies” during their discussions. But the most startling revelation was that fixed deposits were unreal and fictitious which were managed with an understanding between the audit section and management.
“The bank deposits were handled directly by Raju and he was specifically asked not to look into it”, Srinivas said. This was corroborated in Raju’s confessional statement which said “myself and my brother used to take decisions and instruct our CFO to do as instructed“. He admitted that the accounts were manipulated about seven years.
His confession is perhaps a pointer to the fact that the promoters could have forged bank documents to show fictitious deposits. This puts a question on the possible involvement of banks in the scam.
Those who should have a pretty clear idea by now are the software company’s main bankers — ICICI Bank, Bank of Baroda, BNP Paribas, Citibank, HDFC Bank and HSBC.
In the normal course, Satyam’s statutory Auditor PricewaterhouseCoopers would have demanded certificates from banks attesting to the existence of money in the IT firm’s accounts. Did the banks indeed certify that they had the money? Or were certificates forged and presented to PricewaterhouseCoopers?
Srinivas has pointed fingers at his assistant Rama Krishna who has been working him for about ten years. “Prior to quarterly board meetings Ramakrishna will prepare balance sheet with the assistance of his team with internal employees. I do not pay much attention to the details of that balance sheet.
On his part, Raju said “we wanted to show more income in the account to avoid others from involving in the company affairs and any other possible hostile takeover situation, and hence, manipulated the balance sheet to attract more business and show unavailable amount as available cash in hand”, said Raju.
Loading ...