With rumours abound that Satyam is planning to fire some 15,000 odd staff personnel due to inability to pay their salaries. There is also speculation that Satyam is likely to freeze the salaries of its employees for two months due to lack of cash in their accounts to pay them off.
“Even if we are not retrenched, we may face cuts in our salaries. This whole thing is not our fault,” said one employee who, like all others interacting with the media at Satyam campus, spoke on condition of anonymity.
With tears in his eyes, this ‘Satyamite’ of three years further added that he got Rs 72,000 per month till last year, and had bought a car and even taken a home loan.
“My total liabilities are now over Rs 45 lakh. I don’t mind selling my car. But what do I do about my home? I have to live in that with my family,” the employee said.
After taking drastic and quick measures by dissolving the Satyam Board and cancelling its 10th January meeting, criticism of slow action on the part of the Indian Government has finally taken a bow down. The members of disbanded board included the company’s interim CEO Ram Mynampati, former Cabinet Secretary T R Prasad and an IIT Professor V S Raju.
Union Minister for Corporate Affairs Premchand Gupta said a ten-member board will be constituted by the government which will take up its work in about a week.
In further developments the Company’s Law Board has asked Satyam not to implementing the decisions of the board, but has allowed it to continue its business, a senior executive of the firm said in Hyderabadon Saturday.
“We are asked by the Company Law Board not to implement the decisions of the Board. But we are allowed to continue our activity. The team which was constituted recently is continuing its work,” Satyam Computer Head Global Marketing and Communications Hari Thalapalli told PTI.
While the fact that computer IT major Satyam’s profits are inflated in millions of dollars is now in public domain, now more ghosts are appearing from Satyam’s grave. According to reports in newspapers like Economic Times, Satyam’s employee figures also stand overstated. Satyam which claims to have around 53,000 odd employees under its payroll, is being questioned over discrepancies in its numbers.
Sources say that two years ago the company was aiming at a headcount of 80,000 by Q1 2009 and Raju’s ambition to turn Satyam into a multicultural enterprise helped the firm fudge employee figures.
‘‘ Setting up offices in nations such as China and Malaysia required the company to ensure 80 per cent of the employees were local. There was probably some fudge happening there,” said a former HR manager of Satyam.
He added: ‘‘ Few years ago Satyam was planning to set up offices in various other nations such as Mexico, Sweden, Brazil and was hiring students from those countries. All these added to the headcount confusion.’’ He said that data collection and updation weren’t exactly a Satyam strength.
Besides, another source familiar with the company’s HR said that while the company has development centres in various locations such as Malaysia, South Africa and Egypt, the headcounts there are not very clear, particularly in the case of interns.
In a state where no one seems to be ready to touch the diseased Satyam following Ramalinga Raju’s confession regarding the Satyam scam, something needs to be done to prevent the Satyam effect of having its impact on the Indian economy. Satyam which employees close to a 53,000 employees, is indeed one big company and it does not matter if the Satyam founder and Board members may have messed up, the company needs to be rescued.
Swaminathan Iyer in his column on Economic Times feels that someone of the stature of Narayaan Murthy is needed to salvage the sinking ship of Satyam. While speaking to TV channels Narayan Murthy has publicly said that, ‘Infosys would never touch an infected company like Satyam and taking over Satyam would mean taking over law suits and legal claims.‘
Despite business analysts going all out to question Satyam’s financial credibility, with most of them saying that Satyam does not have money to pay of even January’s current salary to its employees. Satyam has ‘‘ good revenue” , so says its HR.
In response to a flood of queries by employees worried about their January salary, the Satyam’s HR is sending a positive response: ‘‘ Company has good revenue and impressive client and long standing engagement” .
It is possibly for such reasons that employees are now seeking a professional ‘‘ external and credible” management . While they have been flooded with mails over the last two days from team leads and senior management to keep their morale high, they say that the presence of the old set of management is not able to restore their confidence in the firm and its future. Read more
The Indian Goovernment may take its time before coming out with full on action against Satyam, but Satyam is likely to be more troubled in U.S. waters. With more severe punishments and very fast action being taken to deter such fraudelent activities, Satyam will be most troubled by lawsuits from the United States.
About a dozen lawsuits have been filed against Satyam Computer in US courts, charging the Indian IT firm with duping thousands of American investors out of billions of dollars.
When asked about the specific damages sought in the lawsuit, law firm Vianale & Vianale LLP’s counsel Keneth J Vianale said that the sum duped could be in hundreds of millions of dollars.
Vianale said in an emailed statement to media: “We have not alleged a specific damages amount that we are seeking. That will be a subject of expert testimony.
“However, in cases of this sort, it is not unusual for the damages to be in the hundreds of millions of dollars.”
Another law firm Pomerantz Haudek Block Grossman & Gross said that it “has commenced an investigation of the scandal on behalf of investor clients, and is exploring the possible claims that can be raised, including under the federal securities laws …
“… and focusing on identification of possible defendants in addition to the Raju brothers, such as outside auditors, and on the location of assets in this country.”
After the scandal was revealed, trading in Satyam shares was halted by the NYSE on January 7 and the stock exchange has said that it is assessing whether the firm deserves to stay on the bourses.
The trading could be resumed on Monday if its review is satisfactory, the exchange said in a statement.
In these lawsuits, Satyam Computer has been charged with duping thousands of American investors by artificially inflating share price.
While two lawsuits were filed on January 7, the day when Satyam’s founder-chairman Ramalinga Raju resigned after disclosing massive financial irregularities to the tune of over a billion dollar, so far there has been nearly a dozen lawsuits that have been filed against the company.
Earlier, nearly six law firms including Brodsky & Smith LLC, Glancy Binkow & Goldberg LLP, Harwood Feffer LLP, Sarraf Gentile LLP, Vianale & Vianale LLP and Izard Nobel LLP had filed class action law suits against Satyam Computer.
Besides, these five more lawsuits have also been filed including Pomerantz Haudek Block Grossman & Gross, Finkelstein Thompson, Dyer & Berens, Brualdi Law Firm, and Federman & Sherwood.
Meanwhile, Finkelstein Thompson has also announced a class action lawsuit on behalf of Satyam Computer ADR holders in the United States District Court for the Southern District of New York.
In another instance, Dyer & Berens has filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of investors who purchased the American Depository Receipts of Satyam Computer between January 6, 2004 and January 6, 2009.
Glancy Binkow & Goldberg, Federman & Sherwood, Harwood Feffer and Izard Nobel have filed their class action lawsuits in the United States District Court for the Southern District of New York. Identical suits filed by Vianale & Vianale and Sarraf Gentile are pending in the Manhattan federal court.
With Satyam facing so many class action lawsuits, it would be a very arduous task to come out unscathed.
Article Courtesy : PTI
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