1 Feb 2009
HYDERABAD: On paper Satyam Computer Services has 690 customers of which 185 are Fortune 500 companies. While there can be no doubt about the number of the Fortune 500 companies who are customers, investigators are still not sure whether all the other customers actually exist.
This in view of the discovery that the customer list of Satyam during Raju times was a top secret that even senior company executives had no access to. Investigators aver that many of the clients could be dummy companies that could have been used for hawala transactions to channelise money back into India. Export income being tax free, such channelising could have made economic sense, the investigators think. The apprehension of investigators has been raised by their near certain belief that money has illegally been transferred into India by the Rajus.
"The same gang of Srinivas Vadlamani and his vice president of accounts Ramakrishna G had access to the onsolidated list of clients and the revnues generated from each of them. Nobody else knew nothing much," a senior manager of Satyam told TOI. "
A highly level of secrecy was maintained and we felt that this was too much. But then we thought probably the company does not want to lose clients to competitors," the senior manager added.
From time to time, independent checks about clients used to be done by the company. But this was limited to clients who were listed on various stock exchanges and whose balance sheets were available publicly.
Saturday, January 31, 2009
Investigating the truth on Satyam
1 Feb 2009, ET Bureau
Fraud-hit Satyam computer has no outstanding tax dues. Yet, chairman of Central Board of Direct Taxes (CBDT) N B Singh, who is retiring today, said that tax liabilities would be known only after a year when I-T department’s investigation will end. While talking to ET, Mr Singh talked about how the department was proceeding the investigation in Satyam computer’s case.
Excerpts
Let’s begin by asking you the I-T department’s ongoing investigation on Satyam fraud. Any outcome as yet?
It’s too early to get any results. We have centralised the investigation under one commissioner in Hyderabad. He and his team are now scrutinising each and every document related to the case. There are hundreds of benami (anonymous) bank accounts which were floated by the Satyam promoters. We attached some of them in the past.
What’s the time-line of the investigation process? Will it be wrapped up by two to three months?
No, it will take time. It’s a fraud of a huge scale, and it has been going on for about eight years or so. We will need at least a year to complete our investigation.
But a potential buyer of Satyam computer would like to know the company’s tax liabilities. Is there any tax outstanding? Also, if there has been an inflated profit as former Satyam chairman Ramalinga Raju claimed in his confession letter, will you return the excess tax amount?
If a new company takes over Satyam computer, it must take all liabilities as well. Those will include tax liabilities too. There has been no outstanding tax dues of Satyam, but we will be able to ascertain the quantum of liabilities only after a year or so when our investigation is over. Regarding any inflated profit being shown, I won’t go by the statement of R Raju. The statement must have been issued at his own convenience.
In 2002, you spotted some I-T frauds in Satyam, but did not act swiftly.
It’s very easy to point out the lapses. Yes, we did not go continue our investigation beyond a point as we did not anticipate such huge fraud.
But have you found any other instances where modus operandi of opening benami accounts to siphon off huge sum of money has been adopted?
Yes, we have already identified some cases. And the identification process is on.
Are there any big names?
I won’t be able to name the companies at this stage. But yes, some prominent companies have also come into our radar.
Fraud-hit Satyam computer has no outstanding tax dues. Yet, chairman of Central Board of Direct Taxes (CBDT) N B Singh, who is retiring today, said that tax liabilities would be known only after a year when I-T department’s investigation will end. While talking to ET, Mr Singh talked about how the department was proceeding the investigation in Satyam computer’s case.
Excerpts
Let’s begin by asking you the I-T department’s ongoing investigation on Satyam fraud. Any outcome as yet?
It’s too early to get any results. We have centralised the investigation under one commissioner in Hyderabad. He and his team are now scrutinising each and every document related to the case. There are hundreds of benami (anonymous) bank accounts which were floated by the Satyam promoters. We attached some of them in the past.
What’s the time-line of the investigation process? Will it be wrapped up by two to three months?
No, it will take time. It’s a fraud of a huge scale, and it has been going on for about eight years or so. We will need at least a year to complete our investigation.
But a potential buyer of Satyam computer would like to know the company’s tax liabilities. Is there any tax outstanding? Also, if there has been an inflated profit as former Satyam chairman Ramalinga Raju claimed in his confession letter, will you return the excess tax amount?
If a new company takes over Satyam computer, it must take all liabilities as well. Those will include tax liabilities too. There has been no outstanding tax dues of Satyam, but we will be able to ascertain the quantum of liabilities only after a year or so when our investigation is over. Regarding any inflated profit being shown, I won’t go by the statement of R Raju. The statement must have been issued at his own convenience.
In 2002, you spotted some I-T frauds in Satyam, but did not act swiftly.
It’s very easy to point out the lapses. Yes, we did not go continue our investigation beyond a point as we did not anticipate such huge fraud.
But have you found any other instances where modus operandi of opening benami accounts to siphon off huge sum of money has been adopted?
Yes, we have already identified some cases. And the identification process is on.
Are there any big names?
I won’t be able to name the companies at this stage. But yes, some prominent companies have also come into our radar.
Friday, January 30, 2009
(L&T) kept its cards close to its chest
Engineering major Larsen & Toubro (L&T) kept its cards close to its chest on the issue of management control in beleaguered Satyam, saying it would go by the decision of the IT firm's board.
"What is going to happen on Satyam will be decided by the Satyam board. Our action will depend on what the board decides. They will decide how they go forward," L&T Board Member J P Nayak said amid reports that the engineering major has approached the Government on taking management control.
Nayak, however, said that the company has not written to the Government on this, nor has it asked for any advance ruling from SEBI on the issue of open offer.
"L&T has so far invested Rs 650-670 crore in the company for acquiring a 12 per cent stake," L&T Executive Vice-President (Finance) R Shankar Raman said.
Raman said L&T had acquired a four per cent stake in Satyam in three to four days before December 31.
The company has increased its stake in the Satyam to 12 per cent through open market operations in January.
It has been reported that Spice Corp of BK Modi is also interested in acquiring Satyam.
"What is going to happen on Satyam will be decided by the Satyam board. Our action will depend on what the board decides. They will decide how they go forward," L&T Board Member J P Nayak said amid reports that the engineering major has approached the Government on taking management control.
Nayak, however, said that the company has not written to the Government on this, nor has it asked for any advance ruling from SEBI on the issue of open offer.
"L&T has so far invested Rs 650-670 crore in the company for acquiring a 12 per cent stake," L&T Executive Vice-President (Finance) R Shankar Raman said.
Raman said L&T had acquired a four per cent stake in Satyam in three to four days before December 31.
The company has increased its stake in the Satyam to 12 per cent through open market operations in January.
It has been reported that Spice Corp of BK Modi is also interested in acquiring Satyam.
Govt cos, MNCs may help Satyam with $400-mn deals
31 Jan 2009,, ET Bureau
NEW DELHI: Satyam Computer Services may be poised to win large contracts worth around $400 million in revenues from some government-run entities and multi-national firms, giving the scandal-tainted firm a welcome breather at a time it is vulnerable to large-scale customer defections.
A top Satyam official, who asked not to be named, said the company was the front-runner for large contracts from the Indian Railways, BSNL, Vizag Steel Plant and the Indian Mint, as it was the lowest bidder.
The contracts from these entities are for tasks such as data management, information infrastructure management and deploying new applications. Rival bidders eyeing these contracts include IBM, Accenture, CSC, TCS, Infosys and Wipro.
Some of Satyam’s overseas clients are also likely to increase their engagement with it, the official said, listing a $100-million multi-year contract from a large global telecom company that is close to being finalised and additional work from a US-based technology company and a Swiss-based vending services company. The official declined to name the companies.
The news comes at a time some of Satyam’s customers have terminated contracts, after its future was called into question, following revelations of massive fraud by its founder and former chairman B Ramalinga Raju. However, Satyam officials say most of the company’s clients have been supportive, although some of them have put in place back-up plans.
One of Satyam’s biggest customers, General Electric, has said it will continue to work with the company, while Canadian conglomerate Bombardier and UK’s frozen food maker Birds Eye Iglo have also assured it that they will continue projects
.
“We have very good reaction from customers. They do not have issues with Satyam’s delivery capability or its employees. Satyam is a frontrunner for government contracts due to its better financial bid and on technical soundness. As far as global clients are concerned, their only worry is business continuity and we are assuring them on that front,” the official said.
Bombardier, which set up a Bombardier India Engineering Centre at Satyam in 2006 and ramped it up to 285 employees from 25 in two years, said in a letter to the company sent via the Indian High Commission in Ottawa: “Bombardier has always been satisfied with the work of Satyam associates. We look forward to maintaining our relationship with Satyam.”
Birds Eye Iglo, which had switched to Satyam from Capgemini in 2008, plans to continue using the Indian company for its supply chain management-related processes.
NEW DELHI: Satyam Computer Services may be poised to win large contracts worth around $400 million in revenues from some government-run entities and multi-national firms, giving the scandal-tainted firm a welcome breather at a time it is vulnerable to large-scale customer defections.
A top Satyam official, who asked not to be named, said the company was the front-runner for large contracts from the Indian Railways, BSNL, Vizag Steel Plant and the Indian Mint, as it was the lowest bidder.
The contracts from these entities are for tasks such as data management, information infrastructure management and deploying new applications. Rival bidders eyeing these contracts include IBM, Accenture, CSC, TCS, Infosys and Wipro.
Some of Satyam’s overseas clients are also likely to increase their engagement with it, the official said, listing a $100-million multi-year contract from a large global telecom company that is close to being finalised and additional work from a US-based technology company and a Swiss-based vending services company. The official declined to name the companies.
The news comes at a time some of Satyam’s customers have terminated contracts, after its future was called into question, following revelations of massive fraud by its founder and former chairman B Ramalinga Raju. However, Satyam officials say most of the company’s clients have been supportive, although some of them have put in place back-up plans.
One of Satyam’s biggest customers, General Electric, has said it will continue to work with the company, while Canadian conglomerate Bombardier and UK’s frozen food maker Birds Eye Iglo have also assured it that they will continue projects
.
“We have very good reaction from customers. They do not have issues with Satyam’s delivery capability or its employees. Satyam is a frontrunner for government contracts due to its better financial bid and on technical soundness. As far as global clients are concerned, their only worry is business continuity and we are assuring them on that front,” the official said.
Bombardier, which set up a Bombardier India Engineering Centre at Satyam in 2006 and ramped it up to 285 employees from 25 in two years, said in a letter to the company sent via the Indian High Commission in Ottawa: “Bombardier has always been satisfied with the work of Satyam associates. We look forward to maintaining our relationship with Satyam.”
Birds Eye Iglo, which had switched to Satyam from Capgemini in 2008, plans to continue using the Indian company for its supply chain management-related processes.
Four big clients likely to desert Satyam
31 Jan 2009,
MUMBAI: Troubles keep mounting for Satyam Computer Services. Four of its large clients, Citigroup, Merrill Lynch, Novartis and GlaxoSmithKline Five facts about Satyam
(GSK), are in talks to move their business from the Hyderabad-based company to other Indian IT firms. These clients contribute over $200 million to Satyam’s topline.
In response to queries about the contribution of Citi, Merrill, Novartis, and GSK’s contracts to Satyam’s revenues and the impact on the company if they were to move out, a Satyam spokesperson said: “We don’t comment on individual contracts. However, we believe that none of these are material.”
It is learnt that Citigroup, the second-largest client of Satyam contributing to over $60 million in revenue, is in the process of moving away part of its contract to other IT vendors like Wipro and TCS. A senior Citi official confirmed this, on condition of anonymity.
It is understood that small parts of the application, maintenance and development (AMD) work is being moved away. However, when contacted by ET, a Citigroup spokesperson said: “Satyam is among several vendors providing IT Services to Citi. We are unable to share any more details regarding the nature of this relationship due to reasons of confidentiality.” TCS and Wipro too declined to comment on individual clients.
Wipro is likely to benefit the most from this as it had recently acquired Citi Technology Services (CTS), Citi’s captive providing critical technology infrastructure support, development and deployment of strategic software applications.
It is also learnt that Merrill Lynch, which contributes close to $50 million in revenues to Satyam, is sending in its own team of experts to the company’s headquarters. This team will meet senior officials next week to assess the situation. A Merrill spokesperson declined to comment.
State Farm Insurance, Satyam’s oldest and among its top 10 clients contributing around $50 million per year, had announced in January 2009 that it had terminated its contract with Satyam. A person familiar with the deal said TCS and Patni were the front-runners to acquire this contract.
Satyam provided AMD services as well package implementation to the US-based insurance company. When contacted, Patni declined to comment on the development.
Novartis and GSK are also believed to be shifting some of their business away from Satyam. Industry sources told ET that Novartis was likely to move its business to its back office in Hyderabad.
GSK contributes around $30-40 million per year to Satyam and is one of the top 25 clients of the company. A Satyam employee, on conditions of anonymity, said that should Novartis and GSK shift their business, it would deal a big blow to the company.
ET Bureau
MUMBAI: Troubles keep mounting for Satyam Computer Services. Four of its large clients, Citigroup, Merrill Lynch, Novartis and GlaxoSmithKline Five facts about Satyam
(GSK), are in talks to move their business from the Hyderabad-based company to other Indian IT firms. These clients contribute over $200 million to Satyam’s topline.
In response to queries about the contribution of Citi, Merrill, Novartis, and GSK’s contracts to Satyam’s revenues and the impact on the company if they were to move out, a Satyam spokesperson said: “We don’t comment on individual contracts. However, we believe that none of these are material.”
It is learnt that Citigroup, the second-largest client of Satyam contributing to over $60 million in revenue, is in the process of moving away part of its contract to other IT vendors like Wipro and TCS. A senior Citi official confirmed this, on condition of anonymity.
It is understood that small parts of the application, maintenance and development (AMD) work is being moved away. However, when contacted by ET, a Citigroup spokesperson said: “Satyam is among several vendors providing IT Services to Citi. We are unable to share any more details regarding the nature of this relationship due to reasons of confidentiality.” TCS and Wipro too declined to comment on individual clients.
Wipro is likely to benefit the most from this as it had recently acquired Citi Technology Services (CTS), Citi’s captive providing critical technology infrastructure support, development and deployment of strategic software applications.
It is also learnt that Merrill Lynch, which contributes close to $50 million in revenues to Satyam, is sending in its own team of experts to the company’s headquarters. This team will meet senior officials next week to assess the situation. A Merrill spokesperson declined to comment.
State Farm Insurance, Satyam’s oldest and among its top 10 clients contributing around $50 million per year, had announced in January 2009 that it had terminated its contract with Satyam. A person familiar with the deal said TCS and Patni were the front-runners to acquire this contract.
Satyam provided AMD services as well package implementation to the US-based insurance company. When contacted, Patni declined to comment on the development.
Novartis and GSK are also believed to be shifting some of their business away from Satyam. Industry sources told ET that Novartis was likely to move its business to its back office in Hyderabad.
GSK contributes around $30-40 million per year to Satyam and is one of the top 25 clients of the company. A Satyam employee, on conditions of anonymity, said that should Novartis and GSK shift their business, it would deal a big blow to the company.
ET Bureau
Scam-hit Satyam unlikely to exist: Gartner
31 Jan 2009,
BANGALORE: The scam-stricken Satyam Computer is unlikely to exist in its current form, according to a study by research firm Gartner.
It is expected to discontinue some of its businesses, service lines or cease to exist in certain geographies by 2010. The study indicated that even the name Satyam may not be around by that time, as the company is expected to undergo a complete change, in ownership and organizationally.
Satyam’s ability to sign on new clients during 2009 has significantly diminished, says the study. ‘‘In addition, it will be challenged to invest in client engagements, staff developments or R&D, all critical elements for IT services,’’ said Gartner’s V-P for research, Frances Karamouzis.
For the study, Gartner interviewed representatives of over 30 top Fortune 500 clients of Satyam, 20 top non-Satyam clients, the board of Satyam and CEOs of six tier-I Indian IT firms including TCS, Wipro, Infosys Technologies, Cognizant and HCL.
Many respondents felt that the job of a new chief executive officer or COO or CFO of Satyam will be extremely demanding as holding the existing clients is going to be a tough task. Also, with a monthly payroll of more than $125 million and dire cash flow issues, the future does not bode well for the company.
BANGALORE: The scam-stricken Satyam Computer is unlikely to exist in its current form, according to a study by research firm Gartner.
It is expected to discontinue some of its businesses, service lines or cease to exist in certain geographies by 2010. The study indicated that even the name Satyam may not be around by that time, as the company is expected to undergo a complete change, in ownership and organizationally.
Satyam’s ability to sign on new clients during 2009 has significantly diminished, says the study. ‘‘In addition, it will be challenged to invest in client engagements, staff developments or R&D, all critical elements for IT services,’’ said Gartner’s V-P for research, Frances Karamouzis.
For the study, Gartner interviewed representatives of over 30 top Fortune 500 clients of Satyam, 20 top non-Satyam clients, the board of Satyam and CEOs of six tier-I Indian IT firms including TCS, Wipro, Infosys Technologies, Cognizant and HCL.
Many respondents felt that the job of a new chief executive officer or COO or CFO of Satyam will be extremely demanding as holding the existing clients is going to be a tough task. Also, with a monthly payroll of more than $125 million and dire cash flow issues, the future does not bode well for the company.
Just how many clients does Satyam have?
Saturday January 31,
Satyam Computer Services (SATYAM.BO : 54.05 +4.2)' new board has dismissed the view that its employee numbers are inflated. However, a more pertinent question that should bother the embattled firm's shareholders and potential suitors is this just how many clients does Satyam really have?
Satyam's new board is striving hard to assure not only clients but also investors and potential suitors that it's 'business as usual' at the firm. Since the drama began after Satyam founder B Ramalinga Raju confessed to massive fraud on January 7, board members have been positive about client retention and, over the last week, have stressed that only 'two key clients' have exited.
As per its 2007-08 annual report, Satyam had 617 active clients. As many as 34 new customers came on board during the first quarter of 2008-09 and 33 new clients in the second quarter. This means that Satyam's client base should have been 684 by September 2008. However, corporate filings with the New York Stock Exchange (NYSE) till January 16 reflected that Satyam had 690 clients across 20 distinct industries and 65 countries, which includes 185 Fortune 500 firms, as of September 30, 2008. This already reflects a small difference in the firm's client base numbers.
Moreover, some of Satyam's much-touted 185 Fortune 500 clients like Coca Cola, Nestle, BP and Cigna are reviewing, closely monitoring or devising contingency plans regarding their existing relationships with Satyam. Australian telecom and media giant Telstra has kept Satyam out of its vendor consolidation exercise, whereby it aims to trim its vendors from the current four to two.
Global retailing giant Tesco, ranked 51 on the Fortune 500 list, said Satyam works on a couple of small engagements with Tesco. "We are concerned about what's happened at Satyam, and are keeping a close watch on the developments. We will make appropriate decisions on the continuation of our relationship with Satyam in due course," Ray Simon, a senior official in Tesco's IT, HR services and corporate communications department.
"This is a marketplace and everybody is talking to everybody," is how Vineet Nayar, CEO of HCL Technologies (HCLTECH.NS : 116.1 +6.95), had described the pro-activeness of other IT vendor including HCL towards Satyam clients.
Like in Telstra's case, Satyam is also likely to lose out on vendor consolidation exercises being undertaken aggressively by several companies as a belt-tightening measure in response to the global economic slowdown.
Meanwhile, US-based Bombardier is learnt to have sent a letter to Satyam's Board member Tarun Das stating continuance of contract. "The company has always been very satisfied with the work of Satyam's 285 associates. We look forward to maintaining relationship with Satyam," said the letter. Other Satyam clients like GE, Cisco and Malaysian Airlines have expressed their confidence in Satyam's operations. Incidentally, GE and Satyam have a joint venture partnership, called Satyam GE Software Services (P) Limited.
Satyam's profile in its NYSE filings till January 16 stuck to its 690-strong clientele. However, the intimation to the US exchange after another board meeting on January 17, had a different profile of the company all the specific client numbers had been dropped.
Financial Express
Satyam Computer Services (SATYAM.BO : 54.05 +4.2)' new board has dismissed the view that its employee numbers are inflated. However, a more pertinent question that should bother the embattled firm's shareholders and potential suitors is this just how many clients does Satyam really have?
Satyam's new board is striving hard to assure not only clients but also investors and potential suitors that it's 'business as usual' at the firm. Since the drama began after Satyam founder B Ramalinga Raju confessed to massive fraud on January 7, board members have been positive about client retention and, over the last week, have stressed that only 'two key clients' have exited.
As per its 2007-08 annual report, Satyam had 617 active clients. As many as 34 new customers came on board during the first quarter of 2008-09 and 33 new clients in the second quarter. This means that Satyam's client base should have been 684 by September 2008. However, corporate filings with the New York Stock Exchange (NYSE) till January 16 reflected that Satyam had 690 clients across 20 distinct industries and 65 countries, which includes 185 Fortune 500 firms, as of September 30, 2008. This already reflects a small difference in the firm's client base numbers.
Moreover, some of Satyam's much-touted 185 Fortune 500 clients like Coca Cola, Nestle, BP and Cigna are reviewing, closely monitoring or devising contingency plans regarding their existing relationships with Satyam. Australian telecom and media giant Telstra has kept Satyam out of its vendor consolidation exercise, whereby it aims to trim its vendors from the current four to two.
Global retailing giant Tesco, ranked 51 on the Fortune 500 list, said Satyam works on a couple of small engagements with Tesco. "We are concerned about what's happened at Satyam, and are keeping a close watch on the developments. We will make appropriate decisions on the continuation of our relationship with Satyam in due course," Ray Simon, a senior official in Tesco's IT, HR services and corporate communications department.
"This is a marketplace and everybody is talking to everybody," is how Vineet Nayar, CEO of HCL Technologies (HCLTECH.NS : 116.1 +6.95), had described the pro-activeness of other IT vendor including HCL towards Satyam clients.
Like in Telstra's case, Satyam is also likely to lose out on vendor consolidation exercises being undertaken aggressively by several companies as a belt-tightening measure in response to the global economic slowdown.
Meanwhile, US-based Bombardier is learnt to have sent a letter to Satyam's Board member Tarun Das stating continuance of contract. "The company has always been very satisfied with the work of Satyam's 285 associates. We look forward to maintaining relationship with Satyam," said the letter. Other Satyam clients like GE, Cisco and Malaysian Airlines have expressed their confidence in Satyam's operations. Incidentally, GE and Satyam have a joint venture partnership, called Satyam GE Software Services (P) Limited.
Satyam's profile in its NYSE filings till January 16 stuck to its 690-strong clientele. However, the intimation to the US exchange after another board meeting on January 17, had a different profile of the company all the specific client numbers had been dropped.
Financial Express
Fidelity raises stake in Satyam to 6.8 pct
MUMBAI (Reuters) - Fraud-hit Satyam Computer Services said on Friday asset manager Fidelity Investments had raised its holding to 6.79 percent in the Indian outsourcer, which would potentially make it the second largest stakeholder.
Fidelity, which held 3.17 percent, bought 3.62 percent on Wednesday, Satyam said in filing to the stock exchange.
Engineering conglomerate Larsen & Toubro (LT.NS : 690.25 +29.2), which trebled its holding in Satyam last week to 12 percent, is the largest stakeholder, exchange data showed.
Satyam has been struggling for survival after its founder quit as chairman this month disclosing profits were falsified for years.
Stock exchange data late on Wednesday showed two Fidelity funds had bought a 2.5 percent stake in Satyam in block deals for $18.7 million
Fidelity, which held 3.17 percent, bought 3.62 percent on Wednesday, Satyam said in filing to the stock exchange.
Engineering conglomerate Larsen & Toubro (LT.NS : 690.25 +29.2), which trebled its holding in Satyam last week to 12 percent, is the largest stakeholder, exchange data showed.
Satyam has been struggling for survival after its founder quit as chairman this month disclosing profits were falsified for years.
Stock exchange data late on Wednesday showed two Fidelity funds had bought a 2.5 percent stake in Satyam in block deals for $18.7 million
L&T's Satyam gamble
26 Jan 2009, ET Bureau
Faced with capital losses, many investors tend to start buying more and more of the same stock or stocks, the justification being it would bring down the average cost of acquisition. And there would be a neat pile at the other end when prices rally.
Engineering and construction major Larsen & Toubro (L&T) seems to be doing the same with its investments in fraud-hit Satyam Computer Services. As Satyam’s share has tanked after the accounting/funds-siphoning fraud came to light, L&T’s investment in the company has risen, from 4% to about 12%. According to estimates, L&T’s average acquisition cost is down from Rs 157 a share to about Rs 80 now.
Against that, the Satyam stock closed at Rs 39 last week. The investments could well fetch a bonanza later, but as of now it raises some questions. When retail investors average down their acquisition costs in face of losses they are putting own money at risk.
In contrast, increased investment in Satyam by L&T board is tantamount to committing shareholder money. Since L&T is a professionally managed company, one would like to know what the minority shareholders think of such heavy investment in Satyam which may even go into liquidation. Sure, L&T would have taken its large investors into confidence, but the non-institutional shareholders that have a near 50% ownership in it need some explanations.
Besides averaging down acquisition cost, L&T’s intent is to acquire a significant ownership in Satyam to be able to have a say in its management. That is a justifiable action, but should L&T not have waited a while, at least till a better picture of the state of affairs at Satyam was available? L&T’s shareholders would also like to know if the management has asked some of Satyam’s large clients whether they would stay with the company if it were acquired by someone else.
For, as things stand, Satyam’s clients would themselves be answerable to their respective stakeholders. Therefore, L&T could simply be throwing good money after bad. Of course, there is also a reasonable chance it could turn out to be a master stroke. The point is that L&T needs to take its shareholders along in such decisions. It should at least publicise the facts so that those who do not agree with the management can exit.
Faced with capital losses, many investors tend to start buying more and more of the same stock or stocks, the justification being it would bring down the average cost of acquisition. And there would be a neat pile at the other end when prices rally.
Engineering and construction major Larsen & Toubro (L&T) seems to be doing the same with its investments in fraud-hit Satyam Computer Services. As Satyam’s share has tanked after the accounting/funds-siphoning fraud came to light, L&T’s investment in the company has risen, from 4% to about 12%. According to estimates, L&T’s average acquisition cost is down from Rs 157 a share to about Rs 80 now.
Against that, the Satyam stock closed at Rs 39 last week. The investments could well fetch a bonanza later, but as of now it raises some questions. When retail investors average down their acquisition costs in face of losses they are putting own money at risk.
In contrast, increased investment in Satyam by L&T board is tantamount to committing shareholder money. Since L&T is a professionally managed company, one would like to know what the minority shareholders think of such heavy investment in Satyam which may even go into liquidation. Sure, L&T would have taken its large investors into confidence, but the non-institutional shareholders that have a near 50% ownership in it need some explanations.
Besides averaging down acquisition cost, L&T’s intent is to acquire a significant ownership in Satyam to be able to have a say in its management. That is a justifiable action, but should L&T not have waited a while, at least till a better picture of the state of affairs at Satyam was available? L&T’s shareholders would also like to know if the management has asked some of Satyam’s large clients whether they would stay with the company if it were acquired by someone else.
For, as things stand, Satyam’s clients would themselves be answerable to their respective stakeholders. Therefore, L&T could simply be throwing good money after bad. Of course, there is also a reasonable chance it could turn out to be a master stroke. The point is that L&T needs to take its shareholders along in such decisions. It should at least publicise the facts so that those who do not agree with the management can exit.
L&T seeks management control of Satyam
New Delhi January 30, 2009
It’s official now. Engineering giant Larsen & Toubro (L&T) has sought management control of Satyam.
In the first official acknowledgment of L&T’s interest in taking over Satyam, the Department of Corporate Affairs (DCA) has said in a note, written in the last week of January, to the finance ministry that L&T Chairman A M Naik has expressed interest in acquiring a sufficient stake in Satyam to take management control.
The note quotes Naik as saying that L&T eventually wants to run the company, for which it is in the process of getting internal approvals.
L&T executives said they had no comment to offer.
Naik, according to the communication, met the DCA secretary on January 20 in Delhi to convey his willingness to acquire Satyam. The communication also details the action taken by the DCA on the Satyam scam.
The DCA communication is significant as L&T has never officially acknowledged that it would like to acquire and control Satyam. The company, which increased its stake in Satyam from 4.48 per cent to 12 per cent on January 23 through open market operations merely said it did so to protect its investments by bringing down the average cost of acquisition.
There was speculation that L&T may increase its stake to 15 per cent and go in for an open offer. However, the company has been silent on the issue.
L&T has been seen by the market as one of the possible bidders to take over Satyam. The others which have shown interest include iGate, Tech Mahindra and HCL Technologies.
Although L&T did not want to comment, sources familiar with the developments said the sharp increase in Satyam’s share price would not have taken place if L&T did not emerge as a serious interested buyer and a potential saviour of the company.
The sources also said it is difficult to quantify the value of Satyam net of non-existent reserves, non-availability of a reconstructed balance sheet, un-quantified liabilities in the form of class action suits and other claims such as employee benefit provisions, lost key clients and employees and loss of a top management team.
On reports of L&T seeking a waiver of open offer pricing norms, the sources said the normal Sebi guidelines for the valuation of an open offer price based on the average price of the preceding six months cannot be logically applied to a company whose promoters perpetuated the biggest corporate fraud in Indian history, and the balance sheet of which included significant assets/margins that are non-existent.
The sources said the disintegration of Satyam would benefit some overseas firms who are already soliciting their key client accounts. Indian IT firms have been avoiding doing so till clarity emerges on the government’s and the interim board’s decisions on the way forward.
It’s official now. Engineering giant Larsen & Toubro (L&T) has sought management control of Satyam.
In the first official acknowledgment of L&T’s interest in taking over Satyam, the Department of Corporate Affairs (DCA) has said in a note, written in the last week of January, to the finance ministry that L&T Chairman A M Naik has expressed interest in acquiring a sufficient stake in Satyam to take management control.
The note quotes Naik as saying that L&T eventually wants to run the company, for which it is in the process of getting internal approvals.
L&T executives said they had no comment to offer.
Naik, according to the communication, met the DCA secretary on January 20 in Delhi to convey his willingness to acquire Satyam. The communication also details the action taken by the DCA on the Satyam scam.
The DCA communication is significant as L&T has never officially acknowledged that it would like to acquire and control Satyam. The company, which increased its stake in Satyam from 4.48 per cent to 12 per cent on January 23 through open market operations merely said it did so to protect its investments by bringing down the average cost of acquisition.
There was speculation that L&T may increase its stake to 15 per cent and go in for an open offer. However, the company has been silent on the issue.
L&T has been seen by the market as one of the possible bidders to take over Satyam. The others which have shown interest include iGate, Tech Mahindra and HCL Technologies.
Although L&T did not want to comment, sources familiar with the developments said the sharp increase in Satyam’s share price would not have taken place if L&T did not emerge as a serious interested buyer and a potential saviour of the company.
The sources also said it is difficult to quantify the value of Satyam net of non-existent reserves, non-availability of a reconstructed balance sheet, un-quantified liabilities in the form of class action suits and other claims such as employee benefit provisions, lost key clients and employees and loss of a top management team.
On reports of L&T seeking a waiver of open offer pricing norms, the sources said the normal Sebi guidelines for the valuation of an open offer price based on the average price of the preceding six months cannot be logically applied to a company whose promoters perpetuated the biggest corporate fraud in Indian history, and the balance sheet of which included significant assets/margins that are non-existent.
The sources said the disintegration of Satyam would benefit some overseas firms who are already soliciting their key client accounts. Indian IT firms have been avoiding doing so till clarity emerges on the government’s and the interim board’s decisions on the way forward.
Now Hindujas join race for Satyam
MUMBAI: A day after non-resident industrialist BK Modi announced his intention to join the race to takeover Satyam, the Hinduja Group joins the fray Five facts about Satyam to acquire the fraud-hit Satyam Computer Services. The group has sent a formal communication to the investment bankers of Satyam expressing its interest in Hyderabad-based software exporter. A top Hinduja Group official confirmed the development to ET.
Hinduja Global Solutions, the new industry arm of the Hinduja Group, has $130 million of cash in books to mount the takeover bid. “If a proper and transparent bidding process is followed, we are definitely interested in Satyam.
We are looking at expanding our current operations to outsourcing and infotech related services. Satyam provides us with that opportunity,” the official, who is a member of HGSL board, told ET on condition of anonymity.
“We see a strategic fit with our existing business. We already have funds in our books. Besides, our promoters (the Hindujas) have also promised to contribute additional funds, if we make a bid. We are already in conversation with our bankers to raise additional funds if required,” he added. K Thiagarajan, COO of Hinduja TMT, was associated with Satyam as director and senior VP.
However, industry sources are not certain about the Hinduja Group’s chance of winning Satyam, which is expected to be sold out in two months. An industry expert said that the group is not an aggressive bidder, if its past record is anything to go by.
It had made an attempt to purchase Hutchison’s stake in Hutchison Essar but was outbid by Vodafone two-year-ago. Larsen and Toubro, which holds a 12% stake in Satyam, is considered to be the front-runner for the company. It is also lobbying hard with its institutional shareholders and the government to win their support on this transaction. iGATE, Tech Mahindra and Essar Group have already evinced interest in buying parts of Satyam.
But others like Tech Mahindra are waiting for a clear picture on the liabilities. Says Tech Mahindra’s president (international operations) CP Gurnani: “We are uninterested in Satyam until we get the re-stated balance sheet and the quantification of the legal liability.”
The other potential suitor iGATE had earlier stated that they were looking at buying Satyam in parts. However, given the fact that the Satyam new management categorically stated that Satyam would not be sold in parts, Phaneesh Murthy, CEO, iGATE told ET: “At this time, we are in a wait and watch mode.
We are assuming that since the company is for sale, they will have the new financial statements soon. Our next step and decision will be based on those statements.”
A Essar official said the company is interested only in the BPO arm of Satyam
31 Jan 2009, ET Bureau
Hinduja Global Solutions, the new industry arm of the Hinduja Group, has $130 million of cash in books to mount the takeover bid. “If a proper and transparent bidding process is followed, we are definitely interested in Satyam.
We are looking at expanding our current operations to outsourcing and infotech related services. Satyam provides us with that opportunity,” the official, who is a member of HGSL board, told ET on condition of anonymity.
“We see a strategic fit with our existing business. We already have funds in our books. Besides, our promoters (the Hindujas) have also promised to contribute additional funds, if we make a bid. We are already in conversation with our bankers to raise additional funds if required,” he added. K Thiagarajan, COO of Hinduja TMT, was associated with Satyam as director and senior VP.
However, industry sources are not certain about the Hinduja Group’s chance of winning Satyam, which is expected to be sold out in two months. An industry expert said that the group is not an aggressive bidder, if its past record is anything to go by.
It had made an attempt to purchase Hutchison’s stake in Hutchison Essar but was outbid by Vodafone two-year-ago. Larsen and Toubro, which holds a 12% stake in Satyam, is considered to be the front-runner for the company. It is also lobbying hard with its institutional shareholders and the government to win their support on this transaction. iGATE, Tech Mahindra and Essar Group have already evinced interest in buying parts of Satyam.
But others like Tech Mahindra are waiting for a clear picture on the liabilities. Says Tech Mahindra’s president (international operations) CP Gurnani: “We are uninterested in Satyam until we get the re-stated balance sheet and the quantification of the legal liability.”
The other potential suitor iGATE had earlier stated that they were looking at buying Satyam in parts. However, given the fact that the Satyam new management categorically stated that Satyam would not be sold in parts, Phaneesh Murthy, CEO, iGATE told ET: “At this time, we are in a wait and watch mode.
We are assuming that since the company is for sale, they will have the new financial statements soon. Our next step and decision will be based on those statements.”
A Essar official said the company is interested only in the BPO arm of Satyam
31 Jan 2009, ET Bureau
PwC auditors accused of assisting Satyam fraud
Two employees arrested in India as scandal deepens
Written by Rosalie Marshall 30 Jan 2009
Two PricewaterhouseCoopers (PwC) auditors stand accused of helping Satyam chairman Ramalinga Raju to inflate the company's profits by 50.4bn rupees (£682m) in a scandal that is now commonly referred to as 'India's Enron'.
Subramani Gopala Krishnan and Talluri Srinivas are currently in police custody in India and have been suspended from their normal duties at PwC.
A number of PwC employees have been flown out to Hyderabad to help deal with the publicity and imminent legal battle.
Meanwhile, Raju and his brother Rama - another Satyam co-founder - and chief financial officer Srinivas Vadlamani are still awaiting trial and face life in prison if convicted.
Speculation has been rife since Raju first admitted the fraud at the beginning of the year that a number of other firms must have collaborated with him to tamper with the balance sheet.
At the time of his arrest, Vadlamani claimed that PwC had not pointed out any deficiencies in the financial reports.
A number of media reports claim that the PwC auditors have confessed to their involvement in the scam, but the confessions have been seen only in police reports and not in any formal documents submitted to the court.
PwC has been the official Satyam auditor since 2000, but said earlier this month that its audit reports on the company could no longer be relied on. PwC's audit head in India resigned on Tuesday.
A Satyam spokesman said that, because the investigation is ongoing, it is inappropriate to comment at this time.
Satyam has hired Goldman Sachs as its new investment bankers to advise the company on how to deal with the situation, and to look for buyers for the firm. Some reports have suggested that up to seven companies are interested in buying the outsourcing giant.
Written by Rosalie Marshall 30 Jan 2009
Two PricewaterhouseCoopers (PwC) auditors stand accused of helping Satyam chairman Ramalinga Raju to inflate the company's profits by 50.4bn rupees (£682m) in a scandal that is now commonly referred to as 'India's Enron'.
Subramani Gopala Krishnan and Talluri Srinivas are currently in police custody in India and have been suspended from their normal duties at PwC.
A number of PwC employees have been flown out to Hyderabad to help deal with the publicity and imminent legal battle.
Meanwhile, Raju and his brother Rama - another Satyam co-founder - and chief financial officer Srinivas Vadlamani are still awaiting trial and face life in prison if convicted.
Speculation has been rife since Raju first admitted the fraud at the beginning of the year that a number of other firms must have collaborated with him to tamper with the balance sheet.
At the time of his arrest, Vadlamani claimed that PwC had not pointed out any deficiencies in the financial reports.
A number of media reports claim that the PwC auditors have confessed to their involvement in the scam, but the confessions have been seen only in police reports and not in any formal documents submitted to the court.
PwC has been the official Satyam auditor since 2000, but said earlier this month that its audit reports on the company could no longer be relied on. PwC's audit head in India resigned on Tuesday.
A Satyam spokesman said that, because the investigation is ongoing, it is inappropriate to comment at this time.
Satyam has hired Goldman Sachs as its new investment bankers to advise the company on how to deal with the situation, and to look for buyers for the firm. Some reports have suggested that up to seven companies are interested in buying the outsourcing giant.
Thursday, January 29, 2009
I-T dept ignored Raju's diversion of funds
30 Jan 2009
HYDERABAD: The income-tax department appears to have turned a blind eye seven years ago to diversion of funds from Satyam to members of the Raju family. A deputy director of investigation in IT found fixed deposits worth Rs 19.5 crore in banks on which tax had not been deducted at source.
The fixed deposit accounts were in the names of various family members of chairman Ramalinga Raju including his mother B Appalanarsamma, father Satyanarayana Raju and other relatives.
The IT department started a probe when it found a large number of form 15H (wherein senior citizens seek exemption from TDS) filings that were associated with accounts without proper documentation, according to an IT report submitted in 2002.
The Times of India in its edition of January 15 had reported that the authorities were taking a another look at the 2002 investigation report against the promoters of Satyam, which had unearthed more than 50 bank accounts in the names of Raju's family members and alleged fronts.
The officer who was carrying out the investigation had found that the funds had originated from Satyam and reached the banks through layers of transactions.
Instead of nailing the Raju camp which was involved in this embezzlement, the IT department transferred the officer, Siripurapu Padmaja, and asked her replacement to produce another report. But even the report of the second officer, Bhaskar Goswami, which was described as a supplementary one, supported Padmaja's findings.
By this time Raju's men, having got wind of the investigation, approached the IT department and offered to pay tax on the FDs, which they were allowed to do. There was no effort to involve the economic intelligence agencies, Sebi, RoC or the department of company affairs in what was a more serious crime than income-tax evasion.
"Raju was too big a guy in 2002. He was the face of a new emerging Hyderabad. The then AP chief minister Chandrababu Naidu had put him on the same dais along with President Clinton even as heads of top industry houses sat in the the audience. Who could have pointed a finger at him then?" said an IT official.
When this correspondent spoke to A K Basu, who was then director of investigation (and is now a chief commissioner), his response was, "It's so long ago...Now the matter is being looked at at the level of Delhi...It would be inappropriate for me to comment."
P A Chowdhury, then director general of investigation and now an insurance ombudsman after retirement said, "I won't be able to tell you what we did with the report. That's confidential."
HYDERABAD: The income-tax department appears to have turned a blind eye seven years ago to diversion of funds from Satyam to members of the Raju family. A deputy director of investigation in IT found fixed deposits worth Rs 19.5 crore in banks on which tax had not been deducted at source.
The fixed deposit accounts were in the names of various family members of chairman Ramalinga Raju including his mother B Appalanarsamma, father Satyanarayana Raju and other relatives.
The IT department started a probe when it found a large number of form 15H (wherein senior citizens seek exemption from TDS) filings that were associated with accounts without proper documentation, according to an IT report submitted in 2002.
The Times of India in its edition of January 15 had reported that the authorities were taking a another look at the 2002 investigation report against the promoters of Satyam, which had unearthed more than 50 bank accounts in the names of Raju's family members and alleged fronts.
The officer who was carrying out the investigation had found that the funds had originated from Satyam and reached the banks through layers of transactions.
Instead of nailing the Raju camp which was involved in this embezzlement, the IT department transferred the officer, Siripurapu Padmaja, and asked her replacement to produce another report. But even the report of the second officer, Bhaskar Goswami, which was described as a supplementary one, supported Padmaja's findings.
By this time Raju's men, having got wind of the investigation, approached the IT department and offered to pay tax on the FDs, which they were allowed to do. There was no effort to involve the economic intelligence agencies, Sebi, RoC or the department of company affairs in what was a more serious crime than income-tax evasion.
"Raju was too big a guy in 2002. He was the face of a new emerging Hyderabad. The then AP chief minister Chandrababu Naidu had put him on the same dais along with President Clinton even as heads of top industry houses sat in the the audience. Who could have pointed a finger at him then?" said an IT official.
When this correspondent spoke to A K Basu, who was then director of investigation (and is now a chief commissioner), his response was, "It's so long ago...Now the matter is being looked at at the level of Delhi...It would be inappropriate for me to comment."
P A Chowdhury, then director general of investigation and now an insurance ombudsman after retirement said, "I won't be able to tell you what we did with the report. That's confidential."
Satyam likely to get new owner in 2 months
30 Jan 2009
HYDERABAD: The management of Satyam Computer Services, fighting to boost morale in the beleaguered company, has told its employees that the sale of the company will be completed in about two months. This is the first time the company has given an indication of the time needed to complete the process.
“We have been informing our employees through webinars that investment bankers are evaluating strategic options, which include possibilities of a change in management control. We need to keep them informed as we are aware that employees will wait and watch to see how events unfold and keep their options open. The process of change in management control, if any, will take at least 60 days from now,” said a source privy to the development.
A person close to the company’s new government-appointed board also confirmed that its main task would be to find a new strategic investor to run the troubled software company. “This board has been put in place as a temporary measure to stabilise the company. A strategic investor has to be found soon, possibly within a two-month timeframe,” the person said.
All suitors, including L&T, will have to take part in the bidding process which will be overseen by the new board, he added.
The move was taken in order to quell rumours and gossip and settle uncertainty amongst employees. Morale plummeted in this once-proud software major after its founder B Ramalinga Raju confessed to falsifying accounts for several years on January 7. Its share price plunged, customers threatened to walk out and the government took the unprecedented step of superseding its board and appointing a new one.
A number of suitors have expressed interest in acquiring Satyam. The most aggressive among them has been Larsen & Toubro (L&T), which has already acquired 12% in the company. L&T has also been heavily lobbying with institutions, lenders, the government and the newly-appointed Satyam board that it be allowed a chance.
The board, in its meeting last week, said that it will follow a proper and transparent process and appointed Goldman Sachs and Avendus Advisors to manage it.
Meanwhile, institutional investors on the board of L&T are likely to press the management about its plans for Satyam. The engineering major has already pumped in Rs 700 crore to get around 12% of Satyam.
On Thursday, there was a strong buzz that some of the intermediaries had picked up a little less than 2% in Satyam (which would take L&T’s holding in Satyam to over 14%), but there was no confirmation on this. The L&T board is meeting on Friday in Mumbai.
While L&T’s average cost per Satyam share is pegged at around Rs 80, the company is sitting on mark-to-market losses of around Rs 250 crore. “After making such large investments in Satyam, it’s important for L&T that it gets control of the IT company. L&T already has the first-mover advantage and has made its intent clear by picking up the stake. Our main concern now is that L&T should protect its investments and the only way to do it is to ensure that it gets control of Satyam,” said a senior official with a leading financial institution.
HYDERABAD: The management of Satyam Computer Services, fighting to boost morale in the beleaguered company, has told its employees that the sale of the company will be completed in about two months. This is the first time the company has given an indication of the time needed to complete the process.
“We have been informing our employees through webinars that investment bankers are evaluating strategic options, which include possibilities of a change in management control. We need to keep them informed as we are aware that employees will wait and watch to see how events unfold and keep their options open. The process of change in management control, if any, will take at least 60 days from now,” said a source privy to the development.
A person close to the company’s new government-appointed board also confirmed that its main task would be to find a new strategic investor to run the troubled software company. “This board has been put in place as a temporary measure to stabilise the company. A strategic investor has to be found soon, possibly within a two-month timeframe,” the person said.
All suitors, including L&T, will have to take part in the bidding process which will be overseen by the new board, he added.
The move was taken in order to quell rumours and gossip and settle uncertainty amongst employees. Morale plummeted in this once-proud software major after its founder B Ramalinga Raju confessed to falsifying accounts for several years on January 7. Its share price plunged, customers threatened to walk out and the government took the unprecedented step of superseding its board and appointing a new one.
A number of suitors have expressed interest in acquiring Satyam. The most aggressive among them has been Larsen & Toubro (L&T), which has already acquired 12% in the company. L&T has also been heavily lobbying with institutions, lenders, the government and the newly-appointed Satyam board that it be allowed a chance.
The board, in its meeting last week, said that it will follow a proper and transparent process and appointed Goldman Sachs and Avendus Advisors to manage it.
Meanwhile, institutional investors on the board of L&T are likely to press the management about its plans for Satyam. The engineering major has already pumped in Rs 700 crore to get around 12% of Satyam.
On Thursday, there was a strong buzz that some of the intermediaries had picked up a little less than 2% in Satyam (which would take L&T’s holding in Satyam to over 14%), but there was no confirmation on this. The L&T board is meeting on Friday in Mumbai.
While L&T’s average cost per Satyam share is pegged at around Rs 80, the company is sitting on mark-to-market losses of around Rs 250 crore. “After making such large investments in Satyam, it’s important for L&T that it gets control of the IT company. L&T already has the first-mover advantage and has made its intent clear by picking up the stake. Our main concern now is that L&T should protect its investments and the only way to do it is to ensure that it gets control of Satyam,” said a senior official with a leading financial institution.
Raju floated 325 companies: SFIO
30 Jan 2009
HYDERABAD: The Serious Fraud Investigation Office (SFIO) has found that Ramalinga Raju floated about 325 companies to carry out various transactions.
The fresh list has more companies than the initial projection made by the I-T department, according to which Raju had promoted 275 companies.
The SFIO has now ordered the Registrar of Stamps and Properties to examine all land transactions pertaining to the 325 companies. The investigating agency has also asked the registrar to submit a report listing out details of the companies by the first week of February.
“More than 300 companies were raised by Ramalinga Raju and his family members across the state and other regions for carrying out transactions,” said Registrar of Stamps and Properties commissioner and inspector general B Aravinda Reddy.
This could perhaps mean that Raju’s land dealings extended beyond Hyderabad and Andhra Pradesh. At present, it is believed that Raju and his family own large tracts of land mainly in Ranga Reddy district, his native West Godavari district and Visakhapatnam district.
Three agencies, the Criminal Investigation Department (CID), the income-tax department and the SFIO, investigating the Rs 7,000-crore Satyam financial scam, are focusing on the land holdings of Ramalinga Raju and his family.
According to the list furnished by the I-T department, only 110 companies promoted by Ramalinga Raju have registered land dealings. Of the 325 companies, 40 other biotech, agro-farm, power and real-estate companies have been floated under the Maytas banner alone.
Officials from the Registrar of Stamps and Properties said that not all companies raised by the promoters of the Satyam group were for carrying out real-estate transactions. While only companies registered with the Registrar of Companies have to give a declaration of purpose at the time of registration, such a mandate need not be fulfilled when property is registered, Mr Reddy said.
HYDERABAD: The Serious Fraud Investigation Office (SFIO) has found that Ramalinga Raju floated about 325 companies to carry out various transactions.
The fresh list has more companies than the initial projection made by the I-T department, according to which Raju had promoted 275 companies.
The SFIO has now ordered the Registrar of Stamps and Properties to examine all land transactions pertaining to the 325 companies. The investigating agency has also asked the registrar to submit a report listing out details of the companies by the first week of February.
“More than 300 companies were raised by Ramalinga Raju and his family members across the state and other regions for carrying out transactions,” said Registrar of Stamps and Properties commissioner and inspector general B Aravinda Reddy.
This could perhaps mean that Raju’s land dealings extended beyond Hyderabad and Andhra Pradesh. At present, it is believed that Raju and his family own large tracts of land mainly in Ranga Reddy district, his native West Godavari district and Visakhapatnam district.
Three agencies, the Criminal Investigation Department (CID), the income-tax department and the SFIO, investigating the Rs 7,000-crore Satyam financial scam, are focusing on the land holdings of Ramalinga Raju and his family.
According to the list furnished by the I-T department, only 110 companies promoted by Ramalinga Raju have registered land dealings. Of the 325 companies, 40 other biotech, agro-farm, power and real-estate companies have been floated under the Maytas banner alone.
Officials from the Registrar of Stamps and Properties said that not all companies raised by the promoters of the Satyam group were for carrying out real-estate transactions. While only companies registered with the Registrar of Companies have to give a declaration of purpose at the time of registration, such a mandate need not be fulfilled when property is registered, Mr Reddy said.
Satyam scam: Separate entity must to avoid legal tangle
30 Jan 2009, ET Bureau
NEW DELHI: The government on Thursday said it cannot protect the acquirer of Satyam Computer Services from the fraud-hit software exporter’s legal liability in the aftermath of a merger.
To avoid taking the legal liability of the Hyderabad-based company arising from the law suits filed by its investors abroad, the successful suitor will have to retain it as a separate entity after acquisition, said an official with the ministry of corporate affairs who asked not to be named.
Companies with small stakes could get management control of Satyam with the support of other shareholders. But so long as the company remains a separate entity, all its liabilities will be vested in itself, he said. That is, any company that takes management control of Satyam or make Satyam into a subsidiary will not have to bear the software exporter’s legal liabilities.
“Under the law, a company is a person with perpetual succession. Managements may come and go, but the company’s liabilities remain with it till the time it is wound up. However, in the case of a merger, the company ceases to exist and, therefore, its liabilities are transferred to the acquirer,” the official said.
Engineering giant L&T, which has an information technology arm called L&T Infotech, and Mahindra group’s software arm Tech Mahindra have shown interest in taking management control of Satyam.
While consolidating parent-subsidiary balance sheets, only crystallised liability will show in the parent’s books. Legal liability of Satyam is not crystallised yet and it is only a distant possibility, said the official.
NEW DELHI: The government on Thursday said it cannot protect the acquirer of Satyam Computer Services from the fraud-hit software exporter’s legal liability in the aftermath of a merger.
To avoid taking the legal liability of the Hyderabad-based company arising from the law suits filed by its investors abroad, the successful suitor will have to retain it as a separate entity after acquisition, said an official with the ministry of corporate affairs who asked not to be named.
Companies with small stakes could get management control of Satyam with the support of other shareholders. But so long as the company remains a separate entity, all its liabilities will be vested in itself, he said. That is, any company that takes management control of Satyam or make Satyam into a subsidiary will not have to bear the software exporter’s legal liabilities.
“Under the law, a company is a person with perpetual succession. Managements may come and go, but the company’s liabilities remain with it till the time it is wound up. However, in the case of a merger, the company ceases to exist and, therefore, its liabilities are transferred to the acquirer,” the official said.
Engineering giant L&T, which has an information technology arm called L&T Infotech, and Mahindra group’s software arm Tech Mahindra have shown interest in taking management control of Satyam.
While consolidating parent-subsidiary balance sheets, only crystallised liability will show in the parent’s books. Legal liability of Satyam is not crystallised yet and it is only a distant possibility, said the official.
Spice Group ready to put $408 mn for 51% stake in Satyam
30 Jan 2009, REUTERS
NEW DELHI: Spice Group is ready to invest about Rs 2000 crore ($408 million) in Satyam Computer Services and wants to buy a 51 percent stake in the fraud-scarred outsourcer, Spice Chairman B.K. Modi said.
"That is our desire," Modi told reporters on Friday. "We want the money to go inside the company. For that they will have to make a preferential issue.
If I buy shares from the market, the money will not go into the company." Modi said the group had submitted on Thursday its proposal to the government-appointed new board of Satyam.
"We have also talked to two, three board members informally." Spice Group has diversified operations including mobile handset manufacturing, mobile software development, back-office operations, entertainment and retail.
Last year, it sold its mobile telecoms services business to Idea Cellular for Rs 2176 crore. "That is one of the sources (for funding). But we have other channels," Modi said, adding that the group was capable to fund a possible deal internally.
NEW DELHI: Spice Group is ready to invest about Rs 2000 crore ($408 million) in Satyam Computer Services and wants to buy a 51 percent stake in the fraud-scarred outsourcer, Spice Chairman B.K. Modi said.
"That is our desire," Modi told reporters on Friday. "We want the money to go inside the company. For that they will have to make a preferential issue.
If I buy shares from the market, the money will not go into the company." Modi said the group had submitted on Thursday its proposal to the government-appointed new board of Satyam.
"We have also talked to two, three board members informally." Spice Group has diversified operations including mobile handset manufacturing, mobile software development, back-office operations, entertainment and retail.
Last year, it sold its mobile telecoms services business to Idea Cellular for Rs 2176 crore. "That is one of the sources (for funding). But we have other channels," Modi said, adding that the group was capable to fund a possible deal internally.
Wednesday, January 28, 2009
No action so far on Satyam
US market regulator Securities and Exchange Commission on Wednesday said it is yet to take any "disciplinary action" in the Satyam scandal, but did not rule out appropriate regulatory and enforcement steps to protect the investors.
The New York Stock Exchange listed Indian IT major Satyam Computer's founder and then Chairman Ramalinga Raju had shocked the world three weeks ago on January 7 with the disclosure of a massive financial wrongdoing to the tune of over a billion dollar at the company.
This was followed by the NYSE suspending trading in Satyam shares the very same day. Trading resumed on January 12 after assessing the company's regulatory filings and its suitability to remain listed at the bourses.
Asked how the US regulator was responding to accounting fraud at Satyam, John Heine, Deputy Director at the SEC Office of Public Affairs, told PTI in an emailed statement, "There has been no public disciplinary action by the SEC (for example a court case or administrative proceedings) involving Satyam."
Separately, about a dozen class action lawsuits have been already filed in the various US courts on behalf of thousands of American investors in the Indian company, which is also listed in the US and Europe.
The scam is already being probed by various Indian authorities, including by the country's market regulator Securities and Exchange Board of India (SEBI).
SEC is believed to be in touch with its Indian counterpart SEBI on the developments in the probe.
The New York Stock Exchange listed Indian IT major Satyam Computer's founder and then Chairman Ramalinga Raju had shocked the world three weeks ago on January 7 with the disclosure of a massive financial wrongdoing to the tune of over a billion dollar at the company.
This was followed by the NYSE suspending trading in Satyam shares the very same day. Trading resumed on January 12 after assessing the company's regulatory filings and its suitability to remain listed at the bourses.
Asked how the US regulator was responding to accounting fraud at Satyam, John Heine, Deputy Director at the SEC Office of Public Affairs, told PTI in an emailed statement, "There has been no public disciplinary action by the SEC (for example a court case or administrative proceedings) involving Satyam."
Separately, about a dozen class action lawsuits have been already filed in the various US courts on behalf of thousands of American investors in the Indian company, which is also listed in the US and Europe.
The scam is already being probed by various Indian authorities, including by the country's market regulator Securities and Exchange Board of India (SEBI).
SEC is believed to be in touch with its Indian counterpart SEBI on the developments in the probe.
Larsen and Toubro to raise stake in Satyam
Engineering and infrastructure major Larsen and Toubro (L&T) on Tuesday said it might further raise its stake in the scam-tainted Satyam Computers.
"Overall, we are only trying to improve our situation," company chairman AM Naik told a news channel. "If nothing else, to really make L&T Infotech bigger by our stake in Satyam," Naik said.
Incidentally, L&T Infotech's revenues are expected to touch $500 million (Rs.25 billion) this fiscal.
The company's chief financial officer YM Deosthalee reiterated the view, saying: “We need to have a reasonable stake in the company."
Last week, L&T had raised its stake in Satyam to 12 per cent from 4 per cent. It also believes the stake hike would ensure a seat on the IT firm's board.
However, Deosthalee also said "going forward, there will be complications”.
“There are legal risks associated with Satyam,” Deosthalee said, adding, “This company has significant embedded value and has demonstrated track record.”
There will be a number of challenges in front of L&T, one of them being convincing investors about enhancing its software business, which forms less than 10 per cent of its revenue.
Satyam faces liabilities in the form of US class action lawsuits after former chairman B Ramalinga Raju admitted to inflating earnings for "several years".
“We believe margins as part of the disclosure are not necessarily the real margins,” Deosthalee said.
Earlier, Tarun Das, a member on the newly-formed Satyam board, had said: "We have looked at the legal issues which the company faces because of the class actions suits filed in America and have appointed legal advisors to deal with that."
"Overall, we are only trying to improve our situation," company chairman AM Naik told a news channel. "If nothing else, to really make L&T Infotech bigger by our stake in Satyam," Naik said.
Incidentally, L&T Infotech's revenues are expected to touch $500 million (Rs.25 billion) this fiscal.
The company's chief financial officer YM Deosthalee reiterated the view, saying: “We need to have a reasonable stake in the company."
Last week, L&T had raised its stake in Satyam to 12 per cent from 4 per cent. It also believes the stake hike would ensure a seat on the IT firm's board.
However, Deosthalee also said "going forward, there will be complications”.
“There are legal risks associated with Satyam,” Deosthalee said, adding, “This company has significant embedded value and has demonstrated track record.”
There will be a number of challenges in front of L&T, one of them being convincing investors about enhancing its software business, which forms less than 10 per cent of its revenue.
Satyam faces liabilities in the form of US class action lawsuits after former chairman B Ramalinga Raju admitted to inflating earnings for "several years".
“We believe margins as part of the disclosure are not necessarily the real margins,” Deosthalee said.
Earlier, Tarun Das, a member on the newly-formed Satyam board, had said: "We have looked at the legal issues which the company faces because of the class actions suits filed in America and have appointed legal advisors to deal with that."
PriceWaterhouse suspends Satyam-linked duo
PriceWaterhouse has suspended two of its employees for their alleged involvement in the fraud at Satyam Computer Services, the Indian arm of the global auditing firm said on Tuesday.
"In light of recent allegations, chief relationship partner S Gopalakrishnan and engagement leader Srinivas Talluri have been suspended, pending completion of investigations into the Satyam matter," the company said in a statement in Hyderabad.
PriceWaterhouse is the Indian arm of the US-based PricewaterhouseCoopers (PwC).
While the duo remains suspended, neither will play any part in client matters. They will also undertake no activities on behalf of the Indian arm.
"The two staffers have been advised to cooperate with the ongoing inquiries regarding Satyam. As investigations proceed, we will continue to evaluate the situation," the statement noted.
Gopalkrishnan and Talluri were arrested Jan 23 by the Crime Investigation Department (CID) of the Andhra Pradesh police for their alleged role in the Rs.70-billion (Rs.7,000/$1.43 billion) Satyam fraud under section 120b (criminal conspiracy) of the Indian Penal Code (IPC).
A city court Jan 24 remanded the two to judicial custody till Feb 6.
The CID Jan 13 raided the Hyderabad office of PriceWaterhouse and seized several documents and records relating to Satyam accounts.
"In light of recent allegations, chief relationship partner S Gopalakrishnan and engagement leader Srinivas Talluri have been suspended, pending completion of investigations into the Satyam matter," the company said in a statement in Hyderabad.
PriceWaterhouse is the Indian arm of the US-based PricewaterhouseCoopers (PwC).
While the duo remains suspended, neither will play any part in client matters. They will also undertake no activities on behalf of the Indian arm.
"The two staffers have been advised to cooperate with the ongoing inquiries regarding Satyam. As investigations proceed, we will continue to evaluate the situation," the statement noted.
Gopalkrishnan and Talluri were arrested Jan 23 by the Crime Investigation Department (CID) of the Andhra Pradesh police for their alleged role in the Rs.70-billion (Rs.7,000/$1.43 billion) Satyam fraud under section 120b (criminal conspiracy) of the Indian Penal Code (IPC).
A city court Jan 24 remanded the two to judicial custody till Feb 6.
The CID Jan 13 raided the Hyderabad office of PriceWaterhouse and seized several documents and records relating to Satyam accounts.
300 companies created to divert funds: Gupta
28 Jan 2009
NEW DELHI: The government said on Wednesday that Satyam Computer's disgraced founder Ramalinga Raju created a network of about 300 companies and diverted funds from one company to another in a complex but carefully planned process.
"There has been an issue of siphoning (off of) funds. This is what we have understood from the information we have received from (the) RoC, SFIO and various other agencies (probing the Satyam case)," Union minister of corporate affairs Prem Chand Gupta said in a TV interview.
Gupta said, "Our information is that there was a network of almost 300 companies and funds were diverted from one company to (another) and then to (a) third."
"So like this, it was a very complex process he had adopted," Gupta said, but added that "unless the investigation is complete we can't say what exactly happened".
Asked if it meant a carefully planned process to avoid detection, Gupta said, "...Well, to some extent I would agree with you that it was a carefully planned operation, but ... still what we personally feel it was a complex process."
Asked if other people might also be involved in the scam, Gupta said, "I feel there are other people involved ..."
"But if you go into the systematic inspection and investigation of the structure of the company, you come to the conclusion that the whole thing (revolves) around the Raju family only."
On the employee count, Gupta said there were reports that 10,000 ghost employees have been identified but the issue is being looked into by those specially appointed CA firms, KPMG and Deloitte.
"They are looking into this and I think the fact would come before all of us... It is difficult to verify because Satyam has operations in more than 50 places..."
If there are fake employees, no salary will be paid against their names, the minister said
NEW DELHI: The government said on Wednesday that Satyam Computer's disgraced founder Ramalinga Raju created a network of about 300 companies and diverted funds from one company to another in a complex but carefully planned process.
"There has been an issue of siphoning (off of) funds. This is what we have understood from the information we have received from (the) RoC, SFIO and various other agencies (probing the Satyam case)," Union minister of corporate affairs Prem Chand Gupta said in a TV interview.
Gupta said, "Our information is that there was a network of almost 300 companies and funds were diverted from one company to (another) and then to (a) third."
"So like this, it was a very complex process he had adopted," Gupta said, but added that "unless the investigation is complete we can't say what exactly happened".
Asked if it meant a carefully planned process to avoid detection, Gupta said, "...Well, to some extent I would agree with you that it was a carefully planned operation, but ... still what we personally feel it was a complex process."
Asked if other people might also be involved in the scam, Gupta said, "I feel there are other people involved ..."
"But if you go into the systematic inspection and investigation of the structure of the company, you come to the conclusion that the whole thing (revolves) around the Raju family only."
On the employee count, Gupta said there were reports that 10,000 ghost employees have been identified but the issue is being looked into by those specially appointed CA firms, KPMG and Deloitte.
"They are looking into this and I think the fact would come before all of us... It is difficult to verify because Satyam has operations in more than 50 places..."
If there are fake employees, no salary will be paid against their names, the minister said
Hyderabad court dismisses bail pleas of Rajus, Srinivas
28 Jan 2009- PTI
HYDERABAD: A city court on Wednesday dismissed the bail applications of Satyam's disgraced founder Ramalinga Raju, former managing director Rama Raju and former CFO Vadlamani Srinivas.
The 6th additional chief metropolitan magistrate also posted for Thursday, hearing on separate petitions relating to the bail and police custody of SRSR Holding general manager Gopala Krishna Raju.
SRSR Holding is promoted by Ramalinga Raju's family and Raju held stake in Satyam through this company.
Ramalinga Raju, Rama Raju and Srinivas are in judicial custody till January 31.
The court, on Tuesday, had reserved its verdict on the bail pleas of three held for fraud, putting it off for Wednesday.
Gopala Krishna, SRSR Holding general manager, was arrested on January 22. CID had moved the court of additional chief metropolitan magistrate to secure his custody.
The bail petition of PricewaterhouseCooper executives S Gopalakrishnan and T Srinivas is up for hearing on January 29.
HYDERABAD: A city court on Wednesday dismissed the bail applications of Satyam's disgraced founder Ramalinga Raju, former managing director Rama Raju and former CFO Vadlamani Srinivas.
The 6th additional chief metropolitan magistrate also posted for Thursday, hearing on separate petitions relating to the bail and police custody of SRSR Holding general manager Gopala Krishna Raju.
SRSR Holding is promoted by Ramalinga Raju's family and Raju held stake in Satyam through this company.
Ramalinga Raju, Rama Raju and Srinivas are in judicial custody till January 31.
The court, on Tuesday, had reserved its verdict on the bail pleas of three held for fraud, putting it off for Wednesday.
Gopala Krishna, SRSR Holding general manager, was arrested on January 22. CID had moved the court of additional chief metropolitan magistrate to secure his custody.
The bail petition of PricewaterhouseCooper executives S Gopalakrishnan and T Srinivas is up for hearing on January 29.
Raju traded in land meant for poor
28 Jan 2009,
HYDERABAD: Assigned land in Andhra Pradesh is defined as land given to the landless poor by the government as part of its land reforms exercise. But Satyam Computers’ former chairman Ramalinga Raju - in a patently illegal action - bought more than hundred acres of assigned land in Bahadurpally village in Greater Hyderabad, close to where the company’s global headquarters is located.
The land was bought in the name of Satyam Institute of E-Business which was officially represented by Ramalinga Raju. What is more, after a while, Ramalinga Raju also sold most of this illegal land in his possession to Dr Reddy’s Biosciences Ltd.
These facts have come to light in the last three weeks after the Satyam scam broke out, and revenue authorities are now investigating whether the global headquarters of the company is itself located on assigned land.
The government wanting to be seen as taking strong action has slapped notices on both Ramalinga Raju and Dr Reddy’s Biosciences Limited under rule 3 of AP Assigned Lands (Prohibition of transfers) Act, 1977.
As per the law, the government can resume all the assigned land under Satyam’s possession and that which the organisation has sold. The notices were issued by the tehsildar on January 7, the day Ramalinga Raju confessed to his fraud.
Revenue officials told TOI on Tuesday that Ramalinga Raju had purchased 134 acres of assigned land in Bahadurpally village in 2000 but sold it to Dr Reddy’s Biosciences Ltd in 2004. According to revenue authorities, as per ‘pahani’ (land records) of 1951-52, the chunk of land (survey number 227/2/13 to 227/2/23) measuring 153.35 acres was recorded as ‘poramboke’ or sarkari land. In the ‘pattedar column’ the names of Murali Lal and four others were shown as cultivating the land. It was to them or their successors that the land was “assigned” (redistributed).
Out of this 153.35 acres in the survey, Satyam bought 134 acres in the year 2000 from the heirs of Murari Lal.
The names of the person who sold this non- transferable land could not be ascertained. What is more interesting, this illegal sale was registered in the name of Satyam E-Business Institute. “That’s not surprising, this is a widely prevalent practice in Andhra Pradesh. The registration department will have no qualms in registering the sale of even Charminar,” an analyst said. But the sale of this land to Dr Reddy’s Biosciences was not registered.
Satyam Technology Centre, the global headquarters of Satyam in Bahadurpally village extends over an area of 120 acres in survey no. 62/1. “We are checking the pahanis (land records) to verify whether it also stands on assigned land,” a revenue department official said.
HYDERABAD: Assigned land in Andhra Pradesh is defined as land given to the landless poor by the government as part of its land reforms exercise. But Satyam Computers’ former chairman Ramalinga Raju - in a patently illegal action - bought more than hundred acres of assigned land in Bahadurpally village in Greater Hyderabad, close to where the company’s global headquarters is located.
The land was bought in the name of Satyam Institute of E-Business which was officially represented by Ramalinga Raju. What is more, after a while, Ramalinga Raju also sold most of this illegal land in his possession to Dr Reddy’s Biosciences Ltd.
These facts have come to light in the last three weeks after the Satyam scam broke out, and revenue authorities are now investigating whether the global headquarters of the company is itself located on assigned land.
The government wanting to be seen as taking strong action has slapped notices on both Ramalinga Raju and Dr Reddy’s Biosciences Limited under rule 3 of AP Assigned Lands (Prohibition of transfers) Act, 1977.
As per the law, the government can resume all the assigned land under Satyam’s possession and that which the organisation has sold. The notices were issued by the tehsildar on January 7, the day Ramalinga Raju confessed to his fraud.
Revenue officials told TOI on Tuesday that Ramalinga Raju had purchased 134 acres of assigned land in Bahadurpally village in 2000 but sold it to Dr Reddy’s Biosciences Ltd in 2004. According to revenue authorities, as per ‘pahani’ (land records) of 1951-52, the chunk of land (survey number 227/2/13 to 227/2/23) measuring 153.35 acres was recorded as ‘poramboke’ or sarkari land. In the ‘pattedar column’ the names of Murali Lal and four others were shown as cultivating the land. It was to them or their successors that the land was “assigned” (redistributed).
Out of this 153.35 acres in the survey, Satyam bought 134 acres in the year 2000 from the heirs of Murari Lal.
The names of the person who sold this non- transferable land could not be ascertained. What is more interesting, this illegal sale was registered in the name of Satyam E-Business Institute. “That’s not surprising, this is a widely prevalent practice in Andhra Pradesh. The registration department will have no qualms in registering the sale of even Charminar,” an analyst said. But the sale of this land to Dr Reddy’s Biosciences was not registered.
Satyam Technology Centre, the global headquarters of Satyam in Bahadurpally village extends over an area of 120 acres in survey no. 62/1. “We are checking the pahanis (land records) to verify whether it also stands on assigned land,” a revenue department official said.
Monday, January 26, 2009
Tension between Raju brothers over Maytas control
26 Jan 2009
HYDERABAD: Although they are in jail together, investigators have discovered simmering tension between Ramalinga Raju and his younger brother Rama Raju. It's learned that Rama Raju has told cops that he did not script the Satyam scandal and that he was unnecessarily dragged into the matter.
The cops have also got an indication that there were problems between Rama Raju and his nephews, particularly Teja Raju, the elder son of Ramalinga Raju. "The story of a closely knit family standing through thick and thin is by and large a myth," said a source who knows the Raju family well.
The major cause of tension between the two brothers and the uncle and nephew was over the control of Maytas Infra and Maytas Properties, which are the two companies that Satyam wanted to take over last month.
Maytas Infra was founded - as Satyam Constructions - in 1988 by the three Raju brothers. While the middle brother, Suryanarayana Raju, just held shares in the company, Ramalinga Raju (better known as Raju) and Rama Raju (better known as Ramu) were both shareholders and formed part of the management of the company.
The trouble began when Ramalinga's elder son Teja was inducted as a director in the company in 2001, on turning 22. Matters came to a head in late 2006 when Ramalinga Raju persuaded his two brothers, Rama and Suryanarayana, to step down from the directorship of the company - a position that they had been holding since inception.
What further complicated matters was the public issue of the company (by now renamed Maytas Infra). On the eve of this maiden issue in mid-2007, Ramalinga was able to convert this company into virtually a Teja Raju enterprise. Teja was named promoter of Maytas Infra and the promotor group included Ramalinga Raju, wife Nandini, younger son Rama Raju (junior), Teja's wife Divya and Anjali, the minor daughter of Teja. A clutch of 42 companies - in which Teja or Nandini were the major shareholders - also became part of the promoting company, much to the chagrin of the other Raju brothers.
Simultaneously Ramalinga Raju started aggressively pushing Maytas Properties, a company he had founded in 2005 for his younger son, Rama Raju (junior). A public issue was also planned for the company, which has a land bank of 6,800 acres.
"Rama Raju was in awe of his elder brother Ramalinga and was virtually a shadow of the latter though the age difference between the two is merely four years. Lately, he had started resenting his elder brother's plans but could never muster enough courage to counter him publicly," says a source.
Middle brother Suryanarayana, the least educated of the three, too, could not resist Ramalinga, who had come to have a towering public image. The empire was built largely due to the planning of Ramalinga, although Suryanarayana dealt with land affairs.
Presently, the police is looking for Suryanarayana but he is absconding.
Interestingly, in Satyam, the company that has now slipped out of the hands of the Raju duo, the two were almost equal partners. Raju and Ramu owned shares in Satyam through SRSR Holdings. But in this holding company, Raju and his wife collectively held 47.60% of the shares against 52.40% held by Ramu and his wife Radha. "This might explain why Raju was focussed on Maytas because that's where his future lay," an analyst said.
HYDERABAD: Although they are in jail together, investigators have discovered simmering tension between Ramalinga Raju and his younger brother Rama Raju. It's learned that Rama Raju has told cops that he did not script the Satyam scandal and that he was unnecessarily dragged into the matter.
The cops have also got an indication that there were problems between Rama Raju and his nephews, particularly Teja Raju, the elder son of Ramalinga Raju. "The story of a closely knit family standing through thick and thin is by and large a myth," said a source who knows the Raju family well.
The major cause of tension between the two brothers and the uncle and nephew was over the control of Maytas Infra and Maytas Properties, which are the two companies that Satyam wanted to take over last month.
Maytas Infra was founded - as Satyam Constructions - in 1988 by the three Raju brothers. While the middle brother, Suryanarayana Raju, just held shares in the company, Ramalinga Raju (better known as Raju) and Rama Raju (better known as Ramu) were both shareholders and formed part of the management of the company.
The trouble began when Ramalinga's elder son Teja was inducted as a director in the company in 2001, on turning 22. Matters came to a head in late 2006 when Ramalinga Raju persuaded his two brothers, Rama and Suryanarayana, to step down from the directorship of the company - a position that they had been holding since inception.
What further complicated matters was the public issue of the company (by now renamed Maytas Infra). On the eve of this maiden issue in mid-2007, Ramalinga was able to convert this company into virtually a Teja Raju enterprise. Teja was named promoter of Maytas Infra and the promotor group included Ramalinga Raju, wife Nandini, younger son Rama Raju (junior), Teja's wife Divya and Anjali, the minor daughter of Teja. A clutch of 42 companies - in which Teja or Nandini were the major shareholders - also became part of the promoting company, much to the chagrin of the other Raju brothers.
Simultaneously Ramalinga Raju started aggressively pushing Maytas Properties, a company he had founded in 2005 for his younger son, Rama Raju (junior). A public issue was also planned for the company, which has a land bank of 6,800 acres.
"Rama Raju was in awe of his elder brother Ramalinga and was virtually a shadow of the latter though the age difference between the two is merely four years. Lately, he had started resenting his elder brother's plans but could never muster enough courage to counter him publicly," says a source.
Middle brother Suryanarayana, the least educated of the three, too, could not resist Ramalinga, who had come to have a towering public image. The empire was built largely due to the planning of Ramalinga, although Suryanarayana dealt with land affairs.
Presently, the police is looking for Suryanarayana but he is absconding.
Interestingly, in Satyam, the company that has now slipped out of the hands of the Raju duo, the two were almost equal partners. Raju and Ramu owned shares in Satyam through SRSR Holdings. But in this holding company, Raju and his wife collectively held 47.60% of the shares against 52.40% held by Ramu and his wife Radha. "This might explain why Raju was focussed on Maytas because that's where his future lay," an analyst said.
Satyam board to meet on Jan 27
26 Jan 2009, PTI
HYDERABAD: The six-member board of Satyam will meet on Tuesday instead of Monday. "There will be no board meeting today... the board will meet tomorrow," a Satyam spokesperson said, declining to give any reason for deferring the meeting.
The new Satyam board was to finalize the issues pertaining to appointment of a CEO and a CFO, besides working capital arrangement.
HYDERABAD: The six-member board of Satyam will meet on Tuesday instead of Monday. "There will be no board meeting today... the board will meet tomorrow," a Satyam spokesperson said, declining to give any reason for deferring the meeting.
The new Satyam board was to finalize the issues pertaining to appointment of a CEO and a CFO, besides working capital arrangement.
Satyam's Rs 5,000cr cash disappeared in a quarter
26 Jan 2009, PTI
NEW DELHI: Bank statements show that Satyam had funds of over Rs 5,000 crore as of September 2008, but by January 2009 when company founder Ramalinga Raju admitted to fudging accounts the IT firm could have been left with just Rs 200 crore of maturable fixed deposits.
The scam-tainted firm had short-term or long-term fixed deposits of over Rs 3,300 crore, and another Rs 300 crore of accrued interest, in addition to current account deposits of over Rs 1,800 crore, as per the last auditing done by Price WaterHouse for the quarter ending September 2008.
The company is believed not to have made any term deposit after mid-February 2007, though it did make a few short-term or margin money deposits, amounting to about Rs 10 crore till September 2008.
The auditing was done on the basis of statements sent by a host of banks detailing the fixed long-term deposits, along with maturity, ranging between October 2008 and February 2009.
With such a cash and deposits position, the IT company should not have had any worry on the cash front and a concern to mobilise resources for the payment of salaries to staff.
In his statement on January 7, Raju had said that he was disclosing the manipulation of accounts after failing in his last-ditch effort to salvage Satyam through acquisition of the two Maytas firms on December 16.
However, the bank statements, on which PWC relied for the auditing, reveal that more than 90% of the total deposits had matured by January 7.
Price WaterHouse, whose two top officials were arrested by Andhra Pradesh Police yesterday, is understood to have prepared its defence on the basis of these documents, besides foreign exchange earnings and receivables of Satyam, as per the export clearance documents of Software Technology Parks of India.
According to the available information pertaining to deposits of the company, Satyam had a total long-term deposits of over Rs 3,300 crore for maturity during the October- February period, while its short-term deposits to mature till October 2011 were about Rs 10 crore.
According to the statements, deposits were largely held with HDFC Bank, HSBC, ICICI Bank, BNP Paribas and Citibank, while the current accounts were mostly with Bank of Baroda.
PW officials are understood to have given these documents to probing agencies to make clear their role while maintaining that they had gone by the book for the purpose of auditing.
While no comments could be obtained from PW on the details of the bank deposits and cash position with the company, sources in the know said that it would be impossible to forge all the bank statements that were addressed to the auditor but procured by the Satyam management for auditing.
After arrest of its two partners yesterday, the auditing firm said it has fully cooperated over the last fortnight in all inquiries and "has provided all the documents called for by the Indian authorities" and promised continued cooperation.
"We greatly regret that two Price WaterHouse partners have been detained today for further questioning. We do not know the basis for them being detained," said a statement from Price Waterhouse, the statutory auditors of Satyam Computer.
PW's Chief Relationship Partner S Gopalakrishnan and Engagement Leader Srinivas Talluri are now in judicial custody pending investigation.
NEW DELHI: Bank statements show that Satyam had funds of over Rs 5,000 crore as of September 2008, but by January 2009 when company founder Ramalinga Raju admitted to fudging accounts the IT firm could have been left with just Rs 200 crore of maturable fixed deposits.
The scam-tainted firm had short-term or long-term fixed deposits of over Rs 3,300 crore, and another Rs 300 crore of accrued interest, in addition to current account deposits of over Rs 1,800 crore, as per the last auditing done by Price WaterHouse for the quarter ending September 2008.
The company is believed not to have made any term deposit after mid-February 2007, though it did make a few short-term or margin money deposits, amounting to about Rs 10 crore till September 2008.
The auditing was done on the basis of statements sent by a host of banks detailing the fixed long-term deposits, along with maturity, ranging between October 2008 and February 2009.
With such a cash and deposits position, the IT company should not have had any worry on the cash front and a concern to mobilise resources for the payment of salaries to staff.
In his statement on January 7, Raju had said that he was disclosing the manipulation of accounts after failing in his last-ditch effort to salvage Satyam through acquisition of the two Maytas firms on December 16.
However, the bank statements, on which PWC relied for the auditing, reveal that more than 90% of the total deposits had matured by January 7.
Price WaterHouse, whose two top officials were arrested by Andhra Pradesh Police yesterday, is understood to have prepared its defence on the basis of these documents, besides foreign exchange earnings and receivables of Satyam, as per the export clearance documents of Software Technology Parks of India.
According to the available information pertaining to deposits of the company, Satyam had a total long-term deposits of over Rs 3,300 crore for maturity during the October- February period, while its short-term deposits to mature till October 2011 were about Rs 10 crore.
According to the statements, deposits were largely held with HDFC Bank, HSBC, ICICI Bank, BNP Paribas and Citibank, while the current accounts were mostly with Bank of Baroda.
PW officials are understood to have given these documents to probing agencies to make clear their role while maintaining that they had gone by the book for the purpose of auditing.
While no comments could be obtained from PW on the details of the bank deposits and cash position with the company, sources in the know said that it would be impossible to forge all the bank statements that were addressed to the auditor but procured by the Satyam management for auditing.
After arrest of its two partners yesterday, the auditing firm said it has fully cooperated over the last fortnight in all inquiries and "has provided all the documents called for by the Indian authorities" and promised continued cooperation.
"We greatly regret that two Price WaterHouse partners have been detained today for further questioning. We do not know the basis for them being detained," said a statement from Price Waterhouse, the statutory auditors of Satyam Computer.
PW's Chief Relationship Partner S Gopalakrishnan and Engagement Leader Srinivas Talluri are now in judicial custody pending investigation.
Saturday, January 24, 2009
Satyam had Rs 3,319 cr bank FDs till Sept 30
24 Jan 2009
NEW DELHI: As government sleuths dig deep into the Satyam quagmire, they have been able to find some of the missing pieces to this sordid jigsaw puzzle. Simultaneously , they have also come up with some new revelations that add to the mystery. Here's the latest poser: Was Satyam flush with funds in excess of Rs 3,500 crore till as recently as the Q2 of this fiscal (ending September 30, 2008) and did the company's disgraced former chairman, B Ramalinmga Raju, siphon off the huge deposits in just three months?
Statements from banks, (copies available with TOI) which were also submitted to the company's auditor Pricewaterhouse , show that Satyam had fixed and other short-term deposits totalling around Rs 3,319.17 till September 30, 2008. These deposits, that were further swelled by the approximately Rs 300-crore-odd-plus accrued interest, were with leading banks like BNP Paribas, HSBC, Citibank and HDFC, all of whom confirmed presence of funds in letters to the statutory auditor.
The documents show that Satyam had, in its quarterly audit, given exhaustive details of its FDs to Pricewaterhouse, and these were also validated by confirmations by the banks. The FDs, except for shortterm /margin money deposits, were made for two years and the majority were maturing by January 2 this year, days before the January 7 confessions by Ramalinga Raju.
The documents in the possession of investigators — show that around Rs 800 crore of funds were kept as FD with HSBC along with Rs 95.43 crore in accrued interest in the name of Satyam Computer. In BNP Paribas, deposits were around Rs 468 crore. In Citibank, the FDs were worth Rs 612 crore, while in HDFC, FDs were worth Rs 704 crore. The papers show FDs in ICICI at around Rs 725 crore.
According to official sources, Pricewaterhouse was presented by this exhaustive list of FDs as well as other short term/margin money deposits by Satyam's erstwhile top brass during the quick audit after July-September quarter), with ‘original' supporting bank papers.
The margin money deposits were those that the company kept in banks against the guarantees it gave for Satyam. Importantly, they were confirmed by the banks in letters to Pricewaterhouse, which effectively means that the auditor had independently confirmed their veracity. TOI has copies, though these could not be individually confirmed with the banks.
And, while these confirmations seemingly clear the auditor of any major negligence in its audit process, why did Pricewaterhouse say in a statement a few days ago that its report on Satyam should not be relied upon? A company statement, however, had clarified that it was contingent on the auditor to issue such a clarification regarding an audit if a management admits to a fraud. This is because audits are based on financial statements and books of records produced by the company management.
Sources say that the list of the FD accounts at September end and their disappearance by December-end points to many possibilities. Firstly, it means that the company was flush with huge funds by the end of the second quarter. The guesswork then is that Raju used the three interim months to clean out accounts, though there is no consensus on the modus operandi. ‘‘ A possible theory for the missing cash in this case could be that Raju raised cash in lieu of these FDs and diverted the money on their maturity to these lenders," the sources said.
However, one more possibility could be that the erstwhile management forged all these papers, including the independent confirmation receipts of the banks, completely fooling the auditors and the investors at large.
NEW DELHI: As government sleuths dig deep into the Satyam quagmire, they have been able to find some of the missing pieces to this sordid jigsaw puzzle. Simultaneously , they have also come up with some new revelations that add to the mystery. Here's the latest poser: Was Satyam flush with funds in excess of Rs 3,500 crore till as recently as the Q2 of this fiscal (ending September 30, 2008) and did the company's disgraced former chairman, B Ramalinmga Raju, siphon off the huge deposits in just three months?
Statements from banks, (copies available with TOI) which were also submitted to the company's auditor Pricewaterhouse , show that Satyam had fixed and other short-term deposits totalling around Rs 3,319.17 till September 30, 2008. These deposits, that were further swelled by the approximately Rs 300-crore-odd-plus accrued interest, were with leading banks like BNP Paribas, HSBC, Citibank and HDFC, all of whom confirmed presence of funds in letters to the statutory auditor.
The documents show that Satyam had, in its quarterly audit, given exhaustive details of its FDs to Pricewaterhouse, and these were also validated by confirmations by the banks. The FDs, except for shortterm /margin money deposits, were made for two years and the majority were maturing by January 2 this year, days before the January 7 confessions by Ramalinga Raju.
The documents in the possession of investigators — show that around Rs 800 crore of funds were kept as FD with HSBC along with Rs 95.43 crore in accrued interest in the name of Satyam Computer. In BNP Paribas, deposits were around Rs 468 crore. In Citibank, the FDs were worth Rs 612 crore, while in HDFC, FDs were worth Rs 704 crore. The papers show FDs in ICICI at around Rs 725 crore.
According to official sources, Pricewaterhouse was presented by this exhaustive list of FDs as well as other short term/margin money deposits by Satyam's erstwhile top brass during the quick audit after July-September quarter), with ‘original' supporting bank papers.
The margin money deposits were those that the company kept in banks against the guarantees it gave for Satyam. Importantly, they were confirmed by the banks in letters to Pricewaterhouse, which effectively means that the auditor had independently confirmed their veracity. TOI has copies, though these could not be individually confirmed with the banks.
And, while these confirmations seemingly clear the auditor of any major negligence in its audit process, why did Pricewaterhouse say in a statement a few days ago that its report on Satyam should not be relied upon? A company statement, however, had clarified that it was contingent on the auditor to issue such a clarification regarding an audit if a management admits to a fraud. This is because audits are based on financial statements and books of records produced by the company management.
Sources say that the list of the FD accounts at September end and their disappearance by December-end points to many possibilities. Firstly, it means that the company was flush with huge funds by the end of the second quarter. The guesswork then is that Raju used the three interim months to clean out accounts, though there is no consensus on the modus operandi. ‘‘ A possible theory for the missing cash in this case could be that Raju raised cash in lieu of these FDs and diverted the money on their maturity to these lenders," the sources said.
However, one more possibility could be that the erstwhile management forged all these papers, including the independent confirmation receipts of the banks, completely fooling the auditors and the investors at large.
Satyam fraud: AP CID arrests two top PwC officials
24 Jan 2009, PTI
HYDERABAD: The Andhra Pradesh police on Saturday arrested two top officials of auditing firm Price Waterhouse who worked on the Satyam account, in
connection with the financial fraud disclosed by the IT firm's founder Ramalinga Raju.
The state CID arrested PwC's Chief Relationship Partner S Gopalakrishnan and Engagement Leader Srinivas Taluri.
The police had earlier questioned Gopalakrishnan. Raju, his brother Rama Raju and Satyam's former CFO Vadlamani Srinivas are already in judicial custody awaiting charges to be filed in connection with the Rs 7,800 crore accounting fraud in the IT company.
PwC had said that its auditing of Satyam accounts may not be reliable given Raju's disclosure of falsifying profits.
HYDERABAD: The Andhra Pradesh police on Saturday arrested two top officials of auditing firm Price Waterhouse who worked on the Satyam account, in
connection with the financial fraud disclosed by the IT firm's founder Ramalinga Raju.
The state CID arrested PwC's Chief Relationship Partner S Gopalakrishnan and Engagement Leader Srinivas Taluri.
The police had earlier questioned Gopalakrishnan. Raju, his brother Rama Raju and Satyam's former CFO Vadlamani Srinivas are already in judicial custody awaiting charges to be filed in connection with the Rs 7,800 crore accounting fraud in the IT company.
PwC had said that its auditing of Satyam accounts may not be reliable given Raju's disclosure of falsifying profits.
For Satyamites, it's a world of harsh reality with small mercies
24 Jan 2009
HYDERABAD: One evening last week, an employee of the troubled Satyam Computer Services was stopped by a traffic policeman for riding a motorbike without wearing a helmet. The indiscreet youngster fully expected to leave the place his wallet a lot lighter, but was pleasantly surprised by the sympathy he received from an unexpected quarter.
“When I told the policeman that I work for Satyam and was not sure about whether I’d get my salary, I was let off with just a reprimand,” he recalls, remarking that the incident was one of those rare occasions in recent days when it has paid to be associated with the Satyam name.
Satyam staff are no strangers to sweetheart deals — until January 7, when its founder B Ramalinga Raju said he had orchestrated a Rs 7,000-crore fraud, businesses were falling over each other to offer them heavy discounts on car loans, jewellery and even Hyderabadi biryani.
While once it was a privilege to do business with and offer special deals to employees of the firm, the only ones being generous now are those such as the traffic policeman who was moved to pity by a youngster uncertain of his job or salary.
Jobs, too, are not coming easily because of the economic slowdown and Satyam’s scarred image. While nobody is saying it openly, most employees are running into dead ends in their search for new opportunities. Even getting postpaid mobile phone connections or the flexibility normally allowed with credit card payments are not a given any more.
Within campuses, too, there is growing realisation that Satyam needs a miracle. An employee, requesting anonymity, says “Senior leaders talk to us very regularly on motivation asking us to keep the morale high. But we are tired of being told to just focus on quality and work. We need answers on whether salaries are coming in January at all.” That answer may be provided by Wednesday by the government-appointed board, which says it should have tied up emergency funding by then to keep operations running until March.
According to insiders, some of the banks may unthaw a freeze on Satyam’s bank accounts and release about Rs 300-400 crore to help pay salaries. The firm’s average monthly wage bill is Rs 500 crore, but in the light of reports that headcount may have been fudged, this figure could be misleading. Many employees are prepared for slight delays in salaries and cuts in variable pay.
ET Bureau
HYDERABAD: One evening last week, an employee of the troubled Satyam Computer Services was stopped by a traffic policeman for riding a motorbike without wearing a helmet. The indiscreet youngster fully expected to leave the place his wallet a lot lighter, but was pleasantly surprised by the sympathy he received from an unexpected quarter.
“When I told the policeman that I work for Satyam and was not sure about whether I’d get my salary, I was let off with just a reprimand,” he recalls, remarking that the incident was one of those rare occasions in recent days when it has paid to be associated with the Satyam name.
Satyam staff are no strangers to sweetheart deals — until January 7, when its founder B Ramalinga Raju said he had orchestrated a Rs 7,000-crore fraud, businesses were falling over each other to offer them heavy discounts on car loans, jewellery and even Hyderabadi biryani.
While once it was a privilege to do business with and offer special deals to employees of the firm, the only ones being generous now are those such as the traffic policeman who was moved to pity by a youngster uncertain of his job or salary.
Jobs, too, are not coming easily because of the economic slowdown and Satyam’s scarred image. While nobody is saying it openly, most employees are running into dead ends in their search for new opportunities. Even getting postpaid mobile phone connections or the flexibility normally allowed with credit card payments are not a given any more.
Within campuses, too, there is growing realisation that Satyam needs a miracle. An employee, requesting anonymity, says “Senior leaders talk to us very regularly on motivation asking us to keep the morale high. But we are tired of being told to just focus on quality and work. We need answers on whether salaries are coming in January at all.” That answer may be provided by Wednesday by the government-appointed board, which says it should have tied up emergency funding by then to keep operations running until March.
According to insiders, some of the banks may unthaw a freeze on Satyam’s bank accounts and release about Rs 300-400 crore to help pay salaries. The firm’s average monthly wage bill is Rs 500 crore, but in the light of reports that headcount may have been fudged, this figure could be misleading. Many employees are prepared for slight delays in salaries and cuts in variable pay.
ET Bureau
Satyam Computer's HR dept starts employee verification
24 Jan 2009, PTI
HYDERABAD: The human resources department of Satyam Computer Services has started verification to ascertain the company's headcount, following the Andhra Pradesh CID's claim that there were 13,000 ghost employees on the rolls of the IT firm.
"Our HR department is now verifying the employee details," the company's spokesperson told media on saturday.
"As of now, we believe there are 53,000 employees, which is subject to verification and auditing," a Satyam spokesperson told media yesterday, adding "the board has confirmed that prima facie there appears to be no basis to doubt the same."
The Andhra Pradesh CID had told the local court that Satyam's founder B Ramalinga Raju had admitted that the number of employees was inflated by over 12,000, by which he (Raju) drew over Rs 20 crore a month towards staff cost.
Ramalinga Raju's lawyer Bharat Kumar said the police claim is wrong.
According to a Satyam official, the line managers have been asked to provide details of the employees directly reporting to them.
The HR department's verification is based on active e-mail IDs and access card data captured across the offices of Satyam.
The company was supposed to have had 53,000 employees and operated in 66 countries with a customer base of 185 Fortune 500 companies.
HYDERABAD: The human resources department of Satyam Computer Services has started verification to ascertain the company's headcount, following the Andhra Pradesh CID's claim that there were 13,000 ghost employees on the rolls of the IT firm.
"Our HR department is now verifying the employee details," the company's spokesperson told media on saturday.
"As of now, we believe there are 53,000 employees, which is subject to verification and auditing," a Satyam spokesperson told media yesterday, adding "the board has confirmed that prima facie there appears to be no basis to doubt the same."
The Andhra Pradesh CID had told the local court that Satyam's founder B Ramalinga Raju had admitted that the number of employees was inflated by over 12,000, by which he (Raju) drew over Rs 20 crore a month towards staff cost.
Ramalinga Raju's lawyer Bharat Kumar said the police claim is wrong.
According to a Satyam official, the line managers have been asked to provide details of the employees directly reporting to them.
The HR department's verification is based on active e-mail IDs and access card data captured across the offices of Satyam.
The company was supposed to have had 53,000 employees and operated in 66 countries with a customer base of 185 Fortune 500 companies.
ADS holders seen blocking any attempt at Satyam acquisition
24 Jan 2009
MUMBAI: As talk of Satyam Computer’s buyout heats up, the response of the company’s American Depository Share (ADS) holders remains unclear.
While the government and the company’s top shareholders are believed to be inclined in easing the buyout terms to pave the way for a smoother acquisition process, no one’s sure whether the ADS holders would agree to any such a relaxation.
The biggest hindrance to Satyam’s buyout remains the litigations filed by ADS holders, as the acquisition would include the transfer of these litigations too. “The litigations will continue regardless of any sale,” said Kenneth J Vianale of US-based law firm Vianale & Vianale, one of the 12 law firms which has filed a class-action lawsuit against Satyam on behalf of ADS holders. “The acquirer could be named in the suit also as the successor to Satyam.” The company, along with Ramalinga Raju and Rama Raju, has been named in the class-action lawsuits filed in the US courts.
Satyam’s ADS holders are at an advantage here as they are permitted to exercise their voting rights. In a filing with the Securities and Exchange Commission (SEC), the Nasdaq-listed company said: “As a holder, you generally have the right under the deposit agreement to instruct the depository bank to exercise the voting rights for the equity shares represented by your ADS.”
According to Siddharth Shah of Nishith Desai Associates, “While the liability arising out of any claims against a company would vest with the company and on its shareholders, as each of them is a distinct legal entity, anyone buying the shares of the company would in any case indirectly participate in any losses of the company arising out of damages.
Since in the instant case the company is made a party in the US class-action lawsuit, any new management or investor along with other Indian shareholders will end up sharing the liabilities arising in the form of damages.”
Lawyers and market watchers believe that ADS holders are most likely to block any attempts of Satyam’s buyout, especially if valuations are unfavourable and in case the company is split into various assets. This may happen if authorities partly relax the takeover guidelines in Satyam’s case to smoothen the takeover process.
Meanwhile, PTI adds, the Andhra Pradesh CID on Friday began searches at some of the offices of Maytas Infra and Maytas Properties in Hyderabad as part of investigations into the Satyam fraud, a senior CID official said.
The United Nations has said it has suspended tainted Satyam Computer Services from the secretariat’s vendor database and placed all ongoing contracts with the company under review. “Satyam has been suspended from the UN Secretariat vendor database.
The information has been communicated to the UN procurement system and the UN global marketplace. Ongoing contracts with Satyam are currently under assessment,” UN procurement division’s integrated support service chief Kiyohiro Mitsui said in an e-mail on Friday.
The investigators on Thursday found several ‘dumped’ documents of different companies related to family members of Rajus during searches at the residential flats used by Rajus at different locations in the city. The searches in these flats are continuing.
, ET Bureau
MUMBAI: As talk of Satyam Computer’s buyout heats up, the response of the company’s American Depository Share (ADS) holders remains unclear.
While the government and the company’s top shareholders are believed to be inclined in easing the buyout terms to pave the way for a smoother acquisition process, no one’s sure whether the ADS holders would agree to any such a relaxation.
The biggest hindrance to Satyam’s buyout remains the litigations filed by ADS holders, as the acquisition would include the transfer of these litigations too. “The litigations will continue regardless of any sale,” said Kenneth J Vianale of US-based law firm Vianale & Vianale, one of the 12 law firms which has filed a class-action lawsuit against Satyam on behalf of ADS holders. “The acquirer could be named in the suit also as the successor to Satyam.” The company, along with Ramalinga Raju and Rama Raju, has been named in the class-action lawsuits filed in the US courts.
Satyam’s ADS holders are at an advantage here as they are permitted to exercise their voting rights. In a filing with the Securities and Exchange Commission (SEC), the Nasdaq-listed company said: “As a holder, you generally have the right under the deposit agreement to instruct the depository bank to exercise the voting rights for the equity shares represented by your ADS.”
According to Siddharth Shah of Nishith Desai Associates, “While the liability arising out of any claims against a company would vest with the company and on its shareholders, as each of them is a distinct legal entity, anyone buying the shares of the company would in any case indirectly participate in any losses of the company arising out of damages.
Since in the instant case the company is made a party in the US class-action lawsuit, any new management or investor along with other Indian shareholders will end up sharing the liabilities arising in the form of damages.”
Lawyers and market watchers believe that ADS holders are most likely to block any attempts of Satyam’s buyout, especially if valuations are unfavourable and in case the company is split into various assets. This may happen if authorities partly relax the takeover guidelines in Satyam’s case to smoothen the takeover process.
Meanwhile, PTI adds, the Andhra Pradesh CID on Friday began searches at some of the offices of Maytas Infra and Maytas Properties in Hyderabad as part of investigations into the Satyam fraud, a senior CID official said.
The United Nations has said it has suspended tainted Satyam Computer Services from the secretariat’s vendor database and placed all ongoing contracts with the company under review. “Satyam has been suspended from the UN Secretariat vendor database.
The information has been communicated to the UN procurement system and the UN global marketplace. Ongoing contracts with Satyam are currently under assessment,” UN procurement division’s integrated support service chief Kiyohiro Mitsui said in an e-mail on Friday.
The investigators on Thursday found several ‘dumped’ documents of different companies related to family members of Rajus during searches at the residential flats used by Rajus at different locations in the city. The searches in these flats are continuing.
, ET Bureau
Friday, January 23, 2009
Satyam Raju bought lands abroad as well: Prosecution
Hyderabad : Disgraced Satyam Computer Services founder B. Ramalinga Raju bought lands not only in India but in other countries also, prosecutors told a court here Friday.
The court deferred hearing on the bail pleas of Raju and Satyam's former chief financial officer Vadlamani Srinivas to Jan 27 and that of Raju's brother B. Rama Raju, who was the fraud-hit company's managing director to Jan 28.
Lawyers for Andhra Pradesh police crime investigation department (CID) said information about Ramalinga Raju buying lands in foreign countries was given by Gopalakrishna Raju, former general manager of SRSR Advisory Services, floated by the Raju family.
Gopalakrishna Raju has also been arrested. Ramalinga Raju set up SRSR to manage his family stake in Satyam Computer Services.
The court was also informed that BNP Paribas, one of the bankers for Satyam, had told the CID that it did not have any Fixed Deposits of Satyam.
"There has been no transaction with the bank since March 31, 2004," the prosecutors quoted BNP as having informed CID.
They opposed granting bail to the Raju brothers and Srinivas as, they feared, they might tamper with evidence.
"The crime is not an ordinary one. It can attract life imprisonment," the prosecutors submitted.
The court deferred hearing on the bail pleas of Raju and Satyam's former chief financial officer Vadlamani Srinivas to Jan 27 and that of Raju's brother B. Rama Raju, who was the fraud-hit company's managing director to Jan 28.
Lawyers for Andhra Pradesh police crime investigation department (CID) said information about Ramalinga Raju buying lands in foreign countries was given by Gopalakrishna Raju, former general manager of SRSR Advisory Services, floated by the Raju family.
Gopalakrishna Raju has also been arrested. Ramalinga Raju set up SRSR to manage his family stake in Satyam Computer Services.
The court was also informed that BNP Paribas, one of the bankers for Satyam, had told the CID that it did not have any Fixed Deposits of Satyam.
"There has been no transaction with the bank since March 31, 2004," the prosecutors quoted BNP as having informed CID.
They opposed granting bail to the Raju brothers and Srinivas as, they feared, they might tamper with evidence.
"The crime is not an ordinary one. It can attract life imprisonment," the prosecutors submitted.
Satyam Raju inflated employee numbers
“Only 40,000 were actually working”
HYDERABAD: The Crime Investigation Department (CID) of Andhra Pradesh Police told a court here on Thursday that the former Satyam Computer Services chairman, B. Ramalinga Raju, manipulated records to inflate the strength of the company’s employees to 53,000 when only 40,000 were actually working.
Mr. Raju drew Rs. 20 crore a month from banks to meet what he claimed to be the salaries for the 13,000 non-existing staff, the prosecution argued in the court while seeking extension of the police custody of Mr. Raju and the former Chief Financial Officer, Srinivas Vadlamani.
The prosecution said that in view of the “enormity of the offence” and its “multi-dimensional” nature, the two had to be interrogated. The fraud involved several land and bank transactions, including benami ones, manipulation of records, transfer of shares and fudging of accounts. Insider trading was also not ruled out, Senior Assistant Public Prosecutor K. Ajay Kumar argued.
Referring to the outcome of the four-day custody of the Raju brothers and Mr. Srinivas which ended at 10 a.m. on Thursday, he said Mr. Ramalinga Raju was found to have diverted a huge amount of funds by transferring shares in the names of his brother B. Suryanarayana Raju and mother Appala Narsamma. The value of such diversions was estimated at Rs. 7,400 crore.
Mr. Kumar said the interrogation of Mr. Ramalinga Raju also helped detect purchase of land in 400 benami transactions. One Akula Rajaiah was instrumental in land transactions worth Rs. 125 crore.
Besides, banks confirmed that the company’s accounts reflected fictitious deposits to the tune of Rs. 3,300 crore. Confirmation letters purportedly given to auditors by banks were forged.
The CID wanted to interrogate the accused further to identify persons responsible for the forgery. “We also want to know the identity of the masterminds behind the fictitious cash reserves,” Mr. Kumar said.
The CID possessed a letter from the HDFC Bank’s Basheerbagh branch here, stating that it had not issued the document found on the files of the auditors. Though the police sought custody for two more days, Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna granted only one day till 4 p.m. on Friday.
The former Satyam MD, Rama Raju, was sent back to jail.
Lawyers for Ramalinga Raju and Srinivas argued that there was no way that the two can tamper with evidence as all documents were the CID.
The judicial custody of the Raju brothers and Srinivas was to end Friday. The Raju brothers were arrested Jan 9, two days after Ramalinga Raju's startling admission of a Rs.70 billion (Rs.7,000 crore) financial fraud, the country's biggest corporate scam.
All the three were in police custody from Jan 18 to Jan 22. The police custody of Ramalinga Raju and Srinivas was extended till Friday.
HYDERABAD: The Crime Investigation Department (CID) of Andhra Pradesh Police told a court here on Thursday that the former Satyam Computer Services chairman, B. Ramalinga Raju, manipulated records to inflate the strength of the company’s employees to 53,000 when only 40,000 were actually working.
Mr. Raju drew Rs. 20 crore a month from banks to meet what he claimed to be the salaries for the 13,000 non-existing staff, the prosecution argued in the court while seeking extension of the police custody of Mr. Raju and the former Chief Financial Officer, Srinivas Vadlamani.
The prosecution said that in view of the “enormity of the offence” and its “multi-dimensional” nature, the two had to be interrogated. The fraud involved several land and bank transactions, including benami ones, manipulation of records, transfer of shares and fudging of accounts. Insider trading was also not ruled out, Senior Assistant Public Prosecutor K. Ajay Kumar argued.
Referring to the outcome of the four-day custody of the Raju brothers and Mr. Srinivas which ended at 10 a.m. on Thursday, he said Mr. Ramalinga Raju was found to have diverted a huge amount of funds by transferring shares in the names of his brother B. Suryanarayana Raju and mother Appala Narsamma. The value of such diversions was estimated at Rs. 7,400 crore.
Mr. Kumar said the interrogation of Mr. Ramalinga Raju also helped detect purchase of land in 400 benami transactions. One Akula Rajaiah was instrumental in land transactions worth Rs. 125 crore.
Besides, banks confirmed that the company’s accounts reflected fictitious deposits to the tune of Rs. 3,300 crore. Confirmation letters purportedly given to auditors by banks were forged.
The CID wanted to interrogate the accused further to identify persons responsible for the forgery. “We also want to know the identity of the masterminds behind the fictitious cash reserves,” Mr. Kumar said.
The CID possessed a letter from the HDFC Bank’s Basheerbagh branch here, stating that it had not issued the document found on the files of the auditors. Though the police sought custody for two more days, Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna granted only one day till 4 p.m. on Friday.
The former Satyam MD, Rama Raju, was sent back to jail.
Lawyers for Ramalinga Raju and Srinivas argued that there was no way that the two can tamper with evidence as all documents were the CID.
The judicial custody of the Raju brothers and Srinivas was to end Friday. The Raju brothers were arrested Jan 9, two days after Ramalinga Raju's startling admission of a Rs.70 billion (Rs.7,000 crore) financial fraud, the country's biggest corporate scam.
All the three were in police custody from Jan 18 to Jan 22. The police custody of Ramalinga Raju and Srinivas was extended till Friday.
L&T, Essar approach Satyam
NEW DELHI: There seems to be light at the end of the tunnel for the fraud-ridden Satyam Computer Services with two leading corporates — Larsen & Toubro and Essar — showing interest in buying whole or part of the Hyderabad-based IT major, it is understood.
Without identifying the buyers, CII mentor and director on the Satyam board Tarun Das confirmed on Tuesday that there were buyout offers from domestic and foreign companies.
During the day, L&T chief A.M. Naik met Corporate Affairs Minister Prem Chand Gupta on the Satyam fiasco even as the Essar group submitted a proposal for buyout of the BPO arm of the crisis-hit IT company.
Both companies already have interest in Satyam. While L&T has recently bought a little over four per cent stake in the company, the engineering major is also into IT business through L&T Infotech. The Ruias-promoted Essar is also in IT-related business through its outsourcing firm, Aegis.
After his meeting with Mr. Gupta and Corporate Affairs Secretary Anurag Goel here, Mr. Naik merely expressed concern over L&T’s investment in Satyam and did not divulge further details. Apparently, L&T is willing to explore all available options to safeguard its interest and it is too early to take a final decision.
“No comments,” said an L&T spokesperson when he was asked about the company’s interest in Satyam. To a question whether the company was looking for a strategic fit in Satyam, he said: “We have a portfolio investment through L&T Capital.”
According to sources, Essar has submitted a proposal by way of expression of interest (EoI) in Satyam’s BPO business.
It is learnt the Satyam board could soon appoint investment bankers for advice on sale or merger.
“Satyam has enormous fixed assets, human resource and technology assets. So, it is a very strong company. The board has not yet discussed the issue of looking for a buyer... But I have to truthfully say, we have been approached by potential buyers,” Mr. Das said.
Asked if the prospective buyers were multinationals or big Indian IT companies, he said: “both.”
HDFC Chairman and Satyam board member Deepak Parekh had also said the merger option was always open.
Mr. Das said Satyam was focussed on keeping its business running and, in that context, the appointments of a CEO and a CFO “are high priorities for the board,” which is meeting for two days this week to thrash out all these issues.
Without identifying the buyers, CII mentor and director on the Satyam board Tarun Das confirmed on Tuesday that there were buyout offers from domestic and foreign companies.
During the day, L&T chief A.M. Naik met Corporate Affairs Minister Prem Chand Gupta on the Satyam fiasco even as the Essar group submitted a proposal for buyout of the BPO arm of the crisis-hit IT company.
Both companies already have interest in Satyam. While L&T has recently bought a little over four per cent stake in the company, the engineering major is also into IT business through L&T Infotech. The Ruias-promoted Essar is also in IT-related business through its outsourcing firm, Aegis.
After his meeting with Mr. Gupta and Corporate Affairs Secretary Anurag Goel here, Mr. Naik merely expressed concern over L&T’s investment in Satyam and did not divulge further details. Apparently, L&T is willing to explore all available options to safeguard its interest and it is too early to take a final decision.
“No comments,” said an L&T spokesperson when he was asked about the company’s interest in Satyam. To a question whether the company was looking for a strategic fit in Satyam, he said: “We have a portfolio investment through L&T Capital.”
According to sources, Essar has submitted a proposal by way of expression of interest (EoI) in Satyam’s BPO business.
It is learnt the Satyam board could soon appoint investment bankers for advice on sale or merger.
“Satyam has enormous fixed assets, human resource and technology assets. So, it is a very strong company. The board has not yet discussed the issue of looking for a buyer... But I have to truthfully say, we have been approached by potential buyers,” Mr. Das said.
Asked if the prospective buyers were multinationals or big Indian IT companies, he said: “both.”
HDFC Chairman and Satyam board member Deepak Parekh had also said the merger option was always open.
Mr. Das said Satyam was focussed on keeping its business running and, in that context, the appointments of a CEO and a CFO “are high priorities for the board,” which is meeting for two days this week to thrash out all these issues.
Satyam shortlists three for CEO, CFO jobs
Hyderabad January 23, 2009
The new board of beleaguered Satyam Computer Services will finalise its decision on appointing the chief executive officer and chief financial officer of the company in the ensuing week. It would also announce additional funding arrangements by Wednesday besides deciding about the investment bankers in the next few days.
Satyam Computer also said it was close to arranging funds to meet salary payments, and maintained that its staff strength was 53,000. News reports yesterday has said the company's erstwhile chairman, B Ramalinga Raju, had overstated the numbers to siphon off about Rs 20 crore a month and that there were actually only 40,000 employees.
The board meeting, the third in 13 days since its constitution, was chaired by Tarun Das. The board is expected to meet again on Monday and Tuesday.
The board stated that its two-day meeting "focused on issues that are a priority for ensuring business continuity".
It announced that its members have "narrowed the shortlist for the CEO and CFO positions to the final three, and would finalise their decision in the ensuing week".
The selected person would be "uniquely qualified to lead the company during this period of transition and will be a leader of global standing and recognition," it stated in a press release today.
The board also announced that "additional funding arrangements are in the final stages of being concluded". According to Deepak Parekh, this is expected to be formally announced before Wednesday and will address the company's operational needs till the end of March 2009.
The board stated it has also interacted with a number of investment bankers and would take a decision in the next few days.
According to the board, the immovable properties of Satyam, including all campuses owned by the company, are free of any encumbrance. The collections from receivables have been robust so far.
However, taking note of the "demanding financial situation", the board had discussed with the leadership team, ways and means to expedite the collections due from customers and to also execute prudent measures for cost optimisation.
Addressing the customers issue, the board members have spoken to almost two dozen key customers individually. Personalised and direct communication was also being sent to all key customers "articulating the positive developments to restore their confidence in Satyam".
Contrary to common perceptions, the board said existing customers continued to release new work orders and were expressing "positive opinions" on the timely delivery of SLAs (service level agreements) in their engagements.
"There is a profound shift in customer attitudes - from being alarmed in the initial days, it has changed to a sense of cautious optimism. The planned actions will have a distinct impact on the customer confidence," Kiran Karnik, a board member, said.
The new board of beleaguered Satyam Computer Services will finalise its decision on appointing the chief executive officer and chief financial officer of the company in the ensuing week. It would also announce additional funding arrangements by Wednesday besides deciding about the investment bankers in the next few days.
Satyam Computer also said it was close to arranging funds to meet salary payments, and maintained that its staff strength was 53,000. News reports yesterday has said the company's erstwhile chairman, B Ramalinga Raju, had overstated the numbers to siphon off about Rs 20 crore a month and that there were actually only 40,000 employees.
The board meeting, the third in 13 days since its constitution, was chaired by Tarun Das. The board is expected to meet again on Monday and Tuesday.
The board stated that its two-day meeting "focused on issues that are a priority for ensuring business continuity".
It announced that its members have "narrowed the shortlist for the CEO and CFO positions to the final three, and would finalise their decision in the ensuing week".
The selected person would be "uniquely qualified to lead the company during this period of transition and will be a leader of global standing and recognition," it stated in a press release today.
The board also announced that "additional funding arrangements are in the final stages of being concluded". According to Deepak Parekh, this is expected to be formally announced before Wednesday and will address the company's operational needs till the end of March 2009.
The board stated it has also interacted with a number of investment bankers and would take a decision in the next few days.
According to the board, the immovable properties of Satyam, including all campuses owned by the company, are free of any encumbrance. The collections from receivables have been robust so far.
However, taking note of the "demanding financial situation", the board had discussed with the leadership team, ways and means to expedite the collections due from customers and to also execute prudent measures for cost optimisation.
Addressing the customers issue, the board members have spoken to almost two dozen key customers individually. Personalised and direct communication was also being sent to all key customers "articulating the positive developments to restore their confidence in Satyam".
Contrary to common perceptions, the board said existing customers continued to release new work orders and were expressing "positive opinions" on the timely delivery of SLAs (service level agreements) in their engagements.
"There is a profound shift in customer attitudes - from being alarmed in the initial days, it has changed to a sense of cautious optimism. The planned actions will have a distinct impact on the customer confidence," Kiran Karnik, a board member, said.
Maytas Flounders as Satyam Fraud Inquiry Curbs Funds
Jan. 23 -- Maytas, the construction group embroiled in India’s biggest fraud inquiry, may struggle to survive as the investigation stalls funds needed to build roads and houses and investors dump the stock.
Maytas Infra Ltd. has fallen by its daily limit since Satyam Computer Services Ltd. founder Ramalinga Raju said he’d tried to merge the family’s software and property groups to cover up a $1 billion accounting fraud. The takeover was vital to ease a credit squeeze at the Maytas companies as banks curbed lending to real estate and infrastructure, Raju’s son, B. Rama Raju Jr., said.
“We thought Satyam could be the anchor for our businesses, but it has turned into an albatross around our neck,” Rama, the 28-year-old vice chairman of closely held Maytas Properties, said in an interview yesterday.
Maytas Infra’s chief executive has quit, part of the Raju family’s stake has been taken over by banks, and the 23-year-old company can’t report earnings because it’s tied up with the fraud investigation. The inquiry imperils road, power and port projects and may bring down Raju’s group before he comes to trial.
“It’s pretty obvious that they are in deep trouble,” Apurva Shah, the head of research at Prabhudas Lilladher Pvt. in Mumbai, said by telephone. “Existing creditors have no choice but to live with it, but few if any new creditors will consider doing business with Maytas.”
Rama denied reports in the Economic Times and other local newspapers that his father had siphoned off funds from Satyam for the real estate group. Prosecutors allege executives at Satyam, India’s fourth-largest software exporter, padded employee numbers, forged bank documents and diverted funds for real estate deals.
“We never got a single penny from Satyam,” Rama said. “Whatever assets that are in Maytas was acquired by Maytas with its own money, these are the assets acquired over three decades from my grandfather’s days.”
Ramalinga Raju on Dec. 16 proposed that Satyam would buy a 31 percent stake in Maytas Infra from his family, and an additional 20 percent from minority shareholders, as well as all of Maytas Properties, for $1.6 billion.
Less than 12 hours later, he reversed the decision after investors including Templeton Asset Management Ltd. said they were “willing to go to any length” to prevent the deals.
The family and related companies controlled a 36.6 percent stake in Maytas Infra as of Sept. 30, filings with the stock exchange show.
Shares of Maytas Infra have since lost more than 80 percent of their value, and are now almost a quarter of its October 2007 initial sale price of 370 rupees. Raju, in his Jan. 7 letter admitting to inflating assets and profits at Satyam for several years, called this aborted bid a “last attempt to fill the fictitious assets with real ones.”
‘A Prudent Decision’
“It was a prudent decision as bank funds were getting tight for real estate and infrastructure,” Rama Raju said in the interview. “It could have benefited Satyam as well, with the kind of growth potential in these sectors.”
Maytas Infra’s revenue increased sevenfold to 16.4 billion rupees in the two years to March 31, according to its last annual report. Its profit climbed more than fourfold, and the workforce surged to 2,350 people, from 372 in March 2006.
The company’s ongoing projects include a 7.5 billion rupee power project in Senegal, Africa, and a 5.4 billion rupee township project in Hyderabad, according to the company’s last annual report.
Still, its biggest clients are the National Highway Authority of India and state governments, who’ve awarded the company a 4.15 billion rupee contract for the Hyderabad outer ring road, a 3.3 billion rupee dam project, the 2.24 billion rupee Bangalore elevated highway project, and a 3.16 billion rupee canal project, according to its last annual report.
Being Investigated
Maytas Infra yesterday said it has sought an extension on reporting quarterly results as its accounts are being investigated by the government, and its finance team hasn’t been able to compile statements for the three months ended Dec. 31.
The company’s biggest shareholders were forced to transfer their stakes to finance companies to cover loans as “a result of invocation of pledge,” according to a filing by the Hyderabad- based company to the Bombay Stock Exchange on Jan. 21.
Maharashtra state scrapped a 4.8 billion rupee contract with Maytas Infra, Press Trust of India reported that same day, citing Chief Minister Ashok Chavan.
Nevertheless, customer attrition was being closely monitored at the board level and it has seen "no material impact so far". The employees attrition also remained well under control. "Associates continue to show great resilience and exceptional commitment towards the company during these challenging times, in spite of the sustained media onslaught," the board commented
Maytas Infra Ltd. has fallen by its daily limit since Satyam Computer Services Ltd. founder Ramalinga Raju said he’d tried to merge the family’s software and property groups to cover up a $1 billion accounting fraud. The takeover was vital to ease a credit squeeze at the Maytas companies as banks curbed lending to real estate and infrastructure, Raju’s son, B. Rama Raju Jr., said.
“We thought Satyam could be the anchor for our businesses, but it has turned into an albatross around our neck,” Rama, the 28-year-old vice chairman of closely held Maytas Properties, said in an interview yesterday.
Maytas Infra’s chief executive has quit, part of the Raju family’s stake has been taken over by banks, and the 23-year-old company can’t report earnings because it’s tied up with the fraud investigation. The inquiry imperils road, power and port projects and may bring down Raju’s group before he comes to trial.
“It’s pretty obvious that they are in deep trouble,” Apurva Shah, the head of research at Prabhudas Lilladher Pvt. in Mumbai, said by telephone. “Existing creditors have no choice but to live with it, but few if any new creditors will consider doing business with Maytas.”
Rama denied reports in the Economic Times and other local newspapers that his father had siphoned off funds from Satyam for the real estate group. Prosecutors allege executives at Satyam, India’s fourth-largest software exporter, padded employee numbers, forged bank documents and diverted funds for real estate deals.
“We never got a single penny from Satyam,” Rama said. “Whatever assets that are in Maytas was acquired by Maytas with its own money, these are the assets acquired over three decades from my grandfather’s days.”
Ramalinga Raju on Dec. 16 proposed that Satyam would buy a 31 percent stake in Maytas Infra from his family, and an additional 20 percent from minority shareholders, as well as all of Maytas Properties, for $1.6 billion.
Less than 12 hours later, he reversed the decision after investors including Templeton Asset Management Ltd. said they were “willing to go to any length” to prevent the deals.
The family and related companies controlled a 36.6 percent stake in Maytas Infra as of Sept. 30, filings with the stock exchange show.
Shares of Maytas Infra have since lost more than 80 percent of their value, and are now almost a quarter of its October 2007 initial sale price of 370 rupees. Raju, in his Jan. 7 letter admitting to inflating assets and profits at Satyam for several years, called this aborted bid a “last attempt to fill the fictitious assets with real ones.”
‘A Prudent Decision’
“It was a prudent decision as bank funds were getting tight for real estate and infrastructure,” Rama Raju said in the interview. “It could have benefited Satyam as well, with the kind of growth potential in these sectors.”
Maytas Infra’s revenue increased sevenfold to 16.4 billion rupees in the two years to March 31, according to its last annual report. Its profit climbed more than fourfold, and the workforce surged to 2,350 people, from 372 in March 2006.
The company’s ongoing projects include a 7.5 billion rupee power project in Senegal, Africa, and a 5.4 billion rupee township project in Hyderabad, according to the company’s last annual report.
Still, its biggest clients are the National Highway Authority of India and state governments, who’ve awarded the company a 4.15 billion rupee contract for the Hyderabad outer ring road, a 3.3 billion rupee dam project, the 2.24 billion rupee Bangalore elevated highway project, and a 3.16 billion rupee canal project, according to its last annual report.
Being Investigated
Maytas Infra yesterday said it has sought an extension on reporting quarterly results as its accounts are being investigated by the government, and its finance team hasn’t been able to compile statements for the three months ended Dec. 31.
The company’s biggest shareholders were forced to transfer their stakes to finance companies to cover loans as “a result of invocation of pledge,” according to a filing by the Hyderabad- based company to the Bombay Stock Exchange on Jan. 21.
Maharashtra state scrapped a 4.8 billion rupee contract with Maytas Infra, Press Trust of India reported that same day, citing Chief Minister Ashok Chavan.
Nevertheless, customer attrition was being closely monitored at the board level and it has seen "no material impact so far". The employees attrition also remained well under control. "Associates continue to show great resilience and exceptional commitment towards the company during these challenging times, in spite of the sustained media onslaught," the board commented
Satyam Clients May Cancel Deals After Review-Source
HYDERABAD --Six clients of fraud-hit Satyam Computer Services Ltd. (SAY) have notified the company that if uncertainty persists for 90 days they may be forced to cancel their contracts with the firm, a person familiar with the situation said Friday.
The comments came after U.S. State Farm Insurance terminated its outsourcing contract with the Indian software exporter earlier this month and after newly appointed Satyam board member Kiran Karnik said earlier this week that the company's board received termination notices from two clients.
Karnik and the person didn't identify the names of the clients.
The notices are a further blow to the beleaguered Hyderabad-based company already in turmoil after founder B. Ramalinga Raju earlier this month said in a letter to board members that he overstated profits over several years and created a fictitious cash balance of more than $1 billion.
Keeping its business intact will be Satyam's key focus in coming months. The company's clients include several Fortune 500 companies such as General Electric Co., General Motors Corp., Nissan Motor Co., Applied Materials Inc. and Citigroup Inc. Some of its clients in the Asia Pacific region include include Telstra Corp. (TLS), National Australia Bank Ltd. (NAB.AU) and Qantas Airways Ltd. (QAN.AU).
A General Electric representative said earlier this week it continues to maintain its relationship with Satyam.
A Nissan spokeswoman said earlier this week the company has no plans to cancel its outsourcing partnership with Satyam but will closely watch company developments.
Applied Materials said that Satyam is a vendor, but declined comment further, while efforts to reach officials at Citigroup were unsuccessful.
"While Satyam is having difficulty, it continues to meet its contractual obligations," a spokeswoman at National Australia Bank said, noting the company is assessing its current contract with Satyam, which is due to expire in 2011.
Melbourne-based Telstra is in the process of cutting the number of its major IT suppliers to two from four, and "will take the current issues into account," a Telstra spokesman said earlier this month.
Air carrier Qantas, which has five years left to run on a seven-year contract with the Indian firm, said it has a team monitoring the situation and will continue to do so on a daily basis until the situation is resolved.
Satyam Board Meets To Decide On Leaders
Satyam's board is currently meeting in the southern city of Hyderabad. They are discussing candidates for chief executive officer and chief financial officer. They are also expected to name a bank to help it explore options.
Raju, his brother and Satyam co-founder B. Rama Raju, and former chief financial officer S. Vadlamani are currently being held on complaints of cheating, forgery and breach of trust.
On Thursday, prosecutors said Raju used salary payments to 13,000 fictitious employees to siphon millions of dollars from the Indian outsourcer for land purchases.
Prosecutors told a criminal court that Satyam has only about 40,000 employees instead of the 53,000 it claims.
Prosecutors claimed the money, in the form of salaries paid to ghost employees, came to around $4 million a month. The money was diverted through front companies and through accounts belonging to one of Raju's brothers and his mother to buy thousands of acres of land, the prosecutors said. Prosecutors made the claims in a hearing Thursday where the state police for the state of Andhra Pradesh asked for more time to interrogate Raju and Vadlamani, who is also in custody.
S. Bharat Kumar, the lawyer for the three accused, denied all claims made by the prosecutors. Kumar, speaking to Dow Jones Newswires late Thursday, said Raju's letter to the board on Jan. 7 was a statement and not a confession of his offenses.
The comments came after U.S. State Farm Insurance terminated its outsourcing contract with the Indian software exporter earlier this month and after newly appointed Satyam board member Kiran Karnik said earlier this week that the company's board received termination notices from two clients.
Karnik and the person didn't identify the names of the clients.
The notices are a further blow to the beleaguered Hyderabad-based company already in turmoil after founder B. Ramalinga Raju earlier this month said in a letter to board members that he overstated profits over several years and created a fictitious cash balance of more than $1 billion.
Keeping its business intact will be Satyam's key focus in coming months. The company's clients include several Fortune 500 companies such as General Electric Co., General Motors Corp., Nissan Motor Co., Applied Materials Inc. and Citigroup Inc. Some of its clients in the Asia Pacific region include include Telstra Corp. (TLS), National Australia Bank Ltd. (NAB.AU) and Qantas Airways Ltd. (QAN.AU).
A General Electric representative said earlier this week it continues to maintain its relationship with Satyam.
A Nissan spokeswoman said earlier this week the company has no plans to cancel its outsourcing partnership with Satyam but will closely watch company developments.
Applied Materials said that Satyam is a vendor, but declined comment further, while efforts to reach officials at Citigroup were unsuccessful.
"While Satyam is having difficulty, it continues to meet its contractual obligations," a spokeswoman at National Australia Bank said, noting the company is assessing its current contract with Satyam, which is due to expire in 2011.
Melbourne-based Telstra is in the process of cutting the number of its major IT suppliers to two from four, and "will take the current issues into account," a Telstra spokesman said earlier this month.
Air carrier Qantas, which has five years left to run on a seven-year contract with the Indian firm, said it has a team monitoring the situation and will continue to do so on a daily basis until the situation is resolved.
Satyam Board Meets To Decide On Leaders
Satyam's board is currently meeting in the southern city of Hyderabad. They are discussing candidates for chief executive officer and chief financial officer. They are also expected to name a bank to help it explore options.
Raju, his brother and Satyam co-founder B. Rama Raju, and former chief financial officer S. Vadlamani are currently being held on complaints of cheating, forgery and breach of trust.
On Thursday, prosecutors said Raju used salary payments to 13,000 fictitious employees to siphon millions of dollars from the Indian outsourcer for land purchases.
Prosecutors told a criminal court that Satyam has only about 40,000 employees instead of the 53,000 it claims.
Prosecutors claimed the money, in the form of salaries paid to ghost employees, came to around $4 million a month. The money was diverted through front companies and through accounts belonging to one of Raju's brothers and his mother to buy thousands of acres of land, the prosecutors said. Prosecutors made the claims in a hearing Thursday where the state police for the state of Andhra Pradesh asked for more time to interrogate Raju and Vadlamani, who is also in custody.
S. Bharat Kumar, the lawyer for the three accused, denied all claims made by the prosecutors. Kumar, speaking to Dow Jones Newswires late Thursday, said Raju's letter to the board on Jan. 7 was a statement and not a confession of his offenses.
Wednesday, January 21, 2009
Satyam Plans To Hire Banker To "Mull All Options"
MUMBAI - Satyam Computer Services Ltd. (500376.BY), embroiled in a fraud scandal, will decide on hiring an investment bank Thursday to help the company explore options, board member Deepak Parekh said Wednesday.
"All options are being looked at," Parekh told reporters on the sidelines of an industry event.
The comments came after Tarun Das, another Satyam director, said Tuesday potential buyers had approached the board although it had not yet discussed about any buyers or whether it would sell a stake or the company outright.
Meanwhile Kiran Karnik, also a member of the board, said Wednesday two "important" clients had notified Satyam on terminating their contracts with the Indian outsourcer. He declined to name the clients.
Earlier Wednesday, the Economic Times newspaper reported U.S. health insurer Cigna Corp. (CI) had given Satyam a three-month notice to end a technology outsourcing contract.
But a spokeswoman at Satyam said the report was untrue. Cigna officials couldn't be reached for comment.
Parekh said the company is still in the process of raising funds to meet its payment requirements for January and Satyam has pledged some receivables for funding needs. He didn't elaborate.
"We are trying to get receivables so we have funds to make payments for January. But, we are getting mixed responses from clients as they are very concerned and worried about the current circumstances," he said.
Parekh said the company is unable to raise funds from the banking sector unless Satyam's accounts are restated.
"Banks look at financial statements before giving loans, and last year's balance sheet is wrong," said Parekh, who is also the chairman of Housing Development Finance Corp. - India's top mortgage lender by assets.
He said there were certain documents at Satyam which pointed to possible fraud at the company, without providing more specific details.
"Some of the papers we've seen. It is obvious...you can make out that some of the documents were forged."
Parekh, Das and Karnik are part of the new six-member board appointed by the government earlier this month to bring Satyam back on track after its founder and former chairman B. Ramalinga Raju said he overstated its profits and created a fictitious cash balance of more than $1 billion.
Several government agencies are currently probing the company. Raju, his brother and Satyam's former managing director B. Rama Raju, and former chief financial officer Srinivas Vadlamani are in police custody in Hyderabad, where the company is based.
Capital market regulator Securities and Exchange Board of India, or SEBI, said it's difficult to ascertain the extent of the accounting issues at Satyam before the investigations are over.
While the regulator hasn't questioned Ramalinga Raju yet, it has questioned Satyam's auditors and internal finance department staffers, SEBI Chairman C. B. Bhave told reporters.
Price Waterhouse, a local affiliate of PricewaterhouseCoopers, audited Satyam's results for the past several years. Bhave didn't name Satyam employees SEBI questioned.
SEBI had also sought court permission to question Ramalinga Raju, and a judge in Hyderabad is expected to make a decision on the regulator's request Thursday.
Bhave said SEBI would have to go through a lot of papers "and go back in time to know the extent of fudging" of accounts. The regulator is trying to conclude the probe as fast as is "humanly possible," he added.
Bar On Selling Assets
India's Company Law Board has asked the Raju brothers, Vadlamani and two others - former director Ram Mynampati and Company Secretary G. J. Jayaraman - not to sell or mortgage their assets without its permission.
It has also asked them to submit the details of their bank accounts as well as moveable and immovable properties in India and abroad by Feb. 20, federal corporate affairs minister P.C. Gupta told reporters in New Delhi.
With Raju confessing to cooking Satyam's books, the government-appointed board had earlier said the accounts of the company had to be restated. It had appointed KPMG and Deloitte Touche Tohmatsu to look at the accounts.
KPMG's appointment, however, hasn't gone down too well with the nation's apex body for chartered accountants, the Institute of Chartered Accountants of India, which had objected to the firm's role as it isn't a registered member of the institute and, hence, can't audit in India.
But board member Parekh said KPMG isn't auditing Satyam's books and will play only a consulting role.
No Regulatory Probe Yet On Maytas Infra
SEBI hasn't yet formally ordered an investigation on Maytas Infra Ltd. (532907.BY), Bhave said, without elaborating.
The Raju brothers and their families have stakes in Maytas Infra and Maytas Properties Ltd., and Satyam had in December made a proposal to acquire the infrastructure companies for a combined $1.6 billion.
Satyam had to scrap the plan within hours of announcing it as investors, angry over the valuation of the companies, pulled down its stock price.
Meanwhile, as a direct a fallout of the Satyam development, the regulator Wednesday asked founders of companies to make disclosures when they pledge shares to raise funds.
The discloses will have to be made every three months as well as every time the shares are pledged, SEBI's Bhave said.
Ramalinga Raju had pledged his entire stake in Satyam to institutional lenders, who sold the shares when their value dropped after the aborted attempt to acquire the Maytas companies and Raju failed to provide top-up funds.
Such pledging of shares as collateral has picked up pace in the wake of the liquidity crunch, say observers.
-By John Satish Kumar and Ankur Relia; Dow Jones Newswires
"All options are being looked at," Parekh told reporters on the sidelines of an industry event.
The comments came after Tarun Das, another Satyam director, said Tuesday potential buyers had approached the board although it had not yet discussed about any buyers or whether it would sell a stake or the company outright.
Meanwhile Kiran Karnik, also a member of the board, said Wednesday two "important" clients had notified Satyam on terminating their contracts with the Indian outsourcer. He declined to name the clients.
Earlier Wednesday, the Economic Times newspaper reported U.S. health insurer Cigna Corp. (CI) had given Satyam a three-month notice to end a technology outsourcing contract.
But a spokeswoman at Satyam said the report was untrue. Cigna officials couldn't be reached for comment.
Parekh said the company is still in the process of raising funds to meet its payment requirements for January and Satyam has pledged some receivables for funding needs. He didn't elaborate.
"We are trying to get receivables so we have funds to make payments for January. But, we are getting mixed responses from clients as they are very concerned and worried about the current circumstances," he said.
Parekh said the company is unable to raise funds from the banking sector unless Satyam's accounts are restated.
"Banks look at financial statements before giving loans, and last year's balance sheet is wrong," said Parekh, who is also the chairman of Housing Development Finance Corp. - India's top mortgage lender by assets.
He said there were certain documents at Satyam which pointed to possible fraud at the company, without providing more specific details.
"Some of the papers we've seen. It is obvious...you can make out that some of the documents were forged."
Parekh, Das and Karnik are part of the new six-member board appointed by the government earlier this month to bring Satyam back on track after its founder and former chairman B. Ramalinga Raju said he overstated its profits and created a fictitious cash balance of more than $1 billion.
Several government agencies are currently probing the company. Raju, his brother and Satyam's former managing director B. Rama Raju, and former chief financial officer Srinivas Vadlamani are in police custody in Hyderabad, where the company is based.
Capital market regulator Securities and Exchange Board of India, or SEBI, said it's difficult to ascertain the extent of the accounting issues at Satyam before the investigations are over.
While the regulator hasn't questioned Ramalinga Raju yet, it has questioned Satyam's auditors and internal finance department staffers, SEBI Chairman C. B. Bhave told reporters.
Price Waterhouse, a local affiliate of PricewaterhouseCoopers, audited Satyam's results for the past several years. Bhave didn't name Satyam employees SEBI questioned.
SEBI had also sought court permission to question Ramalinga Raju, and a judge in Hyderabad is expected to make a decision on the regulator's request Thursday.
Bhave said SEBI would have to go through a lot of papers "and go back in time to know the extent of fudging" of accounts. The regulator is trying to conclude the probe as fast as is "humanly possible," he added.
Bar On Selling Assets
India's Company Law Board has asked the Raju brothers, Vadlamani and two others - former director Ram Mynampati and Company Secretary G. J. Jayaraman - not to sell or mortgage their assets without its permission.
It has also asked them to submit the details of their bank accounts as well as moveable and immovable properties in India and abroad by Feb. 20, federal corporate affairs minister P.C. Gupta told reporters in New Delhi.
With Raju confessing to cooking Satyam's books, the government-appointed board had earlier said the accounts of the company had to be restated. It had appointed KPMG and Deloitte Touche Tohmatsu to look at the accounts.
KPMG's appointment, however, hasn't gone down too well with the nation's apex body for chartered accountants, the Institute of Chartered Accountants of India, which had objected to the firm's role as it isn't a registered member of the institute and, hence, can't audit in India.
But board member Parekh said KPMG isn't auditing Satyam's books and will play only a consulting role.
No Regulatory Probe Yet On Maytas Infra
SEBI hasn't yet formally ordered an investigation on Maytas Infra Ltd. (532907.BY), Bhave said, without elaborating.
The Raju brothers and their families have stakes in Maytas Infra and Maytas Properties Ltd., and Satyam had in December made a proposal to acquire the infrastructure companies for a combined $1.6 billion.
Satyam had to scrap the plan within hours of announcing it as investors, angry over the valuation of the companies, pulled down its stock price.
Meanwhile, as a direct a fallout of the Satyam development, the regulator Wednesday asked founders of companies to make disclosures when they pledge shares to raise funds.
The discloses will have to be made every three months as well as every time the shares are pledged, SEBI's Bhave said.
Ramalinga Raju had pledged his entire stake in Satyam to institutional lenders, who sold the shares when their value dropped after the aborted attempt to acquire the Maytas companies and Raju failed to provide top-up funds.
Such pledging of shares as collateral has picked up pace in the wake of the liquidity crunch, say observers.
-By John Satish Kumar and Ankur Relia; Dow Jones Newswires
Ramalinga Raju admits to diverting Satyam money
21 Jan 2009
HYDERABAD: Disgraced founder and former chairman of Satyam Computer Services B. Ramalinga Raju has confessed that he diverted funds of the IT Satyam's Development Centres company to the two real estate firms promoted by his family, state police sources said here on Wednesday.
Raju, who was grilled on Wednesday for the fourth day by officials of Criminal Investigation Department (CID) of Andhra Pradesh police, also reportedly admitted using the Satyam money to buy prime land in and around Hyderabad.
CID sources said Raju told interrogators funds were diverted during the past four to five years. This means Raju's Jan 7 statement that he inflated company accounts was a red herring.
While resigning as company chairman, Raju had admitted to a Rs.7,000 crore/$1.43 billion accounting fraud, saying the company had cooked its books over several years resulting in inflated (non-existent) cash and bank balances.
He reiterated this during CID interrogation soon after his arrest Jan 9. But investigations have now revealed that a big chunk of this money existed but was diverted to other firms.
CID, which took Raju, his brother and former managing director B. Rama Raju and former chief financial officer Vadlamani Srinivas in custody for four days following a court order, grilled the former Satyam boss on the basis of his confession.
After prolonged interrogation, Raju finally admitted to diverting Satyam funds to his family firms - Maytas Properties and Maytas Infra. He told CID sleuths that this was going on since 2004.
Raju not only diverted funds out of Satyam but is also believed to have misled company auditors PricewaterhouseCoopers (PwC) by submitting fake bank documents. CID and some regulatory agencies have already seized some documents from PwC.
Raju also reportedly swindled money through 6,000 fake salary accounts for last few years. Sources said he had created these accounts in four banks to divert the funds from fixed deposits. Some of these funds were flowed through his accounts in foreign banks.
The company's claims that it had 53,000 employees came under scrutiny after Raju's Jan 7 confession. The government-appointed board is also trying to ascertain these figures.
With Raju confessing to diversion of funds, the Serious Fraud Investigation Office (SFIO) and Registrar of Companies (RoC) are now trying to trace a Mauritius-based company used for channelising the money to Maytas.
The central government has already asked SFIO to extend the ambit of investigations of Satyam fraud to cover both Maytas Properties and Maytas Infra. A team of SFIO is checking the accounts and records of the two firms.
However, both the firms have denied that they received any funds from Satyam.
HYDERABAD: Disgraced founder and former chairman of Satyam Computer Services B. Ramalinga Raju has confessed that he diverted funds of the IT Satyam's Development Centres company to the two real estate firms promoted by his family, state police sources said here on Wednesday.
Raju, who was grilled on Wednesday for the fourth day by officials of Criminal Investigation Department (CID) of Andhra Pradesh police, also reportedly admitted using the Satyam money to buy prime land in and around Hyderabad.
CID sources said Raju told interrogators funds were diverted during the past four to five years. This means Raju's Jan 7 statement that he inflated company accounts was a red herring.
While resigning as company chairman, Raju had admitted to a Rs.7,000 crore/$1.43 billion accounting fraud, saying the company had cooked its books over several years resulting in inflated (non-existent) cash and bank balances.
He reiterated this during CID interrogation soon after his arrest Jan 9. But investigations have now revealed that a big chunk of this money existed but was diverted to other firms.
CID, which took Raju, his brother and former managing director B. Rama Raju and former chief financial officer Vadlamani Srinivas in custody for four days following a court order, grilled the former Satyam boss on the basis of his confession.
After prolonged interrogation, Raju finally admitted to diverting Satyam funds to his family firms - Maytas Properties and Maytas Infra. He told CID sleuths that this was going on since 2004.
Raju not only diverted funds out of Satyam but is also believed to have misled company auditors PricewaterhouseCoopers (PwC) by submitting fake bank documents. CID and some regulatory agencies have already seized some documents from PwC.
Raju also reportedly swindled money through 6,000 fake salary accounts for last few years. Sources said he had created these accounts in four banks to divert the funds from fixed deposits. Some of these funds were flowed through his accounts in foreign banks.
The company's claims that it had 53,000 employees came under scrutiny after Raju's Jan 7 confession. The government-appointed board is also trying to ascertain these figures.
With Raju confessing to diversion of funds, the Serious Fraud Investigation Office (SFIO) and Registrar of Companies (RoC) are now trying to trace a Mauritius-based company used for channelising the money to Maytas.
The central government has already asked SFIO to extend the ambit of investigations of Satyam fraud to cover both Maytas Properties and Maytas Infra. A team of SFIO is checking the accounts and records of the two firms.
However, both the firms have denied that they received any funds from Satyam.
Andhra chief minister says Maytas is being probed by CID
21 Jan 2009
HYDERABAD: Andhra Pradesh Chief Minister Y S Rajasekhara Reddy has said the state Crime Investigation Department is probing the affair of Maytas Infra, the firm promoted by the family of Satyam Computer former chairman B Ramalinga Raju.
"How can Maytas escape investigation when there are allegations that funds from Satyam got diverted to Maytas," the Chief Minister questioned at a press conference here on Tuesday.
He said "one probe leads to the other", pointing to the CID investigations into the Satyam scandal.
Referring to the various infrastructure projects being executed by Maytas and its joint venture partners in the state, the Chief Minister said: "If we have genuine doubt about their capabilities, we will look at alternatives. If work can go without any problem, we will continue. We will only see that there is no risk to the government."
He said officials of the irrigation department have been directed to "thoroughly and closely" monitor the projects being executed by Maytas. The bank guarantees provided by Maytas are also being verified, he added.
Replying to a question, the Chief Minister said Satyam Computer had been allotted 50 acres near Visakhapatnam for an IT Park only in accordance with the industrial policy of the state government.
"Satyam is a prestigious company. It's only the management that has defrauded the company and the shareholders," Rajasekhara Reddy pointed out.
He, however, did not specify whether the government would cancel the land allocation.
HYDERABAD: Andhra Pradesh Chief Minister Y S Rajasekhara Reddy has said the state Crime Investigation Department is probing the affair of Maytas Infra, the firm promoted by the family of Satyam Computer former chairman B Ramalinga Raju.
"How can Maytas escape investigation when there are allegations that funds from Satyam got diverted to Maytas," the Chief Minister questioned at a press conference here on Tuesday.
He said "one probe leads to the other", pointing to the CID investigations into the Satyam scandal.
Referring to the various infrastructure projects being executed by Maytas and its joint venture partners in the state, the Chief Minister said: "If we have genuine doubt about their capabilities, we will look at alternatives. If work can go without any problem, we will continue. We will only see that there is no risk to the government."
He said officials of the irrigation department have been directed to "thoroughly and closely" monitor the projects being executed by Maytas. The bank guarantees provided by Maytas are also being verified, he added.
Replying to a question, the Chief Minister said Satyam Computer had been allotted 50 acres near Visakhapatnam for an IT Park only in accordance with the industrial policy of the state government.
"Satyam is a prestigious company. It's only the management that has defrauded the company and the shareholders," Rajasekhara Reddy pointed out.
He, however, did not specify whether the government would cancel the land allocation.
Satyam case: City lawyer files complaint against Raju, others
21 Jan 2009
MUMBAI: A city-based lawyer has filed a complaint before a magistrate here seeking legal action against former Satyam Chairman B R Raju, the former board of directors of the company and senior officials of accounting firm PriceWaterhouse Coopers (PwC) for "cheating investors" by manipulating accounts of the IT major.
The complainant has said that he had bought 500 shares of Satyam about three weeks prior to Raju admitting to manipulation in company accounts for showing higher profits, following which Satyam's share value dropped drastically.
The complaint has been filed against 32 individuals before the Chief Metropolitan Magistrate at Esplanade court here including senior officials of PwC and former directors on the board of Satyam.
Action should be initiated against the accused under relevant sections of the IPC for cheating investors, C Anthony Lewis, the complainant said.
"The complaint has been filed since I do not believe that the Hyderabad police version that only three persons are responsible for carrying out this corporate fraud. The others involved should also be brought to book," he said.
The complainant has also said that he did not have faith in the Mumbai police, which is also looking into two applications for complaints filed by investor forums against the IT firm, because of which he had approached the court.
The court, after hearing arguments, has kept the matter for orders on January 28.
MUMBAI: A city-based lawyer has filed a complaint before a magistrate here seeking legal action against former Satyam Chairman B R Raju, the former board of directors of the company and senior officials of accounting firm PriceWaterhouse Coopers (PwC) for "cheating investors" by manipulating accounts of the IT major.
The complainant has said that he had bought 500 shares of Satyam about three weeks prior to Raju admitting to manipulation in company accounts for showing higher profits, following which Satyam's share value dropped drastically.
The complaint has been filed against 32 individuals before the Chief Metropolitan Magistrate at Esplanade court here including senior officials of PwC and former directors on the board of Satyam.
Action should be initiated against the accused under relevant sections of the IPC for cheating investors, C Anthony Lewis, the complainant said.
"The complaint has been filed since I do not believe that the Hyderabad police version that only three persons are responsible for carrying out this corporate fraud. The others involved should also be brought to book," he said.
The complainant has also said that he did not have faith in the Mumbai police, which is also looking into two applications for complaints filed by investor forums against the IT firm, because of which he had approached the court.
The court, after hearing arguments, has kept the matter for orders on January 28.
Satyam case: City lawyer files complaint against Raju, others
21 Jan 2009
MUMBAI: A city-based lawyer has filed a complaint before a magistrate here seeking legal action against former Satyam Chairman B R Raju, the former board of directors of the company and senior officials of accounting firm PriceWaterhouse Coopers (PwC) for "cheating investors" by manipulating accounts of the IT major.
The complainant has said that he had bought 500 shares of Satyam about three weeks prior to Raju admitting to manipulation in company accounts for showing higher profits, following which Satyam's share value dropped drastically.
The complaint has been filed against 32 individuals before the Chief Metropolitan Magistrate at Esplanade court here including senior officials of PwC and former directors on the board of Satyam.
Action should be initiated against the accused under relevant sections of the IPC for cheating investors, C Anthony Lewis, the complainant said.
"The complaint has been filed since I do not believe that the Hyderabad police version that only three persons are responsible for carrying out this corporate fraud. The others involved should also be brought to book," he said.
The complainant has also said that he did not have faith in the Mumbai police, which is also looking into two applications for complaints filed by investor forums against the IT firm, because of which he had approached the court.
The court, after hearing arguments, has kept the matter for orders on January 28.
MUMBAI: A city-based lawyer has filed a complaint before a magistrate here seeking legal action against former Satyam Chairman B R Raju, the former board of directors of the company and senior officials of accounting firm PriceWaterhouse Coopers (PwC) for "cheating investors" by manipulating accounts of the IT major.
The complainant has said that he had bought 500 shares of Satyam about three weeks prior to Raju admitting to manipulation in company accounts for showing higher profits, following which Satyam's share value dropped drastically.
The complaint has been filed against 32 individuals before the Chief Metropolitan Magistrate at Esplanade court here including senior officials of PwC and former directors on the board of Satyam.
Action should be initiated against the accused under relevant sections of the IPC for cheating investors, C Anthony Lewis, the complainant said.
"The complaint has been filed since I do not believe that the Hyderabad police version that only three persons are responsible for carrying out this corporate fraud. The others involved should also be brought to book," he said.
The complainant has also said that he did not have faith in the Mumbai police, which is also looking into two applications for complaints filed by investor forums against the IT firm, because of which he had approached the court.
The court, after hearing arguments, has kept the matter for orders on January 28.
Tuesday, January 20, 2009
YSR says won’t cancel Satyam land allotment ?
21 Jan 2009, ET Bureau
NEW DELHI: The Congress government in Andhra Pradesh, which is experiencing a free fall on the integrity index after media expose of undue favours to Satyam, said that it will not cancel the allotment of 50 acres of land to the tainted firm in Visakhapatnam for setting up a SEZ.
“It was for an institution and not an individual,” chief minister YS Rajasekhara Reddy said in Hyderabad while defending the deal. The “let’s brazen it out” approach of the Congress seems to stem from the realisation that a cancellation of the deal at this juncture would be seen as an admission of wrong doing.
Throwing ethics to the winds, the chief minister had last month got the government allot land to Satyam at a throw away price of Rs 10 lakh per acre when the ruling market price was Rs 5 crore per acre. The sweetheart deal cost the state exchequer Rs 195 crore. The government order issued on December 4, 2008 had said that the land was allotted under “instructions from the chief minister”.
The Raju taint will be difficult to erase as the Congress government went to the extent of snatching land from the elite force Greyhounds to help Satyam. Of the 50 acres, 25 acres were taken away from land allotted for the construction of a commando centre. The other 25 acres came from the Visakhapatnam Urban Development Authority (VUDA).
The development demonstrated that the Congress government led by Mr Reddy has been conducting governance in a questionable manner. This cannot but be distressing for the Congress as the Satyam scandal is threatening to dent the image of the party.
Chief minister Reddy has been dismissing charges that he was responsible for the phenomenal rise of Satyam’s tainted founder Ramalinga Raju. He has also been claiming that his government did not go out of the way to help the software company or Maytas firms. But the order books of Maytas Infra — it shows projects worth over Rs 62,000 crore, covering sectors such as irrigation, power, oil, roads and even railways — clearly indicate that it enjoyed “good rapport” with those in power.
The Congress’ rivals can be expected to use the issue in the coming polls. The TDP-led alliance has been alleging that the chief minister “personally negotiated with some companies the possible takeover of Satyam Computer Services” before B Ramalinga Raju made his confessional statement admitting the fraud. They have been describing it as a Rajaskehara Reddy-Ramalinga Raju joint scam.
NEW DELHI: The Congress government in Andhra Pradesh, which is experiencing a free fall on the integrity index after media expose of undue favours to Satyam, said that it will not cancel the allotment of 50 acres of land to the tainted firm in Visakhapatnam for setting up a SEZ.
“It was for an institution and not an individual,” chief minister YS Rajasekhara Reddy said in Hyderabad while defending the deal. The “let’s brazen it out” approach of the Congress seems to stem from the realisation that a cancellation of the deal at this juncture would be seen as an admission of wrong doing.
Throwing ethics to the winds, the chief minister had last month got the government allot land to Satyam at a throw away price of Rs 10 lakh per acre when the ruling market price was Rs 5 crore per acre. The sweetheart deal cost the state exchequer Rs 195 crore. The government order issued on December 4, 2008 had said that the land was allotted under “instructions from the chief minister”.
The Raju taint will be difficult to erase as the Congress government went to the extent of snatching land from the elite force Greyhounds to help Satyam. Of the 50 acres, 25 acres were taken away from land allotted for the construction of a commando centre. The other 25 acres came from the Visakhapatnam Urban Development Authority (VUDA).
The development demonstrated that the Congress government led by Mr Reddy has been conducting governance in a questionable manner. This cannot but be distressing for the Congress as the Satyam scandal is threatening to dent the image of the party.
Chief minister Reddy has been dismissing charges that he was responsible for the phenomenal rise of Satyam’s tainted founder Ramalinga Raju. He has also been claiming that his government did not go out of the way to help the software company or Maytas firms. But the order books of Maytas Infra — it shows projects worth over Rs 62,000 crore, covering sectors such as irrigation, power, oil, roads and even railways — clearly indicate that it enjoyed “good rapport” with those in power.
The Congress’ rivals can be expected to use the issue in the coming polls. The TDP-led alliance has been alleging that the chief minister “personally negotiated with some companies the possible takeover of Satyam Computer Services” before B Ramalinga Raju made his confessional statement admitting the fraud. They have been describing it as a Rajaskehara Reddy-Ramalinga Raju joint scam.
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