Govt offers half-baked cake to CLB on Maytas board takeover

1 Mar 2009, PTI

NEW DELHI: The Government, which moved the Company Law Board seeking to supersede boards of Maytas firms, has till now failed to put forth its side of the story in a convincingly manner, leave aside producing evidence to back its claim of financial irregularities in the twin companies.

During the hearing of Maytas Infra matter this week, CLB repeatedly asked the government to furnish evidence to support their allegations against the company's present board and its promoters (former Satyam Chairman Ramalinga Raju'kin).

"Tell me incidences, how company is suffering? How they (directors) are not discharging their duties? How it has affected the public interest...?" he said after the government failed to substantiate its allegations by producing evidence.

But deputy directors of the Corporate Affairs Ministry representing the government, kept saying they were seeking only interim relief and that at this stage, "mere intention (of committing irregularities) needs to be established".

On this, the CLB chief said, "Show me material evidence. I want to see it before taking any decision. I have to follow principles of law and can't go merely on allegations."

The Government's pleading was based on company's balance sheet, some prints taken from website of Maytas Infra and confession of fraud by Satyam's former Chairman B Ramalinga Raju. They tried to establish charges of fraud and diversion of company's money to group firms, associates' concerns, etc.

"You are at an interim stage...investigations are on. Bring more material evidence based on that," said CLB Chairman S Balasubramanian to the government, who apparently looked not satisfied by the government submission.

On government's allegation that the promoters and their family members had pledged their shares and had no interest in the company, the CLB Chairman replied, "Yes, you have valid point, but you would have to establish."

In their petition filed on February 18, the government had alleged Maytas Infra had diverted money raised from public to the group companies owned by the kin of B Ramalinga Raju.

The government further submitted before CLB that the affairs of Maytas Infra was shrouded in fraud, misfeasance, persistent negligence and in violation of law.

"The intent in conducting affairs of Maytas Infra had been to defraud stakeholders, including the investors and creditors and to gain unlawful advantage for Satyam Computer, as the promoter directors of the two companies had blood relation," it added.

However, refuting the allegations Maytas Infra, in its reply said that the government is pursuing the matter at the behest of IL&FS, which own 37 per cent share in the company and is its competitor.

It further submitted that the petition filed by the government had "neither been signed nor verified" even. The Government had ordered an inquiry by Serious Fraud and Investigation Office and "nothing incriminating has been found on basis of which the central government had moved this petition."