New Court Revelations Raise Stakes for Satyam in Upaid's US Fraud Case

Online and mobile payments specialist Upaid Systems today said it has added to its Texas fraud lawsuit against Satyam. The new claims against the Indian outsourcing company include misrepresentation and failure to provide good title. Admissions by senior Satyam executives before a UK court only recently brought these new abuses to light.

Satyam lost its effort to block the Texas fraud case in the UK High Court in January, and again on appeal in April. Upaid's revised claims in the US case are a direct result of the UK court revelations. The UK courts confirmed Upaid's contention that an earlier settlement did not excuse fraud. The appellate victory allows Upaid to pursue its substantial damages through the US judicial system.

Upaid employed Satyam in 1997 to develop software needed for the commercial deployment of Upaid's advanced intelligent payments processing framework. Court admissions in London now show that the Indian company deliberately and systematically misled Upaid about the existence of internal assignments of IP by Satyam's own employees. Satyam's own witness testimony makes clear at the time Satyam purportedly assigned all ownership rights to Upaid in 1998; it did not in fact own what it was selling to the payments service leader.

A patent infringement court case launched in Texas against third parties in 2005 revealed the use of forged signatures by Satyam employees on critical documents provided to Upaid by Satyam in the course of the software development. At the time the forgeries were exposed Satyam refused to testify in the proceedings to defend against the allegations of forgery. "These new admissions, that Satyam had sold to Upaid intellectual property and products which they themselves knew they did not own, begin to explain Satyam's bizarre refusal," said Joanne Hunter, a Upaid spokesperson.

"Upaid's new complaint in Texas alleges a continuing pattern of fraudulent behaviour by Satyam. Now it is revealed, by their own admissions, that they systematically covered up their internal title problems throughout their partnership with Upaid, and even after they were called to publicly defend against the alleged forgeries.

"It is now clear that Upaid's case goes well beyond the forgeries of title and patent documents, and maybe beyond Upaid. Satyam's admissions expose glaring systemic deficiencies in their business practices and corporate governance. Even today they continue to refuse to take steps to remedy the problems created by the forged documents. This refusal increases Upaid's losses. Speaking only of the problems they face with Upaid, Satyam's exposure is escalating to dangerous levels. By their continuing refusal to repair the patents Satyam is daily adding to the damages they have caused."

Ms. Hunter continued, "Contrary to Satyam's recent public comments on their damages exposure, there is no limitation on damages in this case, neither for the frauds nor the breaches of contract. In the new complaint Upaid has indicated that our damages are likely to exceed $1 billion. On top of that we have also asked for punitive damages to be awarded against Satyam. It is in fact exactly as Satyam themselves acknowledged in the London Court of Appeal, that the Texas case is '... likely to be highly detrimental to the Appellant and extremely large sums of money are at stake.'"