Maytas diverted Rs.390 crore to Satyam: Khurshid

Corporate Affairs Minister Salman Khurshid Monday said prima facie some evidence indicated that funds had been transferred from Maytas Infra to scam-tainted Satyam Computers, now Mahindra Satyam.

"When the accounts are stated, this will become clear as to where the money has gone," said Khurshid while briefing reporters on a new Company Law Board (CLB) order regarding Maytas Infra.

"But there is prima facie some evidence that about Rs.390 crore has gone from Maytas to Satyam", he added.

In the order, the CLB allowed Infrastructure Leasing and Financial Services to take over management control of Maytas, which is Satyam spelt backwards.

IL&FS is the biggest stakeholder with 37.1 percent in the cash-strapped company and will be required to infuse up to Rs.55 crore as liquidity support, according to the CLB order.

Of its total equity in the company, 22.6 percent is the form of shares pledged to it by the original promoters.

Satyam probe almost over, says Salman Khursheed

There is enough material for successful prosecution in the Rs.78-billion Satyam fraud case and as soon as the Andhra Pradesh High Court sets up a fast track court there will be further progress in the matter, the government said Friday.

"As far as the CBI (Central Bureau of Investigation) and the ministry of corporate affairs are concerned, the investigations are more or less over. There may be some minor things still to be done," Minister of State for Corporate Affairs Salman Khursheed said.

Speaking to reporters on the sidelines of a conference here, Khursheed said an additional charge sheet would be filed as the trial court has granted permission for it.

"We have permission to file an additional charge sheet based on information available during the last few weeks," Khursheed said, adding: "We have got enough material for prosecution and that's why charge sheet is filed."

When his attention was drawn to attempts of the accused to avoid lie-detector test, the minister said: "These are matters of legal procedure."

"The CBI is obviously in good hands. We have an outstanding legal team looking after it. Whatever is required will be done," Khursheed said.

"The Enforcement Directorate (ED) and IRS (Internal Revenue Services) are still looking into some leads. We need to hear from them before we can make an assessment of the approximate figures of the amount involved. Obviously it was pretty huge," he said.

The ED and IRS are also looking into diversion of Satyam funds. The ED is looking into two Maytas firms as well to understand whether their relation with Satyam required any investigation, the minister said.

Maytas Infra and Maytas Properties are promoted by the family of B. Ramalinga Raju, the disgraced founder of the fraud-hit Satyam Computers.

Raju stunned corporate India Jan 7 by admitting the accounting fraud. The accused face charges of cheating, criminal conspiracy, falsification of records and forgery.

The scam-hit company was later taken over by Tech Mahindra, the IT arm of the Mahindra group.

Khursheed said his ministry was happy with the recent developments in Satyam after Tech Mahindra bought the IT major.

"We have no reasons to be dissatisfied as this is a success story having moved from crisis to rehabilitation. For the present, we are happy with the progress but a lot more has to be done," he said.

Asked about Mahindra Satyam firing some employees, Khursheed said the ministry looked at the pattern of entire software industry and did not find it unusual.

He added that there was no serious concern or problem about criminal liability as far as Mahindra Satyam was concerned.

"But there are problems for them as far as American litigation is concerned. They are in touch with us as to how we can be of any further help. We will certainly examine that."

When asked if the ministry would take action against PriceWaterhouse Coopers, the auditors of the fraud-hit Satyam, Khursheed said the government was waiting for the Institute of Chartered Accountants to report on the matter.

Tech Mahindra gets 43 percent stake in Satyam

Mahindra Satyam, formerly Satyam Computer Services, Friday said it has allotted 198.6 million shares to Venturebay Consultants, a Tech Mahindra arm.

After this allotment, Tech Mahindra will hold about 43 percent in the company.

The transfer of shares was done after Venturebay paid Mahindra Satyam Rs.1,152 crore (Rs.11.52 billion or $230 million), according to the agreement governing the takeover of the scam-tainted firm by Tech Mahindra, the IT arm of the Mahindra and Mahindra group.

Tech Mahindra had Monday said its open offer to acquire a further 20 percent in Satyam had resulted in it getting only 0.1 percent. It had stated it would subscribe for additional shares through a second preferential allotment.

Satyam Computers now renamed as "Mahindra Satyam"

Satyam Computers is now Mahindra Satyam

Two months after taking over scam-tainted Satyam Computer Services, Tech Mahindra Sunday renamed the IT major as Mahindra Satyam.

The logo will be adopted from the Mahindra Group. "This strategic move paves the way for the emergence of a robust brand, which draws from the core values of the Mahindra group and the inherent strength of the Satyam brand," said a company statement here Sunday evening.

"Customer centricity, high standards of corporate governance, unimpeachable ethics form the cornerstones of the Mahindra Group," said Mahindra Group vice chairman and managing director Anand Mahindra.

"This rebranding exercise symbolizes an amalgamation of the Mahindra Group's values with Satyam's fabled expertise, even as it retains that part of Satyam's identity which signifies commitment, purpose and proficiency of the organization and its people," the statement said.

Satyam's executive vice chairman Vineet Nayyar described the move as "a significant milestone towards the recovery of the company".

Tech Mahindra, owned by the $6.3 billion Mahindra Group, bought the scam-hit IT company in an open auction in April.

The re-branding comes six months after Satyam's founder and then chairman B. Ramalinga Raju confessed to a Rs.78-billion accounting fraud.

The government launched a probe, superseded the board, and put the company up for sale in open auction.

Ramalinga Raju, his brother Rama Raju, former chief financial officer Vadlamani Srinivas and five other accused are currently in jail.

Satyam gets excellence award from ASTD

Satyam Computer Services Ltd, despite being caught in the country's biggest corporate scandal, has been honoured by the American Society for Training and Development (ASTD) for its continued quest for excellence.

Satyam received an Excellence in Practice Award for Talent Preparation Services and six Excellence in Practice Citations for Enterprise Learning Technologies, Family Learning, Integrated Project Management, Learning Management Review and Re-skilling Services.

In a statement, Tech Mahindra Chairman Anand Mahindra said, ''I am impressed by the world class standards adhered to by team Satyam and would like to congratulate each and every associate at Satyam for this honour which reflects the company's commitment to quality and talent development, towards the creation of world class IT professionals.'' ASTD is the world's largest association dedicated to workplace learning and performance professionals. The Society provides resources for learning and performance professionals, educators and students, brings professionals together in conferences, workshops and online, and recognises excellence and sets standards for best practices in learning and performance, amongst other functions.

Satyam hits upper circuit, Tech Mahindra surges

Satyam Computer today hit the upper limit surging by 10 per cent on the Bombay Stock Exchange (BSE), for the second consecutive session, a day after the scam-tainted IT firm came out with results demonstrating that it was down but not out.

Satyam's new owner Tech Mahindra soared nearly 28 per cent at Rs 758 on the BSE and later traded at Rs 744.20, up 25.46 per cent.

After opening high on bourses, shares of Satyam hit the upper circuit at Rs 73.50 on the BSE, up 9.95 per cent over previous close. On the National Stock Exchange, Tech Mahindra surged by 12.90 per cent to a high of Rs 840. It was later quoting at Rs 824, up by 10.75 per cent, a leading broker said.

Yesterday, Satyam reported a net profit of Rs 160.50 crore for the October-December 2008, a period that saw the beginning of Satyam's fall from grace. The total income was Rs 2,327.21 crore. Satyam was at lowest level in January with a profit of Rs four crore before showing signs of revival by recording a Rs 52 crore profit in February. This was despite losing about two dozen clients.

Satyam paid over Rs 1,000 cr salaries in Jan-Mar

Satyam Computer today said it has paid Rs 1,000 crore to its employees salaries in January-March period.

The scam-hit firm said in a statement that it had spent Rs 91.17 crore on medical insurance for employees and Rs 251.55 crore on statutory compliance.

According to the cash outlays information of the company for January-March period, the IT firm had spent a total of Rs 1,026 crore on paying salaries and another Rs 342.72 crore in other employee-related segments.

The total headcount of the company was 41,622 at the end of March, whereas its subsidiaries, including Satyam BPO, had an employee strength of 3,828 associates.

Satyam Computer stand-alone net profit at Rs 181 cr in Q3

The scam tainted Satyam Computer Services has reported a stand-alone net profit of Rs 181 crore on revenue of Rs 2,294 crore in the third quarter ended on December 2008.

In a filing to the Bombay Stock Exchange (BSE), the Company said it had total bank balance of Rs 373 crore as on March 31. The employee count stood at 41,622.

It posted a profit of Rs four crore on revenue of Rs 681 crore in January and net profit of Rs 52 crore in February with the revenue being Rs 637 crore.

Satyam plunged into crisis after its founder B Ramalinga Raju confessed to perpetrating a Rs 7,000 crore financial fraud in early January. The Company's accounts are being re-stated.

Tech Mahindra had successfully bid in April for a controlling stake in Satyam. It has acquired 26 per cent stake through a preferential offer and will make an open offer to acquire an additional 31 per cent stake. The Company has disclosed its financial results and employee count in the disclosure made to shareholders.

The financial information was prepared using internal management information system and had not been audited, reviewed and examined by an independent auditor.

The financial information is, however, being disclosed because of an open offer that Tech Mahindra is launching on June 12,2009 to acquire up to 20 per cent stakes from Satyam's shareholders, the Company said.

Both BSE and National Stock Exchange excluded Satyam Computer from their respective key benchmark indices with effect from, January 12, 2009. Sun Pharmaceuticals Industries has replaced Satyam on the Sensex, while Reliance Capital has replaced Satyam on the Nifty.

The company's shares were locked at upper limit of ten per cent at Rs 67.15 in the noon session at the BSE after the results were declared. On BSE, 1.40 crore shares were traded in the counter. The scrip had an average daily volume of 1.47 crore shares in the past one quarter.

The stock hit a low of Rs 58.25 so far during the day. It had registered a 52-week high of Rs 502 on June 9,2008 and a 52-week low of Rs 11.50 on January 9,2009, brokers said.

Meanwhile, Tech Mahindra was trading higher at 13.12 per cent at Rs 671 on the BSE.

Fraud-hit Satyam has Rs.373 crore bank balance

The fraud-tainted Satyam Computer Services has a bank balance of Rs.373 crore (about $75 million) as on March 31, the IT bellwether said Tuesday.

In a regulatory statement, Satyam said it has posted standalone net profit of Rs.181 crore ($38 million) on revenue of Rs.2,290 crore in the December quarter.

The company reported net profit of Rs.4 crore in January and revenues of Rs.681 crore.

In February, its profit soared to Rs.52 crore though revenues dropped to Rs.676 crore, the statement said.

This is the first publicly disclosed earnings estimates from Satyam since the disgraced former chairman Ramalinga Raju confessed inflating the company's balance sheet and assets by Rs.78,000 crore or more than $1 billion.

The company said it cannot guarantee the accuracy of the results as Satyam's financial figures stretching back to 2000 have yet to be verified by an independent auditor.

Tech Mahindra revises Satyam open offer dates

IT firm Tech Mahindra has extended the date for approaching the shareholders of Satyam Computer regarding its Rs 1,154 crore open offer for the purchase of a 20 per cent stake in the scam-hit firm, a move which that has come days after market regulator S EBI cleared the open offer.

In a filing to the Bombay Stock Exchange, Satyam Computer said the last date by which letter of offer will be dispatched to the shareholders has been revised to June 9, from the earlier scheduled date of June 3.

Further, the last date of withdrawal by shareholders has also been revised to June 26, from the earlier June 27.

''Dates for all other activities of the schedule remain unchanged,'' the filing added. The Securities and Exchange Board of India (SEBI) had received the open offer for its consideration on May 6, and issued its ''observations'' on May 27.

Through Venturbay Consultant, its acquisition vehicle for the Satyam Computer purchase, Tech Mahindra had announced an open offer on April 22 for buying an additional 20 per cent from the shareholders of the IT firm.

The open offer was made pursuant to Tech Mahindra buying a 31 per cent stake in Satyam for Rs 1,756 crore through the issue of preferential shares after an auction process conducted by the government-appointed board of Satyam.

Tech Mahindra says Satyam poses challenges

Tech Mahindra, which Monday agreed to acquire a controlling stake in Satyam Computer Services, admitted the crisis-ridden IT firm's liabilities would add to the challenges usually associated with an acquisition.

"We have taken on a challenge and we will make it work," Mahindra and Mahindra group vice-chairman and managing director Anand Mahindra told reporters after being selected as the highest bidder for the Hyderabad-based IT firm.

Mahindra said merger and acquisition decisions were taken in the best interest of shareholders. "We will try to make it as less painful as possible," he added.

Tech Mahindra vice chairman, managing director and chief executive Vineet Nayyar also admitted that the ride was not going to be smooth.

"Satyam's revenues have dipped from $1.8 billion to $1.5 billion and may come down to $1.3 billion in the next quarter," Nayyar said.

"Liabilities are there in terms of Upaid and the class action suits," he said, referring to the UK-based mobile payment operator that filed a case accusing Satyam of forgery.

"We had, however, made a fair assessment of what these liabilities would translate into. Let's hope we were right," Nayyar added.

Satyam faces the threat of paying up to $1 billion as damages to Upaid. Apart from this, a dozen-odd class action suits have been filed against it in the US.

But Kiran Karnik, chairman of Satyam's reconstituted board, is optimistic.

"Satyam is a fundamentally sound company with an impressive client roster and committed employees," Karnik said at a separate media briefing.

Satyam's reconstituted board has gone all out to get some clarity on its books of accounts, which were cooked by co-founder B. Ramalinga Raju over several years.

According to a company statement, Satyam's revenue stands at Rs.650 crore per month, while its operating profit is between Rs.15-20 crore per month.

The Hyderabad-based major also has immovable assets in terms of 450 acres of land, of which 125 acres are in Hyderabad alone that house its campuses.

The total valuation of the 125 acres is around Rs.1,700 crore.

"We are trying to get the accounts restated for the past five years starting from last quarter of 2008-09. It will take a few more months," added Deepak Parekh, HDFC chairman and a Satyam board member.

CBI files charge sheet in Satyam fraud case

The Central Bureau of Investigation (CBI) Tuesday filed a charge sheet in the Rs.78 billion ($1.56 billion) accounting fraud in Satyam Computer Services Ltd, three months after the company's disgraced founder and former chairman B. Ramalinga Raju admitted to India's biggest corporate scam.

The CBI officials led by Deputy Inspector General Lakshmi Narayana presented the charge sheet against all the nine accused in a special court for CBI cases here.

The 2,315-page charge sheet said Ramalinga Raju and his brother and former managing director of the IT major were the brains behind the scam while seven other accused, including three arrested Sunday, assisted them.

The CBI personnel brought the voluminous charge sheet and thousands of other documents running into 64,500 pages in a mini-truck to Nampally Criminal Court complex and submitted the same to the court of XIV Additional Chief Metropolitan Magistrate S. Samuel Victor Emmanuel.

The documents, CDs and other records were brought in 25 trunk boxes.

"We also have recorded statement of Rajus, their family members and 432 witnesses in the case," Narayana later told reporters.

The charge sheet says Raju brothers were the kingpins and architects of the fudging and faking of balance sheets and also insider trading in the IT bellwether.

Ramalinga Raju has been accused of diverting funds of Satyam to his family firms for buying huge tracts of land, fudging accounts and also showing fake fixed deposits to inflate the profits. He allegedly bought properties and prime lands in benami transactions.

The CBI filed the charge sheet less than two months after it took over the probe from crime branch of Andhra Pradesh police. The multi-disciplinary investigation team of the CBI had grilled Rajus for nine days last month as part of the investigations.

The federal agency, which took up investigations Feb 18, had booked Rajus and other accused for criminal conspiracy, criminal breach of trust, cheating, forgery and falsification of accounts.

Meanwhile, the court has also allowed the CBI to collect samples of specimen signatures and handwriting of the Raju brothers and the former chief financial officer of the company, Srinivas Vadlamani.

The CBI wants to establish the charge of forgery against the accused.

The court posted to Wednesday orders on bail petitions of former auditors of Price Waterhouse S. Gopalakrishnan and Srinivas Talluri.

Ramalinga Raju had quit as Satyam chairman Jan 7 while confessing he cooked the company's account books and inflated profits over the past several years.

The Rajus were arrested by Andhra Pradesh police Jan 9. Srinivas was picked up the next day. The former auditors were also arrested the same month.

The CBI Sunday arrested three executives of Satyam's finance wing and the court Monday remanded them to judicial custody till April 15.

G. Ramakrishna, vice-president (finance), D. Venkatapathi Raju, senior manager (finance), and Ch. Srisailam, assistant manager, were arrested on the charge of preparing fake invoices, bank confirmation letters and fixed deposit receipts.

CBI officials said they implemented the mechanism for fraud designed by Ramalinga Raju.

These were the first arrests since the CBI took over the investigations in February.

With this, the number of accused in the case rose to nine. All the accused are currently lodged in Chanchalguda central jail here.

Regulator resumes questioning Ramalinga Raju

The market regulator Thursday resumed questioning the disgraced Satyam Computer Services founder B. Ramalinga Raju in Chanchalguda Central Jail here over the Rs.70-billion (Rs.7,000-crore/$1.43 billion) accounting fraud at the IT bellwether.

Officials of the Securities and Exchange Board of India (SEBI), led by south zone general manager and investigating authority Sunil Kumar, returned to the jail in the morning to question Raju for the second consecutive day.

The SEBI team Wednesday questioned only Ramalinga Raju, and it was not clear if his brother and former managing director B. Rama Raju, and former chief financial officer Vadlamani Srinivas would be grilled Thursday.

Jail officials are being allowed to watch Raju's interrogation from a distance. However, SEBI has turned down the request of Raju's lawyer S. Bharat Kumar to be allowed to be present during the interrogation or provide documents to his client.

Bharat Kumar said Raju needs legal assistance during questioning and announced he would take the matter to the Supreme Court.

On the first day, the SEBI team reportedly questioned Raju for five hours on possible insider trading, fudging of accounts and diversion of Satyam's funds to other companies promoted by him and his family members.

This was the first time that SEBI officials had access to Ramalinga Raju after he confessed to the Rs.70-billion fraud Jan 7 while quitting as the chairman of India's fourth largest IT services firm.

The Supreme Court had Tuesday allowed SEBI to interrogate the Raju brothers in jail Feb 4-6.

Rs 6-billion bank funds for Satyam working capital

The cash-strapped Satyam Computer Services would borrow Rs.6 billion (Rs.600 crore/$130 million) from banks to meet its working capital requirements, the company confirmed Thursday after a two-day board meeting here.

“This funding, along with healthy collections, is expected to help the company tide over its financial challenges,” the IT bellwether said in a statement, but did not name the banks which had sanctioned the funds.

Satyam also reaffirmed that the January salaries for its global employees and February salaries (fortnightly) for its US-based staff have been paid from internal accruals.

“Completing the complex financial restatement exercise, including announcement of third quarter results and ensuring prudent financial operations will be the primary focus in the next few weeks,” Partho Datta, who has been appointed as one of the two special advisors to the board, said.

Datta, a veteran chartered accountant, will be overseeing the financial operations of the company.

Former Tata Chemicals managing director Homi Khusrokhan is the other special advisor appointed to assist the six-member Satyam board.

The board also appointed A.S. Murty, a Satyam veteran, as the new chief executive of the IT bellwether with immediate effect.

Murty was Satyam's chief delivery officer, responsible for delivery excellence and leadership development.

“Murty is a Satyam veteran of 15 years, who has been in its forefront since January 1994. He brings to play a deep understanding of the organisation, proven expertise in leading a business unit, overseeing global delivery, nurturing customer relationships and spearheading the entire gamut of the human resources function,” board member Deepak Parekh said in a statement.

C. Achuthan, former presiding officer of the Securities Appellate Tribunal and a Satyam board member, chaired the two-day meeting.

Satyam gets new chief executive, advisors

After a month long suspense, the beleaguered Satyam Computer Services Limited (SATYAM) finally got a head with A S Murty, the Chief Delivery Officer, taking over today as its Chief Executive Officer.

The Board after a two-day meeting here, also announced the appointment of former Tata Chemicals Limited Managing Director Homi Khusrokhan and former Indian Aluminium Company (INDAL) Chief Financial Officer Partho S Datta as Special Advisors to the Board.

Contrary to speculations that an outsider might be reined in to head the embattled company, the Board elevated an in-house 15-year veteran of Satyam with deep understanding of the organisation to steer the company out of the crisis.
However, the two Special Advisors along with the Boston Consulting Group would assist the CEO and the Board in management and finance areas and also help in defining priorities and executing them effectively. Even as a high ranking team from the Securities and Exchange Commission(SEC) flew in from the US to meet the members of the Board and SEBI, the Board, in a post-meeting statement, said its key priorities and collective focus remained unchanged.

It was assessing legal liabilities and working out strategies to deal with them comprehensively with the assistance of Wachtell, Lipton, Rosen and Katz who have been appointed as Satyam's lawyers to address the Class Action suits in US.

Latham and Watkins have been lawyers to Satyam for over eight years and they would continue to support Satyam in its continuing dialogue with US SEC.

''These decisions are aimed at quickly stabilising Satyam. The organisation has visibly increased its focus on business continuity for its customers and confidence building amongst its associates (employees) and vendors'', the Board statement said.

The Board also confirmed that its key focus would be reaching out to key customers and associates to reinforce their trust and confidence, asserting the financial position and restatement of Q3 results, evaluating long-term strategic options, in consultation with the Advisors, assessing legal liabilities and dealing with them comprehensively, undertaking cost rationalisation measures and resuming investments in identified areas.

Regulators waiting for their turn

Regulator's wait to question Rajus continues


The market regulator will have to wait at least for 10 more days to question disgraced Satyam Computer founder B. Ramalinga Raju and his brother B. Rama Raju in the Rs.70-billion (Rs.7,000-crore/$1.43-billion) accounting fraud as the Andhra Pradesh High Court Friday adjourned the hearing on its petition to Feb 9.

Justice Seshasayana Reddy Friday heard initial arguments on the plea by Securities and Exchange Board of India (SEBI), seeking permission to record statements of the Raju brothers.

The court issued notices to the two Rajus and Chanchalaguda prison superintendent where they are lodged. They have to respond by Feb 9.
Solicitor general of India Goolam E. Vahanvati, appearing for SEBI, sought an ex-parte interim order to allow the regulator to interrogate the Rajus, but the judge did not accept this.

"The judge said he will not pass the order without hearing them (the Rajus and the prison superintendent)," Vahanvati told reporters. "This request will also be considered on February 9," he said.

The court is likely to hear arguments Feb 9 on the maintainability of the writ petition and consider the request for interim order.

SEBI roped in India's top law officer after the sixth additional chief metropolitan magistrate dismissed its similar petition last week.

The market watchdog had moved the High Court Wednesday challenging the order of the lower court. Justice Reddy, who began the hearing Thursday, asked the solicitor general to argue the maintainability of the petition.

The judge wanted to know why the writ petition was moved under Article 226 of the Constitution when an alternative remedy (provision under section 397 of the Criminal Procedure Code) was available to challenge the lower court's order.

The solicitor general argued that the order of the lower court was in violation of fundamental right and the principles of natural justice and that there was an error of jurisdiction.

Vahanvati also argued that SEBI was a statutory body and should be allowed to record statements of the accused as the interests of tens of thousands of investors were involved.

SEBI wanted to record statements of the Raju brothers for alleged violations of security laws, including fraudulent and manipulative practices.

SEBI's petition said there were several allegations including a strong likelihood of insider trading prior to Jan 7, when Ramalinga Raju confessed to the massive fraud.

Though it is more than 20 days since the scam came to light, the market regulator has had no access to the key accused to record their statements. SEBI had summoned them Jan 9, but they sought a day's time leading to the adjournment of the proceedings till Jan 10.

"In a strange coincidence, they were arrested (by the CID) on January 9 night," SEBI said adding that they were remanded to judicial custody that was being extended from time to time.

A SEBI lawyer had earlier gone on record that Rajus were trying to avoid grilling by the market watchdog.

Maytas director C.S. Bansal quits

C.S. Bansal Friday resigned as director of Maytas Infra Limited, the firm promoted by disgraced founder and former chairman of Satyam Computer Services B. Ramalinga Raju and his family.

Maytas Infra, at a board meeting here Friday, reviewed the developments in the wake of the massive fraud in Satyam admitted by Ramalinga Raju on Jan 7.

The listed company in a notification informed the BSE and the NSE that B. Narasimha Rao has been appointed additional director of the company with effect from Jan 30.

Bansal, however, will continue to perform his duties as president, transportation and oil and gas sector, it said.

"The board reviewed recent developments and decided to meet again shortly to review operations on track."

"The board while expressing satisfaction on the efforts to provide information to all government agencies on their inspection, advised the employees to extend full support and cooperation in this regard."

The Hyderabad-based infrastructure company is one of the two realty firms that are run by the two sons of Ramalinga Raju, who is the chief promoter with 36 percent equity holding.

The aborted bid to acquire the two firms - Maytas Infra and Maytas Properties - for $1.6 billion (Rs.79.2 billion/Rs.7920 crore) by Satyam led to unprecedented crisis in the global software major, resulting in a spate of resignations by four directors and Ramalinga Raju subsequently.

The letter, signed by B. Teja Raju, vice-chairman of Maytas and son of Ramalinga Raju, also informed the BSE and the NSE that the board accepted the resignations of R.C. Sinha as chairman and independent director, and that of P.K. Madhav as a whole-time director and CEO.

Sinha's resignation was announced by the company on Jan 8. He, however, had put in his papers on Jan 7 when Ramalinga Raju quit admitting Rs.70 billion (Rs.7,000 crore/$1.43 billion) accounting fraud in Satyam.

Madhav resigned as CEO and whole-time director on Jan 19 following his arrest in connection with a criminal case of defrauding depositors of Nagarjuna Finance Limited, the firm he was earlier associated with.

Are there more Satyams out there?

The confessional letter written by Ramalinga Raju in the first week of 2009 about the massive fraud perpetrated at the country's fourth largest software company, Satyam, has opened a Pandora's box. The scam by Raju and his family could ultimately emerge as the mother of all corporate frauds in this country as even the initial investigations are revealing all kinds of manipulation.

The story of greed will rope in many players apart from Raju and his family members as clearly this level of fraud needed many more associates to continue over a period of six or seven years. The reputed multinational accountancy firm, PricewaterhouseCoopers (PwC), has already fallen in the police net with two of its leading executives having been arrested in Hyderabad. As the investigations continue, there is no doubt more big fish will get caught in this complex web of intrigue woven by Raju.

Shocking as these revelations are, one must pause for a moment and have a look at the overall state of corporate governance in the country. Veiled hints have been thrown by industry representatives that this may not be the only company that is manipulating accounts for the benefit of the public.

It is well known that even some of the largest corporates in the country have set up many shell companies for purposes of investment. These companies operate in the stock market at the behest of their parent companies, though ostensibly there is no link between them. There has never been any concrete proof of manipulations or scams though there has always been speculation in corporate circles about these companies.

But the Securities and Exchange Board of India (SEBI) does not seem to have taken the initiative to delve deeper into these issues even though many of the parent companies play a major role in determining the movement of the stock markets.

It is also tacitly acknowledged and accepted that family-owned concerns operate on an ethical code different from that of professionally managed companies. Of course, many family businesses have professionalised their managements over the years like the Goenkas and some segments of the Birlas. In the past, however, it was one of Indian industry's worst kept secrets that the 'lalaji' companies, as they were known, had developed fudging of the accounts into a fine art.

The scenario changed drastically after economic reforms were launched in the 1980s and 90s. A liberalised economic environment led to the rise of many corporates being set up in a professional manner by first generation entrepreneurs. Sunrise industries like computers and software were among the sectors where such corporates stole the limelight. HCL and Infosys were among this lot and the rise of Satyam seemed to be a mirror to these success stories of the software sector.

In fact, the idea that Satyam could be like any of the "lalaji" companies of the past would have been pooh-poohed as Raju had built up an impregnable public image of being yet another Narayanamurthy or Azim Premji. No wonder then that warnings issued by people as eminent as Delhi Metro chief E. Sreedharan or former finance secretary E.A.S. Sarma about the possibility of Satyam being involved in fraudulent activities was never taken seriously by the authorities.

What has made the Satyam issue even more grave is the involvement of a highly respected accounting firm like PwC in the whole affair. Incidentally PwC is already being probed in some other cases including that of the Global Trust Bank. The Institute of Chartered Accountants of India is understandably shaken over the affair which has cast a pall over this entire sector.

But it has also recognised that the auditors of the scam-hit company have not done their job. If they had, it would not be possible for Raju to have hidden the fact that the company's profits of Rs.7,000 crore/70 billion ($1.43 billion) were non-existent. It is thus high time that SEBI and other regulatory agencies like the Registrar of Companies investigated accounting practices not just in Satyam but the whole host of other corporates that may still be doing "creative accounting" and thereby defrauding shareholders.

Right now, the new board of directors is struggling to keep the company afloat and ensure that the thousands of employees are not thrown out of work. On this aspect, it must be pointed out that even the number of employees is now being doubted with some media reports indicating that the head count may be about 40,000 rather than the 53,000 officially on the rolls. In any case, the numbers are large and the new board of directors has brought about a collective sigh of relief with their announcement that salaries will be paid on time.

It is to the credit of the new board that they are trying to act as swiftly as possible while allaying the fears of the employees. Boston Consulting Group has been brought in as a management adviser which is likely to give some support to the new directors who have a gigantic task on their hands. Apart from dealing with employees, they also have to give a comfort level to the many customers who have decided to retain their loyalty to the firm. Simultaneously, they are evaluating prospects of selling off the company to the several suitors.

While the future of Satyam and its employees hang in the balance, the larger question of the credibility of the IT sector is creating unease among most of the key players. Infosys, for instance, is trying to highlight greater transparency by providing details of its bank deposits to its directors. There is a growing apprehension that the spotless reputation of such corporates will be affected by the Satyam scam. Their fears are to some extent justified as both domestic and foreign customers are bound to view the Indian IT sector with some suspicion after the Satyam scandal.

A tremendous initiative to highlight the high standards of corporate governance in this sector will be needed. Indian industry as a whole now needs to introspect and ensure that the levels of corporate governance are raised dramatically so that more such scandals do not smear its name in future. In addition, regulators like SEBI and the Registrar of Companies are not blameless and need to act more aggressively against all kinds of manipulation that is even now continuing in many segments of the corporate world in this country.

Satyam not a red flag to global investors: Kamal Nath

Maintaining that fraud-hit Satyam Computer Services Ltd was an aberration, Commerce and Industry Minister Kamal Nath, however, indicated that regulatory mechanism in India may be strengthened to prevent such a recurrance.

This single incident should not be viewed as a "red flag" by the global investors community, he said in an interview to BBC Hardtalk, adding the (economic) edifice of India is based on its performance over the last 10-12 years.

He said there has been huge investments from all parts of Europe and the United States, and the investors are not looking at the Satyam episode as a red flag. But at the same he said regulatory mechanism could be strengthened based on onging investigation in Satyam.

Asked whether the Satyam swindle would dampen investor sentiment across the world, he said around 60 per cent of the Fortune 500 companies are invested in India. "I think it's (because of) the confidence that they have in India ....".

Over Rs 7,800-crore Satyam swindle is being investigated by Serious Fraud Investigation Office(SFIO) which has also been tasked to probe its subsidiaries - Maytas Infra and Maytas Properies- to find out whether funds from the IT major were siphoned off to these companies, run by sons of Satyam's founder B Ramalinga Raju.

No bail for Satyam Rajus, former CFO

Satyam Computer's disgraced founder B. Ramalinga Raju, his brother B. Rama Raju and former chief financial officer Vadlamani Srinivas will remain in jail as a court here Wednesday dismissed their bail plea in the Rs.70-billion (Rs.7,000-crore) accounting fraud case.

S. Bharat Kumar, lawyer for the Rajus, said his clients would challenge the court order.

"There are options for us to renew the bail application before the same court or the next higher court. We will take a decision on this in the next two days," Bharat Kumar said after the sixth additional chief metropolitan magistrate D. Ramakrishna rejected the bail plea.

The three have been in judicial custody which expires Jan 31.

"The court order is on merits, on whatever arguments made by the defence counsel and the prosecution," public prosecutor Ajay Kumar told reporters outside the court complex.

The magistrate reserved for Thursday orders on the police appeal for custody of Gopalakrishna Raju, former general manager of SRSR Advisory Services floated by the Raju family to manage their stake in Satyam.

He will also rule Thursday on Gopalakrishna Raju's bail plea. During the arguments, the prosecution opposed the plea on the ground that all sections applicable to Ramalinga Raju, Rama Raju and Vadlamani Srinivas also applied to him.

The prosecution also argued that Gopalakrishna Raju was acting as custodian of the property of Ramalinga Raju, and tried to conceal land documents after the arrest of the former Satyam chairman.

Seeking police custody of the accused for seven days, the prosecution told the court that his custodial interrogation would throw more light on the documents recovered so far. After hearing the arguments, the magistrate posted both the petitions for orders Thursday.

The court will also hear Thursday the arguments on the bail pleas of PricewaterhouseCoopers (PwC) partners S. Gopalakrishnan and Srinivas Taluri. They were arrested last week for alleged complicity with the accused.

The court Tuesday heard the arguments on the bail pleas of Ramalinga Raju and Vadlamani Srinivas. The prosecution had opposed them on the ground that the accused could tamper with evidence and their release on bail could hamper investigations.

Ramalinga Raju was arrested Jan 9, two days after he confessed to the country's biggest corporate scam of Rs.70 billion. His brother Rama Raju was also arrested the same day.

Vadlamani Srinivas was picked up a day later.