By Mohammed Shafeeq and Himank Sharma,
Hyderabad/New Delhi : On a day of hectic developments centred on fraud-hit Satyam Computer Services, the markets regulator met Prime Minister Manmohan Singh to brief him on his agency’s proposed plan of action for the beleaguered company even as the hearing on a slew of cases against its erstwhile promoters was adjourned till Friday.
The day also saw the three-member board for Satyam constituted by the government Sunday take stock of the situation in Hyderabad and discuss how the confidence of its 50,000-odd staff, shareholders and clients can be restored.
In Hyderabad, where Satyam is headquartered, Additional Chief Metropolitan Magistrate D. Ramakrishna adjourned to Friday the hearing on at least three cases, including bail petitions by the firm’s erstwhile top brass, including former chairman B. Ramalinga Raju in the Rs.70-billion ($1.43 billion) fraud.
A battalion of 25 lawyers is defending the accused, who also include Raju’s brother and former managing director B. Rama Raju, and former chief financial officer Vadlamani Srinivas, who were remanded to judicial custody till Jan 23.
The Hyderabad court also adjourned the hearing on the petition of the Crime Investigation Department (CID) seeking their custody and another moved by the Securities and Exchange Board of India (SEBI) to question them for the massive fraud.
They have been kept at Chanchalguda Central Jail in Hyderabad, where Vadlamani is believed to have confessed to the police including a startling allegation that the fixed deposits, which the Rajus claimed, were unreal and fictitious, while also blaming the auditors PricewaterhouseCoopers (PwC) for the mess.
“The bank deposits were handled directly by Raju and I was specifically asked not to look into it,” the police quoted Vadlamani as saying in a confessional statement.
Later, the new three-member board also met in Hyderabad and decided to appoint new interim auditors for Satyam in place of PwC and said the board chairperson would be elected as soon as the government appoints more directors. They said that they were also on the lookout for a new chief executive and a new chief financial officer to run the company.
The board currently comprises former chief of the National Association of Software and Service Companies (Nasscom) Kiran Karnik, chairman of Housing Development Finance Corp (HDFC) Deepak Parikh and former SEBI member C. Achuthan.
“We have to find fresh blood in the company. You must understand that it is not difficult to find a new chief executive and a new chief financial officer. Till that time, we will use the services of existing management,” Parikh told a press conference, soon after their first press conference.
Achuthan said if any money had been siphoned off the company, there were ways under the law to recover the same. “But we have to first ascertain how that money was squandered. And that can be done after restatement of accounts,” he added.
In the national capital, meanwhile, official sources said that the prime minister was also keeping a close watch on the developments and was keen that the employees of Satyam do not suffer because of the misappropriations by its top brass.
“The PM has directed the cabinet secretary (K.M. Chandrasekhar) to coordinate the response of the government in consultations with senior officials of the finance ministry and the ministry of corporate affairs,” an official in Prime Minister’s Office said.
Commerce Minister Kamal Nath also maintained that the government was looking at all options to help the company, which, he maintained, was an exceptional case where there may have been delinquencies by its erstwhile management, but there was not of any systematic failure.
“The government is looking at all aspects,” Kamal Nath told reporters outside his office here. “Once the board comes up with its proposals, the government will consider,” the minister added.
“There is no question of slur on India’s corporate governance.”
The developments had a positive impact on the shares of Satyam, which jumped by 44.2 percent to Rs.34.40.