Here NEWS is Posted from recent to past order
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Price Waterhouse objects to Satyam observations
Special Correspondent
Requests the board to inform the specific findings |
HYDERABAD: Price Waterhouse has expressed anguish over the conclusion by the Government-appointed board of directors of Satyam Computer Services that the auditing was not “up to the mark” and termed the view as “premature”.
While tendering the firm’s resignation as statutory auditors on Saturday, N. Ramesh Rajan, partner of Price Waterhouse, Bangalore, said in a letter addressed to a director of Satyam board S. B. Mainak that “if the confirmations of balances from banks were indeed forgeries as stated by you, we are as much victims of the fraud.”
He said it was too early to conclude that the letters from the banks were on the face of it fraudulent, or of a nature that would have raised an alarm.
Mr. Rajan acknowledged the recommendation of the board for replacement of Price Waterhouse and that the firm was resigning as statutory auditors, respecting the board’s decision.
He sought to know how finite conclusions could be arrived at a premature stage when the investigations were in progress.
Price Waterhouse was indeed anguished that the board of directors had concluded that the quality of “our audit being unsatisfactory without giving us an opportunity of being heard, or even advising us of what has actually transpired.”
“As victims of the fraud, we remain keen to get to the bottom of what transpired, and would request you to inform us of your specific findings so that we can consider issues relating to transition to any new auditor you may appoint pursuant to our resignation,” Mr. Rajan said in the letter.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Satyam sacks Price Waterhouse
Special Correspondent
HYDERABAD: Satyam Computer Services Ltd has recommended to the Ministry of Corporate Affairs removal of Price Waterhouse (PW) as statutory auditors of the company. On being notified, the PW tendered its resignation and the company now proposes to appoint new auditors.
At a meeting here on Saturday, the Board of Directors also approved the process for inviting a strategic investor. Deepak Parekh, a Director, said it was decided to seek regulatory approvals early next week after which the Board would announce the process.
The Board was informed that the company was “back to its winning ways” as it had bagged fresh purchase orders and work extensions to the tune of $250 million since January 7, the day B. Ramalinga Raju confessed to his fraud. CEO A. S. Murty said the recent successes, including a single order of $50 million, reflected an all-round positive trend. He said that more than half the revenues were from new purchase orders.
Satyam chairman Kiran Karnik said the Board was satisfied with the progress of the company’s stabilisation programme. He appreciated the sustained efforts of Satyamites in helping the company’s revival in fast track mode.
Another Board member T. N. Manoharan said that the company was receiving unsolicited offers of funding from banks. The funds already raised from the banks were being used in a controlled and phased manner.
Taking note of the exit of some senior business leaders, the Board authorised Mr. Murty to implement a plan to retain key associates in consultation with Boston Consulting Group (BCG) and Special Advisors.
It endorsed the extensive cost cutting measures initiated by the CEO. The meeting, the seventh since the constitution of the new Board, was attended by advisors Homi Khusrokhan and Partho Datta, legal advisors and senior BCG representatives.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
CBI registers case in Satyam scam
Special Correspondent
NEW DELHI: Two days after taking over the probe, the Central Bureau of Investigation (CBI) on Friday registered a case against Satyam’s founder B. Ramalinga Raju and others for their alleged involvement in the Rs. 7,136 crore fraud at the software firm.
The premier investigating agency also formed a 16-member team to complete the probe at the earliest. Describing the alleged scam as “unique,” a CBI spokesman here said the case had been registered against Mr. Raju, the company’s erstwhile directors and its auditor under various sections of the Indian Penal Code (IPC) relating to forgery and cheating.
The CBI has constituted a Multi-Disciplinary Investigation Team to undertake a thorough probe.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Satyam gets CLB nod to induct strategic investor
Ashok Dasgupta
Board allowed to enhance company’s authorised capital |
Board to make preferential allotment of shares
The funds raised will be kept in ‘no-lien account’
NEW DELHI: The Company Law Board (CLB) on Thursday permitted the government-appointed board of fraud-ridden Satyam Computer Services to induct one or more strategic investors through a public auction as also raise funds through preferential allotment of shares.
With the CLB nod, authorising the Satyam board to devise the process, the company moved closer to get a new owner, after permission was sought to conduct an open auction of equity stake bidders and also allot preferential shares to raise funds for working capital expenses, the Hyderabad-based IT major has moved a step closer towards recovery by way of getting a new owner.
In his order, CLB Chairman S. Balasubramanian pointed out that it was necessary for the company to secure long-term funds by inducting a strategic investor and accordingly, the Satyam board was being allowed to pass a resolution to enhance the company’s authorised equity capital to Rs. 280 crore, comprising 140 crore shares of Rs. 2 each, from the current Rs. 160 crore (80 crore shares of Rs. 2 each).
Open biddingAlongside, the CLB has authorised the six-member Satyam board to make a preferential allotment of shares, either at par or at a premium, without having to call an annual general meeting (AGM).
However, while allowing the induction of one or more strategic investors, the CLB has made it clear that the permission would be subject to the proposed plan providing for “a transparent, open and competitive [bidding] process without furthering the interests of any particular acquirer.”
The bidding process, the CLB said, would also be subject to the Satyam board getting the necessary approvals from market regulator SEBI in terms of its ‘takeover code’, and the selection process being “transparent, open and by way of a competitive price bid auction, overseen by a retired judge of the Supreme Court/a former Chief Justice of India.”
Besides, the Satyam board would have to seek CLB’s approval before actually allotting the preferential shares and provide full details about selection of the strategic investors. “In the interest of the company, its employees, shareholders, customers and in the larger public interest, further induction of long-term funds through induction of a strategic investor is necessary, I authorise the board of the company,” the CLB Chairman said while passing the order.
The company’s board had also submitted that on approval of its plan by the CLB, the funds so received would be kept in a ‘no-lien account’ with IDIBI Bank and Bank of Baroda — the two banks that had extended a Rs. 600-crore loan — towards working capital needs and be used for revival of the company.
Among those known to have evinced interest in acquiring Satyam are engineering major Larsen & Toubro (L&T), the B. K. Modi group and the Hindujas.
PTI reports:
With the Company Law Board permitting Satyam board to induct a strategic investor, the Government expressed hope that the troubled IT company’s board will soon prepare a plan for selling stake in the firm.
“The company will prepare its plan to induct strategic investor, which would enable long-term continuation and success of the company...new board of directors will...put in place a suitable plan soon,” Corporate Affairs Minister Prem Chand Gupta told reporters here.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
No wrongdoer will get away with it: Pranab
Sujay Mehdudia
“CM has assured me there is no interference in Satyam probe” |
NEW DELHI: Amid allegations that the Andhra Pradesh government is mishandling the Satyam scam issue, External Affairs Minister Pranab Mukherjee, holding additional charge of Finance, on Thursday assured the Rajya Sabha that no one would be bailed out; a full investigation would be conducted into the entire matter and the guilty punished.
“The intention is not to bail out any individual. Government intention is not to protect any wrongdoer. The Andhra Pradesh Chief Minister had met me recently and assured [me] that there was no interference in the Satyam probe and the Chief Secretary had been made the nodal officer for this. In fact, it was the Andhra Pradesh government that had recommended a CBI probe into the whole irregularities,” Mr. Mukherjee said.
“We may have to wait for some time for a full investigation into the matter. Whatever is necessary for investigation will be done.”
Left allegationWhen Left members alleged that the Andhra Pradesh government prevented the Securities and Exchange Board of India from questioning the accused, he said: “There is no question of influencing the probe or not allowing any statutory authority to complete the investigation. The Chief Minister had assured that all cooperation would be given to any investigating agency. The guilty in the case will be brought to book.”
Ruling out a financial bailout, Mr. Mukherjee said Satyam had adequate assets which could help the company run professionally and the government’s intervention was to ensure just that. “Government’s only interest is that it is an important company in this particular sector. It has a large number of international clients and a good number of professionals.”
Mr. Mukherjee said it was wrong to blame the Institute of Chartered Accountants of India for wrongdoing by some individual auditors.
The SEBI last month ordered an investigation into the dealings in the shares of Satyam Computer Services to ascertain if the provisions of the SEBI Act and rules and regulations made thereunder were violated. The SEBI also asked market participants to undertake a peer review of the working papers of auditors in respect of companies constituting the NSE-Nifty 50, the BSE Sens*x and some listed companies outside the Sens*x and Nifty chosen randomly. The peer review would be undertaken by a panel of auditors constituted by the SEBI.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Rajus’ bail applications dismissed
N. Rahul
HYDERABAD: A court here on Wednesday again dismissed the bail applications of the former Satyam Computer Services chairman, B. Ramalinga Raju, his brother Rama Raju and the former Chief Financial Officer, Srinivas Vadlamani.
This is the second time Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna has rejected their bail plea.
Mr. Ramakrishna permitted the Income-Tax Department to interrogate Mr. Ramalinga Raju in the Chanchalguda jail on February 21.
He also passed orders for interrogation of Mr. Srinivas Vadlamani and Price Waterhouse auditors S. Gopalakrishnan and Talluri Srinivas by the Securities and Exchange Board of India (SEBI) in the jail on Thursday and Friday. The SEBI earlier questioned the Raju brothers for three days in the jail.
Fresh bail pleaMr. Ramakrishna allowed a fresh bail application on behalf of Mr. Gopalakrishnan and Mr. Talluri Srinivas, and posted it for hearing to Friday.
The Central Bureau of Investigation was working out the nitty gritty of taking over the case, its Deputy Inspector-General V.V. Laxminaryana said, adding that a special investigation team would be constituted for the purpose in a day or two.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
CLB moved to sack Maytas boards
Special Correspondent
NEW DELHI: The government on Tuesday moved the Company Law Board (CLB) to supersede the boards of Maytas Infra and Maytas Properties, both promoted by the family of the former chairman of Satyam Computer Services, B. Ramalinga Raju.
Briefing journalists here, Corporate Affairs Minister Prem Chand Gupta said: “In order to prevent further acts of fraud against the said companies [two Maytas firms] and to safeguard the operations of these companies in the public interest, the government has moved the CLB to remove the existing directors.”
Pending the petition, slated to come up for hearing on February 24, the CLB was requested to “nominate government directors on the boards of each company.”
It was also requested to bar the board members of Maytas Infra and Maytas Properties from becoming directors in any other company, Mr. Gupta said.
The government prayed to the CLB that it immediately restrain all existing directors from “alienating, mortgaging, creating charges or liens or interest in the properties, assets owned and/or controlled by them without the leave of CLB.”
The move to sack the directors of the Maytas firms has come a day after the government handed over the Satyam fraud case to the Central Bureau of Investigation on the recommendation of the Andhra Pradesh government.
Explaining the need for such action on the lines of what was done in the Satyam case, Mr. Gupta said the CLB was moved because of a “strong possibility of the affairs of Maytas Infra and Maytas Properties having been conducted by its present management with fraudulent intent, causing breach of trust to stakeholders of the company.”
The Minister said the boards were persistently negligent in discharging their functions and this was proving detrimental to the business and operations of the two companies.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Satyam Computers fraud case transferred to CBI
N. Rahul
A formal notification issued by the State Home Department |
Decision in line with letter written by YSR to Prime Minister Manmohan Singh
CID has collected nearly 200 trunk loads of documents during search operations
HYDERABAD: After nearly six weeks of investigation by its police, the Andhra Pradesh government finally transferred the fraud case in Satyam Computers to the Central Bureau of Investigation (CBI).
A formal notification entrusting the CBI with the investigation into what it called the “accounting scam” in Satyam was issued by the State Home Department on Friday. Separately, Principal Secretary, Home, Ajoyendra Pyal, wrote a letter to the Secretary, Ministry of Personnel, requesting the Centre to instruct the CBI to take up investigation of the case immediately.
The government’s decision is in line with the letter written by Chief Minister Y. S. Rajasekhara Reddy to Prime Minister Manmohan Singh on February 9 stating that “it would be appropriate if the CBI takes over the investigation into the Satyam scam so that coordination with various investigation agencies” could be better achieved. The Satyam fraud rocked the proceedings of the budget session of the A. P. Legislative Assembly that concluded last week.
Dr. Reddy further said that though the Crime Investigation Department (CID) of Sate police was in regular touch with the other agencies, there were several issues which needed to be looked into deeply by the Central government organisations. Besides, irregularities were also reported in overseas operations, he added.
Simultaneously, a team from the Union Home Ministry, which visited Hyderabad, also recommended takeover of the case by the CBI after interacting with officials of various Central agencies investigating into the Rs.7,100-crore fraud.
FormalitiesConsequent upon these developments, the CID began work on the formalities for handing over the case to the CBI. It has collected nearly 200 trunk loads of documents, besides several computers during the search and seizure operations on the offices and residences of former Satyam chairman B. Ramalinga Raju and other top officials.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
SEBI relaxes takeover norms
MUMBAI: The Securities and Exchange Board of India on Friday eased takeover norms for companies whose boards have been superseded by the government, under which suitors need not make an open offer.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Satyam scandal: Home Ministry backs CBI probe
N. Rahul
Recommendation brings relief to Andhra Pradesh government |
HYDERABAD: A team from the Ministry of Home Affairs that interacted with top police officers during the past two to three days has reportedly recommended to the Centre that investigations into the multi-crore fraud in Satyam Computers be handed over to the Central Bureau of Investigation (CBI).
The team was in the city since Monday with the mandate to iron out differences between Central investigating agencies and the CID over sharing of records and computers seized by the latter during searches on premises of Satyam. Their recommendation comes as a relief to the State government. Chief Minister Y.S. Rajasekhara Reddy has written more than one letter to Prime Minister Manmohan Singh, favouring a CBI probe.
Land dealsThe Home Ministry officials were also said to have enquired about land deals of companies promoted by the Satyam group. It perused the records of 23 projects worth hundreds of crores entrusted to Maytas Infra and the consortia in which it is a partner.
B. Rama Raju Jr., son of former Satyam Chairman B. Ramalinga Raju, was interrogated by CID officers with regard to land deals of Satyam. According to a top CID official, some more family members of Mr. Raju will also be questioned shortly. A CID official said that the CID was ready to hand over investigation to the CBI if so ordered. Another senior officer of a Central agency said an exhaustive list of more than 7,700 acres of land owned by Satyam’s ex-boss, his family members, associates, friends and companies connected to them had been compiled by the State police.
The CID would oppose on Thursday the anticipatory bail moved by Ramalinga Raju’s lesser known brother Suryanarayana Raju, who was a key figure in land deals but was not apprehended by the police so far.
The court would also hear on Thursday a fresh bail application of Mr. Ramalinga Raju, his brother Rama Raju and former Chief Financial Officer of the company Srinivas Vadlamani.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
KPMG to conduct forensic study on Satyam
A. Saye Sekhar
Focus will be on business continuity
Takeover offers
will be considered
HYDERABAD: KPMG, the auditing firm hired to re-state the accounts of Satyam Computer Services, along with Deloitte will conduct a forensic investigation to help identify how the fraud was perpetrated.
Chief Executive Officer of Satyam A. S. Murty said in an email interview on Wednesday that the board of directors was aware of the objections raised by the Institute of Chartered Accountants of India (ICAI) over KPMG restating the company’s accounts and it had taken the reservations into consideration. Restatement of accounts of last several years would, however, take some time.
Mynampati’s roleOn the role of Ram Mynampati, who was a whole-time director on the erstwhile board, the CEO said he would continue to serve as president of the company’s commercial and healthcare business, and direct all matters relating to that business. Ever since the crisis came to light, Mr. Mynampati had been in constant contact with customers all over the globe, assuring them of Satyam’s abilities to continue delivery without disruption. Mr. Murty confirmed that he sold some shares to finance the construction of his house after following the due process of insider trading guidelines and the board too conducted due diligence on the issue. The new CEO said he would get some insulation from lawsuits.
To a question on identifying suitors for acquisition of a controlling stake in Satyam and whether the board was talking to the Securities and Exchange Board of India on relaxing the pricing norms, Mr. Murty said the board and the executive team had a fiduciary responsibility to consider all serious offers.
Given its exceptional capabilities and world-class associates, Satyam had been approached by representatives from numerous entities expressing interest in associating with the company in various ways.
“We will evaluate them all, but are under no duress to act on them immediately,” he pointed out.
The organisation’s primary focus for the immediate future would include business continuity, assuring customers and associate, determining the company’s financial position and restating third quarter results, managing legal liabilities and undertaking cost-rationalization measures. Satyam had a promising future, whether or not it remains an independent entity. He confirmed that the U.S. Securities and Exchange Commission officials met the new Satyam board memebrs, but declined to elaborate further.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
YSR calls for CBI probe
HYDERABAD: Chief Minister Y. S. Rajasekhara Reddy has once again requested Prime Minister Manmohan Singh to entrust the inquiry into the Satyam fraud to the Central Bureau of Investigation (CBI).
Such a measure, he said in a letter to the Prime Minister on Monday, would help in better coordination with various agencies, including those dealing with Satyam’s overseas operations.
The Andhra Pradesh police would fully cooperate with the CBI once it took over the investigations, Dr. Reddy said.
In the face of mounting criticism over the lax investigation by the CID, the Chief Minister urged Dr. Singh to “consider the matter at the earliest and issue suitable instructions.” This is in marked departure from the earlier position where the Chief Minister said an inquiry by the premier investigation agency was welcome if the Centre deemed it fit.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Karnik named Satyam chairman
Special Correspondent
Serious Fraud Investigation Office to probe 325 firms and 25 individuals |
NEW DELHI: The Union government on Friday named Kiran Karnik chairman of Satyam Computer Services.
It also expanded the “serious fraud” probe to cover 325 firms and 25 individuals related to the Hyderabad-based IT major and family members of its former chairman B. Ramalinga Raju.
Addressing a press conference here, Union Corporate Affairs Minister Prem Chand Gupta said that while the probe by the Serious Fraud Investigation Office (SFIO) was “proceeding in the right direction”, orders were issued to include the Bangalore office of Satyam’s auditor Price Waterhouse (PW) in the investigations as well.
“The government has extended the investigation [by SFIO] to 350 entities.... there are approximately 325 companies and about 20-25 individuals.… They are related to same Satyam and Raju [family] group and the SFIO will look into linkages between all these companies and all these individuals,” Mr. Gupta said.
The SFIO would examine the role of individuals and issues concerning diversion of funds, among others.
The appointment of Mr. Karnik, former Nasscom president and Satyam director, comes a day after the government-nominated board named company veteran A. S. Murthy the CEO.
Referring to the task entrusted to the SFIO, Mr. Gupta said: “The probe is heading in the right direction.... as required in the larger interest of the corporate sector and in the direction all of which we wish.... it will be a fair assessment of the whole situation.”
Asked whether the SFIO was capable of conducting such a large-scale probe, the Minister said the agency was well-equipped to tackle such issues. While it had moved a magistrate’s court in Hyderabad to question the two Raju brothers, the SEBI concluded questioning of the two on Friday.
CHEZHIYAN
(SENIOR FINANCIAL ANALYST)
(2517 Points)
Replied 25 February 2009
Satyam CEO to focus on four key areas
Special Correspondent
Forms different taskforces to steer them |
HYDERABAD: Chief Executive Officer of Satyam Computer Services A. S. Murty has prioritised four focus areas and formed different taskforces to steer them.
In an e-mail he addressed to all associates in the company on Friday, Mr. Murty listed out the areas of priority that included regaining customer confidence and ensuring retention of all our key customers; reinforcing associate confidence and ensuring key associate retention; initiating cost optimisation measures; and effective management of financial matters.
Mr. Murty said that leaders for the taskforces were also identified and they would define the desired outcomes from each of these areas. The progress would be constantly monitored “through simple and effective dashboards.”
Striking an emotional chord, the new CEO told the employees: “It is not for us to be history; it is for us to create history together.”
“We are moving in the right direction. We are in the process of an ethical transformation of our company; to reassert our value proposition and customer commitment. Our continuous efforts to restore Satyam to its market leadership position will soon bear fruit and stand testimony to our steadfast commitment to our stakeholders,” he said.
Explaining how challenging was the new role that he had to shoulder, Mr. Murty sought their cooperation in shouldering the ‘mammoth responsibility’. The Boston Consulting Group would be working with the company closely and “we will have the guidance of Homi Khusrokhan and Partho Datta, our special advisors,” he said.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India