Board Tries to Chart Recovery for Scandal-Ridden Indian Firm
The new government-appointed board of the fraud-plagued Satyam Computer Services is scrambling to secure financing and fill management positions, board members said after a meeting on Monday in Hyderabad. Two of the company’s former executives, meanwhile, described the details of the fraud to the police.
The technology sector in India was dealt another blow after the World Bank said two other outsourcing firms — Wipro and Megasoft Consultants — were barred in 2007 from contracts with the bank for four years.
Satyam is struggling for survival, after its former chairman, B. Ramalinga Raju, confessed in a letter last week to falsifying some $1 billion in cash at the company and vastly inflating profit margins.
The company has “working capital issues” that need “immediate attention,” said Deepak Parekh, an interim board member and the chairman of the Housing Development Finance Corporation, at a news conference on Monday. Satyam may have trouble meeting payroll for its 53,000 employees at the end of this month, analysts say.
The new board will appoint an accounting firm in the next 48 hours to review and restate Satyam’s numbers, and announce third-quarter results, Mr. Parekh said.
Indian officials might step in to provide capital if needed, politicians in New Delhi said on Monday. “The government is keen to do everything possible to quickly get the organization on its feet and conduct business as usual,” Mr. Parekh said.
Mr. Raju and his brother, B. Rama Raju, were arrested on Friday, and Vadlamani Srinivas, its former chief financial officer, was arrested on Sunday. They are being charged with criminal fraud, cheating and falsifying records. All three have resigned.
In a taped confession to the police, Mr. Srinivas said that he had been specifically asked not to handle the company’s bank deposits, and that he had been presented with the company’s balance sheets only a week before board meetings.
Mr. Srinivas said he had suspected that something was wrong when the company was late with bills, but he said he had been forbidden by Satyam’s chairman and managing director from using fixed deposits to pay them. A transcript of Mr. Srinivas’s confession was obtained by the local television news channel CNBC-18 and reviewed by The New York Times.
Source: NYT
The technology sector in India was dealt another blow after the World Bank said two other outsourcing firms — Wipro and Megasoft Consultants — were barred in 2007 from contracts with the bank for four years.
Satyam is struggling for survival, after its former chairman, B. Ramalinga Raju, confessed in a letter last week to falsifying some $1 billion in cash at the company and vastly inflating profit margins.
The company has “working capital issues” that need “immediate attention,” said Deepak Parekh, an interim board member and the chairman of the Housing Development Finance Corporation, at a news conference on Monday. Satyam may have trouble meeting payroll for its 53,000 employees at the end of this month, analysts say.
The new board will appoint an accounting firm in the next 48 hours to review and restate Satyam’s numbers, and announce third-quarter results, Mr. Parekh said.
Indian officials might step in to provide capital if needed, politicians in New Delhi said on Monday. “The government is keen to do everything possible to quickly get the organization on its feet and conduct business as usual,” Mr. Parekh said.
Mr. Raju and his brother, B. Rama Raju, were arrested on Friday, and Vadlamani Srinivas, its former chief financial officer, was arrested on Sunday. They are being charged with criminal fraud, cheating and falsifying records. All three have resigned.
In a taped confession to the police, Mr. Srinivas said that he had been specifically asked not to handle the company’s bank deposits, and that he had been presented with the company’s balance sheets only a week before board meetings.
Mr. Srinivas said he had suspected that something was wrong when the company was late with bills, but he said he had been forbidden by Satyam’s chairman and managing director from using fixed deposits to pay them. A transcript of Mr. Srinivas’s confession was obtained by the local television news channel CNBC-18 and reviewed by The New York Times.
Source: NYT
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