Government to remove two Maytas firms’ directors (Lead)February 18th, 2009 - 12:20 am ICT by IANS
New Delhi/Hyderabad, Feb 17 (IANS) The government Tuesday moved the Company Law Board to remove the board of directors of Maytas Infrastructure and Maytas Properties, the infrastructure firms promoted by disgraced Satyam founder B. Ramalinga Raju’s family.
Corporate Affairs Minister Prem Chand Gupta said the government has found evidence that the two companies were involved in money laundering, fraudulent accounts and diversion of funds.
The government’s move comes after the Serious Fraud Investigation Office (SFIO) was asked to probe the links between Satyam and the two Maytas companies.
Ramalinga Raju, his brother B. Rama Raju, Satyam’s former chief financial officer Vadlamani Srinivas and two former auditors are now in prison in connection with the Rs.78-billion (Rs.7,800 crore/$1.43 billion) accounting fraud.
Following Ramalinga Raju’s resignation, Maytas Infrastructure chairman and non-executive director R.C. Sinha also tendered his resignation “owing to personal reasons”.
Maytas Properties chief executive K. Thiagarajan resigned Feb 15 reportedly on health grounds. Most of the Maytas Infra board had already resigned in January, with CEO P.K. Madhav putting in his papers Jan 14.
The firm’s wholetime director, Chander Sheel Bansal, quit Jan 30. B. Narasimha Rao was appointed in his place in haste the same day to avert a crisis.
Vice-chairman B. Teja Raju and independent director R.P. Raju are the other members on the Maytas Infra board.
Reacting to the government’s move, Deepak Parekh, a member of the government-appointed board of Satyam, said it was a “move in the right direction”.
“Hope that we are not appointed to Maytas’s firm. Our hands are already full,” he added.
The Satyam fraud has already cast a huge shadow of doubt over the future of both Maytas Infra and Maytas Properties.
The two companies are run by Ramalinga Raju’s sons. Maytas Infra is headed by B. Teja Raju while Maytas Properties is run by B. Rama Raju (junior). Though a listed firm, the Raju family holds 36 percent equity stake in Maytas Infra.
The government move came amid reports that the Raju family informed the stock exchanges that its entire shareholding in Maytas Infra has been pledged to lenders.
It was the aborted bid by Ramalinga Raju to acquire these companies for $1.6 billion which triggered a crisis in Satyam, finally leading to Jan 7 admission by Ramalinga Raju of Rs.78 billion fraud in the IT services firm.
It was on Dec 16 that the Satyam board decided to acquire the two companies but shareholders’ outcry forced Ramalinga Raju to call off the acquisition within 24 hours.
The investigations into the Satyam fraud so far have hinted that Ramalinga Raju diverted Satyam money to Maytas and several other companies floated by him and his family members.
The government move to take over Maytas also came in the midst of mounting criticism of the Congress government in Andhra Pradesh for allegedly favouring Maytas Infra by allotting several major infrastructure projects worth Rs.30 billion.
The move is seen as an attempt to protect the projects.
Maytas consortium was awarded the Rs.120 billion Hyderabad Metro Project and Rs.12 billion Machilipatnam Sea Port work by the state government.
Maytas and its joint venture partners were together awarded Rs.130 billion worth of works, out of Rs.380 billion Pranahita-Chevellalift irrigation project. The company was already implementing irrigation projects at a cost of Rs.30 billion and has completed Rs.17.48 billion worth irrigation works.