Satyam brass questioned, three new board members named (Roundup)January 11th, 2009 - 6:20 pm ICT by IANS
New Delhi/Hyderabad, Jan 11 (IANS) A three-member new board was named Sunday to bring back financial order to the fraud-hit Satyam Computer Services and restore confidence of employees, investors and clients into the firm’s future operations, even as its top brass was questioned regarding the financial fraud.The new board 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 member of markets watchdog Securities and Exchange Board of India (SEBI) C. Achuthan.
“We will ensure that Satyam continues to function in the best interests of the company and its shareholders,” Corporate Affairs Minister Premchand Gupta told reporters here, announcing the names of the new board members.
“The new board will meet in next 24 hours,” the minister said a day after the company’s founder-chairman B. Ramalinga Raju and his brother Rama Raju surrendered before the authorities for financial fraud and were remanded to judicial custody till Jan 23.
“Having considered all aspects, the government has decided to reconstitute the Satyam board with experts in different fields,” Gupta said. “Such a board will provide necessary vision and accountable leadership to the company in the hour of crisis.”
He, however, declined comment when asked if investors in Satyam like Lazard and Life Insurance Corp of India would also be given representation on the company’s board eventually.
Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy made this suggestion during a press conference in state capital Sunday, adding that his government would refer the case to the Central Bureau of Investigation (CBI), if necessary.
In a development that jolted corporate India and raised questions about the level of corporate governance in the country, the 54-year-old Satyam chairman had admitted to perpetrating a Rs.70-billion ($1.4 billion) fraud on the company that saw its revenues cross the $2 billion mark last fiscal.
Gupta said the reconstituted board will make its own assessment of the situation and take appropriate decisions. “It would restore credibility to the company, customer confidence and boost employee morale.”
The minister briefed Prime Minister Manmohan Singh here Saturday to discuss the developments surrounding Satyam, including the names of those proposed to become board members of the Hyderabad-based company, officials said.
The government sacked all members of the Satyam board Friday. Officials said the prime minister wanted a credible management at its helm so as to instil the necessary confidence among various stakeholders.
“This is not only a welcome step but also a speedy decision. The government must be congratulated for prompt action which was the need of the hour,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
“All three people named are leaders in their respective field - one knows the IT industry inside out, the second is an expert regulator and chartered accountant, and the third has phenomenal understanding of corporate governance,” Banerjee told IANS, referring to Karnik, Achuthan and Parikh, respectively.
“I am sure the government will consider more such people,” he added.
“We are confident that this will help to ensure business continuity, build confidence and protect the interests of all the stakeholders - the employees, customers and investors,” said Som Mittal, president of Nasscom.
“By acting in this bold and coordinated manner, the government has sent the right signals to the global community and set an example of what governments can do to protect stakeholder interests while ensuring strict adherence to the rule of law.”
Officials familiar with the developments said that the markets regulator would soon seek permission from the Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna who has the Satyam brass under custody to record their statements.
The two brothers spent Saturday night inside the Chanchalguda jail in Hyderabad, sleeping on the floor along with 26 other prisoners accused of petty crimes like theft. Prison authorities said they will be treated like ordinary under-trials with no special arrangements.
The Crime Branch-Crime Investigation Department (CID) of the Andhra Pradesh police also continued the interrogation of Vadlamani Srinivas, the former chief financial officer of Satyam about the fraud.
“We are continuing interrogation of Vadlamani Srinivas. He will be produced before a magistrate within 24 hours,” V.S.K. Kaumudi, inspector general of police with the Economic Offences Wing of the CID, told IANS in Hyderabad.
SEBI chairman C.B. Bhave met Minister Gupta Saturday to discuss the ongoing investigation into the scam. Senior officials of the markets watchdog have been checking the firm’s books of accounts since Thursday.
Auditing firm PriceWaterhouseCoopers (PwC) that had certified the accounts of the company as “true and fair” is also under scrutiny, officials said.
A top functionary of the Institute of Chartered Accountants of India (ICAI) said in Chennai Saturday that the auditing firm was bound to disclose all the facts and could not hide under the client confidentiality clause.