Satyam’s UK client files lawsuit over aborted Maytas buyoutDecember 19th, 2008 - 9:09 pm ICT by IANS
Bangalore/Mumbai, Dec 19 (IANS) A British firm, which is an old client of Satyam Computer Services, Friday filed a lawsuit in a US county court against the software major’s top brass over the firm’s aborted bid to buy out promoter group companies Maytas Properties and Maytas Infra.The online and mobile payment services Upaid Systems Ltd said in a statement from London that the lawsuit was filed in Collin County, Texas district court, seeking depositions by Satyam founder-chairman B. Ramalinga Raju, chief financial officer Srinivas Vadlamani and its global head of corporate governance G. Jayaraman.
They attempted “to strip all surplus cash from the company in a $1.6-billion (Rs 79.2-billion) related-party transaction benefiting the family of Satyam’s founder and chairman,” it said.
The Hyderabad-based Maytas Properties and Maytas Infra are run by Raju’s two sons - Rama Raju and Teja Raju.
“The evidence of Satyam’s poor corporate governance and business practices has been mounting, harming us, other customers and Satyam’s shareholders,” Upaid said in its statement.
Following the allegations, Satyam’s stock fell further Friday to close at Rs.162.80, down 3.87 percent or Rs.6.55. The scrip has lost about 26.25 percent since last week when the company backtracked on its plan to acquire Maytas Infra and Maytas Properties for about $1.6 billion, following a furore from investors and analysts.
Maytas Infra has been in a free-fall ever since the deal fell through, with its scrip falling 20 percent again Friday to close at Rs.248.55.
The aborted Maytas transactions had also resulted in a fire sale on its stock that led to a 55 percent one-day decline in its market value Tuesday on the New York Stock Exchange (NYSE).
To substantiate its allegation, Upaid accused Satyam of trying to execute a transaction designed to deplete its assets in advance of a judgment, which rightfully concerns its engagement with the Hyderabad-based IT vendor.
“Satyam executives are in the best positions to know their company’s reputation in the business community and the recent events that have drawn such widespread criticism in the marketplace,” Upaid said in the statement.
Upaid also charged Satyam with being willing to engage in fraudulent transfers to avoid its legal obligations.
The beleaguered IT firm Wednesday called off the deal after investors and analysts revolted against the top management for attempting to ‘bail out’ the cash-strapped Maytas firms.
Incidentally, Satyam is already in litigation with Upaid over a breach of contract and is facing lawsuits in the US federal and state courts filed by the latter in April 2007, claiming $1 billion in damages for fraud and forgery.
Though the federal court proceeding is scheduled for a Texas jury trial in June 2009, Satyam is faced with an adverse judgment after it lost an injunction appeal in the Court of Appeal in London in May against the original lawsuit.
As a mobile and online payments specialist, Upaid offers applications ranging from the recharge of prepaid accounts via SMS to electronic bill payment and presentment to billing for mobile content. It holds the franchise for Visa mobile service in the CEMEA (central Europe, Middle East and Africa) region, with operations in Brazil and the US.