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Satyam board members named
Indian authorities yesterday named three business leaders to help rescue embattled outsourcing giant Satyam Computers in the wake of a massive fraud scandal that threatens to sink the company.
- AP
- Published: 23:41 January 11, 2009
New Delhi: Indian authorities yesterday named three business leaders to help rescue embattled outsourcing giant Satyam Computers in the wake of a massive fraud scandal that threatens to sink the company.
Corporate Affairs Minister Prem Chand Gupta tapped experts in technology, finance and law to form the core of a new board for the company, which in the past week has seen its leadership arrested and its board dissolved.
Satyam is fighting for its life after founder and chairman B. Ramalinga Raju confessed to doctoring the company's accounts by $1 billion and filling the company's balance sheets with "fictitious" assets and "nonexistent" cash.
Raju, along with his brother, a former managing director, and the former chief financial officer, have been arrested and charged with criminal conspiracy, forgery, criminal breach of trust and falsifying documents. They face up to life in prison, police said.
Police were questioning the three in the southern city of Hyderabad yesterday, said senior police official V.S.K. Kumudi.
Satyam, which is headquartered in the southern Andhra Pradesh state, employs 53,000 people _ among the 2 million Indians working in the country's booming high-tech industry. The company's clients include a slew of Fortune 500 companies, including Nestle, General Electric and Ford Motors.
"The board's first priority would clearly be to restore the company's credibility, customer confidence and employee morale," said Gupta. "Such a board will provide the necessary vision, along with responsible and accountable leadership to the company in this hour of crisis," he added
Gupta said the three new board members will be Deepak Parekh, head of the Housing Development Finance Corp bank, Kiran Karnik, the former head of Nasscom, a trade body of technology companies, and C. Achuthan, a legal expert and a former member of the Securities and Exchange Board of India.
The company welcomed yesterday's announcement as "the best news we've received in the past four weeks."
"This is a vital stabilising development for Satyam, and it marks the beginning of a new chapter in the company's history," the company said in a statement.
Gupta named the three to the board some 36 hours after he disbanded the previous board.
The new board will meet within the next 24 hours, but Gupta said the government may name up to seven more people to fill out the board. The three will choose among themselves who will serve as the chair.
Karnik said he was confident he and the other new board members would get Satyam "back on the rails".
"It's certainly going to be a challenge, but I think it's very important for the whole Indian IT industry and indeed the country to maintain customer confidence," Karnik told NDTV news channel.
Parekh told NDTV that the board's job will be "to see that employees don't lose their job, Satyam doesn't lose its clients ... and to come out with actual accounting numbers."
Holders of the company's US-listed shares - which have been halted from trading on the New York Stock Exchange while regulators investigate - have filed at least six class action suits against Satyam, the law firms representing the investors said in separate statements.
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