Business | General
Scandal sees Satyam reviewing finances
Satyam Computer Services Ltd, India's fourth-largest software exporter, is trying to assess its finances after its founder admitted $1 billion (Dh367 billion) of false accounting, triggering a record fall in the company's stock.
- Bloomberg
- Published: 23:38 January 8, 2009
Mumbai: Satyam Computer Services Ltd, India's fourth-largest software exporter, is trying to assess its finances after its founder admitted $1 billion (Dh367 billion) of false accounting, triggering a record fall in the company's stock.
Satyam is trying to ascertain the veracity of the disclosures made by former chairman Ramalinga Raju Wednesday, interim CEO Ram Mynampati said at a press conference in Hyderabad yesterday.
Mynampati said he wasn't aware of the financial misconduct by the chairman and managing director as he relied on the audited statements.
Satyam is scrambling to stay in business after India's government, regulator and accountants group all said they're investigating the Hyderabad-based company. Raju quit yesterday after saying profits had been inflated for "several years."
"It clearly raises question marks about the auditors involved, the board of directors and many things," said David Chatterjee, a senior investment manager at Pictet Asset Management Ltd in London, which sold its entire stake in Satyam last quarter.
"What's happened with Satyam is such a huge thing and will have a series of serious ramifications."
The scandal described as "horrifying" by Indian markets regulator C.B. Bhave rattled the nation's stock market, sending the Sensex index tumbling 7.3 per cent yesterday, the biggest drop in more than 10 weeks.
PricewaterhouseCoopers LLP, Satyam's auditor, declined to comment on the scandal, according to an e-mail from the New York-based firm's public relations adviser Edelman.
Ved Jain, president of the Institute of Chartered Accountants of India, said the group has written to the market regulator and the Registrar of Companies seeking information on Satyam and its accounts.
"There can be two possibilities: One, the auditor has been negligent. Second, is that he was aware and intentionally overlooked it," Jain said. "Both ways, my act will be applicable. In the second, it can be a criminal case as well."
Satyam tumbled a record 78 per cent to Rs40.25 (Dh3.04) in Mumbai trading Wednesday. The Indian market was closed for a holiday yesterday.
The software provider's American depositary receipts plunged 90 percent in early New York trading, prompting a halt by the New York Stock Exchange, which said it is evaluating the news.
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