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| Govt orders probe into 8 Satyam-related entities |
| BS Reporter / New Delhi Jan 09, 2009, 00:56 IST |
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The government today ordered probe into eight companies that are related to Satyam Computer Services for their possible role in inflating the profits of the Hyderabad-based software services firm.
Experts have cited transaction with related companies — subsidiaries of Satyam or companies owned or promoted by the Raju family — could be one possibility for overstating the profits and revenues. And the move by the ministry could be to probe this link.
"We are taking a co-ordinated action with the involvement of all departments," said Prem Chand Gupta, minister of corporate affairs, which regulates companies in India.
These companies are —Maytas Properties, Maytas Infra, Satyam BPO, Nipuna Services, Knowledge Dynamics, Nitor Global Solutions, CA Satyam AS and Satyam Venture Engineering Services.
The inspection of these eight companies will be done under Section 209A of the Companies Act which provide powers to the government and the Sebi to inspect the books of accounts without giving prior notice to a company. Also the inspecting officer has the power to call for any relevant document and summon officials.
The minister also denied reports that the ministry has recommended arrest of Ramalinga Raju, the promoter of Satyam, adding that they have only sought assistance from the Andhra government for investigations. The minister also held a meeting in the morning which was attended by the heads of the department of corporate affairs, secretary (law), secretary (finance) along with ICAI president and a representative of the Securities and Exchange Board of India (Sebi) to chalk out a strategy so that a co-ordinated action can be taken against Satyam, its promoters and auditors.
While ICAI will probe into the role of the auditors (both statutory and internal), the other two agencies — Registrar of Companies and Sebi — have already started their investigation. Gupta refused to give a timeline for submission of reports by the two government agencies, but said he would take action based on the report. The government is looking at all possibilities for further action. The ministry could refer the case for investigation to the Serious Frauds Investigation Office (SFIO), even before receiving a report from the RoC, a senior corporate affairs official said.
On being asked if the government is thinking of taking over the board of Satyam or putting its own member on the board, the minister said the government is keeping all options open. "It is the government's intention to ensure that the prestige of the country and particularly that of the corporate sector is restored," said Gupta while maintaining that it was a one-off case of personal greed and that the corporate sector is very responsible.
The government has also asked ICAI to take appropriate action against the erring auditors. ICAI, through the financial reporting review board (FRRB), has asked for Satyam's internal documents within three working days to find out the true picture.
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