Govt supersedes Satyam board

The government today superseded the board of Satyam Computer Services and has decided to appoint 10 nominee-directors. The new board will have its first meeting within seven days and take a decision on a new management team.

Since the present three member board will have no locus standi, tomorrow's board meeting, led by interim CEO Ram Mynampati stands cancelled.

This comes after the regulatory agencies launched a frontal attack on the company during the day, triggering panic selling in the stock which plunged over 40 per cent on the Bombay Stock Exchange today.

Disgraced former Chairman B Ramalinga Raju, whose January 7 revelations of financial irregularities to the stock exchanges sparked off the crisis, will meet officials of the Securities and Exchange Board of India’s (Sebi) investigating team at 4 pm tomorrow, his lawyer S Bharath Kumar said.

Raju, who failed to appear in person at a meeting with the Sebi team today on grounds of ill health, has been given 24 hours time. The meeting will be held at Satyam’s My Home office in Hitec City.

This will be Raju’s first public appearance since admitting the accounting fraud, considered the biggest scandal in India’s corporate history.

Raju can, however, take heart from Sebi Chairman C B Bhave’s statement at a media briefing in Mumbai that the regulator will not file a case till the investigation is complete. “Raju’s letter itself isn’t enough to put him in front of a magistrate,” he said.

Bhave said the regulator is in touch with the US Securities and Exchange Commission (Satyam is listed on New York Stock Exchange, which has suspended trading in the American Depository Receipt) and requested investors to treat the Satyam episode as a one-off case.

A Sebi team first visited Raju’s Jubilee House residence but found it locked. Raju is believed to be staying at a guest house belonging to the Byrraju Foundation at Kompally on the outskirts of Hyderabad.

That the regulatory noose is tightening around what was once touted as India’s fourth-largest software services firm was evident from Minister for Corporate Affairs Prem Chand Gupta’s statement that the government has seized the company’s books of accounts.

"After obtaining a judicial order from the magistrate in Hyderabad, the Registrar of Companies (RoC), in coordination with Sebi, went to the office of Satyam and seized the documents from its premises," Gupta said, adding that the operation went on till 5 am Friday morning.

An eight-member RoC team has already rushed to Hyderabad to investigate the accounts of Satyam and its eight subsidiaries. An RoC official said, "We have a record of eight years of balance sheets of Satyam (till March 2008) available with us and have not found any aberration in them. They have sought an extension of time to furnish the records and returns till date, which we asked for. We are expecting Satyam to submit these on January 12."

He, however, said the investigation could take two more months.

The Criminal Investigation Department (CID) of the Andhra Pradesh police has also launched an investigation into the scandal after the state government finally gave the go-ahead today. Director General of Police S P Yadav will personally supervise the investigation.

Auditor Price Waterhouse also came under glare with the Institute of Chartered Accountants of India asking it to explain its actions within 21 days.

Meanwhile, traders continued to pound the company’s scrip. The stock fell to  yearly low of Rs 11.50 on Bombay Stock Exchange before closing 40.30 per cent lower at Rs 23.85. On National Stock Exchange, the stock fell to a low of Rs 6.30 intra-day.

The BSE has decided to exclude the scrip from the equity derivatives segment. Thus, fresh month contracts will not be introduced for the expiry month April 2009 on the expiration of January 2009 contracts.