NYSE probes deals with 'terror states'

Months before Satyam Computer Services founder B Ramalinga Raju made disclosures about committing fraud, authorities in the US had initiated an investigation into the company’s dealings with Syria, Sudan, Cuba and Iran, identified by the US government as state sponsors of terrorism, and subject to US economic sanctions and export controls.

In a letter to B Rama Raju, the then Managing Director and CEO of Satyam and brother of Ramalinga Raju, the Office of Global Security Risk had pointed out that the computer firm had not made disclosures regarding the contacts with these countries and sought clarifications on the past dealings, and anticipated contacts.

Satyam, which is currently up for sale, did not respond to a questionnaire e-mailed on Wednesday. However, its reply to the US Securities and Exchange Commission, which is posted on the NYSE Euronext website, confirmed that it had transactions with companies in Syria and Sudan but did not disclose them due to the “insignificance of these sales.”

In its response on November 26, without disclosing the identity of the clients in Syria and Sudan, Satyam said the revenue contribution from the services rendered in these countries was less that 0.006 per cent of the company’s revenues in 2003, 2005 and 2006.

“Given the de minimis nature of the company’s dealings with Sudan and Syria outlined above, the company does not believe that this represents a material concern for the company’s investors, from either a quantitative or qualitative perspective," its reply says. "The company acknowledges that investor awareness in the US and elsewhere has heightened in recent years regarding investments in companies which have dealings with the state sponsors of terrorism.… However, the company reiterates that it firmly believes that such concerns are inapplicable to the company.”