Mahindra Satyam reaches settlement with SEC

Mahindra Satyam, the brand identity of Satyam Computer Services Limited, announced that it had reached a settlement with the United States Securities and Exchange Commission (SEC), “without admitting or denying allegations of any wrongdoing,” which concludes the SEC’s investigation of accounting issues pertaining to the company.

Under the terms of the settlement, the company consented to the entry of a judgment requiring it to pay a civil penalty of $10 million (about Rs 45 crore), comply with the US federal securities laws, hire an independent consultant, and comply with certain undertakings, Satyam stated in a press release.

This settlement relates to an accounting fraud perpetrated by the company’s former management from at least 2003 through September 2008. All of the misconduct transpired under previous management prior to the nomination and appointment by the central government of new directors for the company on January 11, 2009, and prior to the strategic investment by Venturbay Consultants Private Limited, a subsidiary controlled by Tech Mahindra Limited, that was completed in July 2009.

According to Satyam, the SEC referred to “the unique and significant remediation efforts made after the fraud became public in 2009” and stated that Mahindra Satyam had been transformed “into a new company with new management, directors and investors and state-of-the-art controls.”

“We concluded that it is in the best interests of Mahindra Satyam and its shareholders to resolve this matter and put it behind us on the basis announced today. The new management of the Company are committed to the highest standards and we will never betray the trust of our investors”, Vineet Nayyar, chairman of Mahindra Satyam, said.

Mahindra Group vice-chairman and managing director Anand Mahindra today said: “These are historical issues. SEC has been in dialogue with us for a while. This is in a way a closing chapter for us as far as SEC is concerned. It is unfortunate that we had to deal with remissions of the past and all major litigations are a closed chapter now.”