Satyam to pay $125 mn to settle US fraud suits

To make Raju, others a party to the case for claiming damages.

Mahindra Satyam (the brand identity of Satyam Computer Services Limited) has agreed to settle the class action law suits filed against the company in a south district court of New York for $125 million (approximately Rs 556 crore) “as a one-off and inclusive of taxes”, said chairman Vineet Nayyar.

“The amount will be delivered to the four lead plaintiffs once the US court judge gives the final approval to the settlement deal, which may take around four months. We will not account the $125 million from the bottomline since that was not part of our operations. We will pay from our cash reserves, which are at Rs 2,900 crore. The payment amount, subject to the approval of the RBI, will be put in an escrow account in a few days,” Nayyar said in a conference call today.

Satyam will also pay 25 per cent of any net recovery that it may obtain in future from PricewaterhouseCoopers (PwC) and related entities that helped Satyam founder B Ramalinga Raju perpetrate the fraud, he said.

“While 25 per cent will go towards the class action suits, 75 per cent will come to the company, provided we sue PwC through the court to give damages or go for an out-of-the-court settlement. It is based on these two options. It will take some time, we are looking at this,” he said declining to comment further.

After Raju confessed to having fudged the company accounts, Satyam’s stock on the New York Stock Exchange nosedived, reportedly causing huge losses and drawing over a dozen law suits from US investors.

Mahindra Satyam had in December 2009 settled a lawsuit filed by its former client UPaid over licence of intellectual property among others, by paying $70 million.

Replying to a query on whether Mahindra Satyam would look at settling claims made by Maytas and 37 other companies belonging to the Raju family, which claimed Rs 1,230 crore, Nayyar said they were yet to start dialogue.

Most of the litigations are now over. There are no pending litigations other than the claims made by the Raju family, he said, adding that like PwC, the company was going to make Raju and associates as a party to sue and claim some damages from the sale of his land assets. “These are part of all the continuing developments. We will sue Raju,” Nayyar said, while refusing to draw any time line.

Satyam's stock is currently trading at Rs 63.55 on the BSE, up 1.44 per cent over the previous close of Rs 62.65 .