Self-promoters...Satyam stoops, investors conquer

Satyam Computer found itself in the eye of a storm after the IT major announced a plan to buy two companies promoted by the promoter's son for around US$1.6bn. The rationale: the move will provide a much-needed cushion amid uncertain business environment for the core IT and BPO businesses. The management also claimed that the diversification will pay rich dividends in future. However, enraged investors forced the company to do an about-turn on the ill-conceived acquisitions, citing blatant violation of corporate governance. The Hyderabad-based company dropped the plan to acquire 100% of Maytas Properties and 51% in Maytas Infra. But, despite the move, the shares of both Satyam and Maytas Infra took a beating, prompting the company to announce plans for a share buyback. The board will meet on Dec. 29 to consider the buyback. But, the move is unlikely to restore investor confidence in Satyam management, who has lost much of its credibility for flouting all ethical norms of corporate governance. Meanwhile, the Government is believed to have ordered a probe into Satyam's decision to buy two promoter group companies and then scrap the deal in the wake of investor backlash.