Satyam saga continues...

The Government appointed six members on the new board of tainted IT major, Satyam Computer Services. The new directors on the Satyam board are, HDFC group chairman Deepak Parekh, former NASSCOM chief Kiran Karnik, ex-SEBI board member C. Achuthan, CII mentor Tarun Das, former ICAI president TN Manoharan, and LIC's Suryakant Balakrishna Mainak. The new board then hit the ground running in a bid to bring the company's operations back on track. It appointed KPMG and Deloitte to restate Satyam's forged accounts. However, ICAI later claimed that the two firms are not registered with it and are not allowed to do audit work in the country. The government appointed board also simultaneously started looking for a suitable CEO and a CFO to run the company.

A Hyderabad court posted to January 19 hearing on a petition by market regulator SEBI seeking permission to question former Satyam chairman B. Ramalinga Raju and two others. The petition was filed before a magistrate court seeking permission for interrogating Raju, MD Rama Raju and former CFO Vadlamani Srinivas. P.K Reddy, lawyer of market watchdog SEBI said the judicial custody of disgraced Satyam promoter was delaying it's probe into the case. Meanwhile, a team of the Serious Fraud Investigation Office (SFIO) examined the records available with the Crime Investigation Department (CID) of Andhra Pradesh Police as part of its ongoing probe into the multi-crore fraud in Satyam. SFIO has been given three months to unravel the Satyam mystery.

In his confession recorded by the Andhra Pradesh police, the disgraced Satyam chief said, "For about seven years, we wanted to show more income in the accounts to avoid others from getting involved in company affairs and any possible hostile acquisition." Raju also said he had manipulated the balance sheet to attract more business. But, Vadlamani said that the software firm's fixed deposits were unreal and fictitious and managed with an understanding between the audit section and the top management.

Price Waterhouse, the statutory auditor of Satyam, said that its audit report is inaccurate. The audit arm of PricewaterhouseCoopers said that since the Satyam chairman admitted that the financial statements were inaccurate, it may have a material effect on the veracity of the company's financial statements presented to us during the audit period. "Consequently, our opinions on the financial statements may be rendered inaccurate and unreliable," PwC said.

Satyam denied reports that executives Ram Mynampati, Virender Aggarwal and Keshab Panda had left the country to avoid investigation. The company said they were currently meeting customers in their regions to assure them of the company's commitment. Reports said that the top executives, including these three, sold Satyam shares in the six-month period before the fraud broke out. Initial investigations by the Registrar of Companies (RoC) into the scam also revealed large-scale selling of shares by institutional investors just days ahead of Ramalinga Raju's startling confession. Global investment banking major Lazard sold a major chunk of its stake in Satyam and was likely to sell further in the coming days if it is not given a board seat.

The Government, which was believed to be considering financial assistance for Satyam, dropped the idea amid growing suspense over the extent of financial irregularities in the company's accounts. Later, Deepak Parekh revealed that the company had Rs17bn in receivables and had also paid salaries to its staff in the US. He also said that KPMG and Deloitte will take 8-12 weeks to restate Satyam's accounts.