Analyst almost got Satyam nailed

There was at least one analyst who almost blew the lid off the Satyam scam. That too, as early as in October. At the IT major’s October analyst conference call, Kawaljeet Saluja from Kotak Securities had enquired the rationale for the $550 million lying idle in a current account. A deposit in a current account doesn’t attract any interest.

The analyst interaction, organised after Satyam’s second quarter earnings
of 2008-09, was addressed by chairman Ramalinga Raju, CFO Srinivas Vadlamani and Ram Mynampati, member of the board, who is now the acting CEO.

Citing no specific reason for parking the funds in the current account, Vadlamani said that the money was restricted to the second quarter only and thereafter the amount goes to the deposit account. Unconvinced by the answer, Saluja probed further.

“But Srinivas if I look at your deposit account for the last four quarters that number has remained absolutely flat and most of the incremental cash flows have been parked in current accounts. Would you highlight the reasons for it,” the analyst wanted to know.

He also pointed out that this trend had been continuing for the past few quarters.

To this Vadlamani replied: “No, basically what will happen is this amount will be basically in different countries and then we would bring them to India, based on the needs. Some of them are in overnight deposits and we have kind of placed them into normal term deposits. So from the next quarter onwards, we will see that as part of the deposits.”

Over a dozen analysts from both global and local brokerages-Bank of America, Goldman Sachs, Susquehanna, Gilford Securities, ICICI Securities and Edelweiss participated in the October 17 conference call. On asked about the low yield earned by Satyam on its excess funds, which was 5.3% against the industry rate of 9-10 %, Vadlamani replied that the yield is roughly around 8% or so.

Satyam - bank statements disappear

The skeletons just won’t stop tumbling out of Satyam’s cupboard. It now turns out that B Ramalinga Raju and his associates may have spirited away bank statements of the company that hold clues to the massive fraud perpetrated by them.

The Hyderabad office of Registrar of Companies did not find the statements at any of the three Satyam offices in and around the city raided in the morning. The offices have since been sealed.

Companies have to keep bank statements for the current and preceding years at registered offices. It is suspected that the files vanished as they would have given away the fraud, rendering Raju and his accomplices liable for immediate penal action.

The ROC is likely to recommend a comprehensive investigation by the Serious Fraud Investigation Office (SFIO), which may be accepted as early as next week. There is already enough evidence to make a foolproof case for an SFIO probe, sources in the corporate affairs ministry said.

Investigators have already found enough evidence to make a foolproof case for an SFIO probe, sources in the corporate affairs ministry said. The Registrar of Companies (ROC), in its report, is also likely to point out that the company violated the requirement under the rules to keep the statutory documents at the headquarters.
As the investigation against Satyam gathers momentum, the Institute of Chartered Accountants of India has initiated disciplinary proceedings against the company’s auditor, PriceWaterhouse.

Sources said the SFIO team would be multi-disciplinary, drawn from Sebi, RBI, CBI, police, customs, revenue intelligence, besides forensic and banking experts.