There is no business like, well, no business. Barely a week after India’s fourth largest IT company, Satyam Computer Services, was savaged by a Rs 7,000 crore fraud, the word in Delhi is that the Congress-led United Progressive Alliance (UPA) government is planning a Rs 2,000 crore package to rescue the company.
The rationale is that Satyam does not have money to pay its 53,000 employees and the government—since it has taken on the task of bringing the company back on track by appointing a new board, etc—has to step in, especially with the software sector’s, and India Inc’s, reputation being at stake.
Is this a good move? Or is this an election stunt? Will it help Satyam or hurt it? Is the Congress trying to project itself as the saviour of IT employees across the nation? Or is this an appropriate move, given the number of dependent lives and livelihoods? Will a company specific bailout package set a poor precedent?
Also read: Come again, in spite of the government or because?
Sign the online petition: “Ban Retrenchments in Satyam”
Link via Jaykumar H.S.
churumuri 
Limited bailout is required. But those who abetted Satyam like present Andhra CM shd be ruthlessly investigated and punished.
Will it happen? I doubt. Company affairs ministry is in the hands of RJD- whose boss is biggest scam-maker. he way Bofors was buried from the top does not give any confidence either.
Flip side is: unlike Bofors, Chara Ghotala- world is watching Satyam investigation and any half measure will affect India in the long run.
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One thing I am sure of, is that any bailout move will not be an “election stunt”. This is because a very very minuscule percentage of ‘IT employees’ actually vote in elections :-)
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By bailing out Satyam, which has a good model, every one will be a winner. Raju has gone. So also his family. Of course we need to ensure none of the people involved with Raju will benefited by this bail out.
If Satyam can be restructured with the government help, it will restore credibility in India’s IT sector which has now been lost to a great extent.
There may be no need for the government to invest in this business. And whatever may be invested could be recouped quickly. At the same time the government should not nationalize it and own the company. That would be a bigger disaster.
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Its ludicrous for India to just copy cat US type of solutions to economic scams. 1/2 of the nation is under poverty limit and these buggers think about giving so much money to a corrupt firm? go put that money in Villages building bridges providing electricity and educating the needy suckers!!!
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Who are they trying to bail out, really?
The work done by Satyam can easily be moved to other Indian IT companies and the employees can move to those companies. So really this is a bailout of the shareholders of Satyam.
Take the Rs. 2000 crore and open up some primary schools in poor areas in India so that you can make people literate and help them earn a living.
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1000+ Crores for 7-10 yrs in Jail, Hell ya I will take it. Does anyone still believe that the company earnings were overstated as opposed to money was siphoned off??? I do agree, Employees have to be rescued, but corporate takeover is a better option. Is PC thinking Auto bail out Ala Carte??? Wrong move….
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If you want to create another business like Satyam, you cannot do it overnight. It takes years to create something like it. So, letting Satyam die will not be a good economic decision. The government move is a welcome move.
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I don’t think it is fair to use Tax Payer money to rescue a private company.
In fact, even Rs.2000crore is only enough to pay a quarter’s salary, so there is no guarantee it’ll rescue Satyam. Satyam will have lawsuits in US which will run in to 100s of million $$. So, it is unlikely satyam will survive, no point in throwing good money after the bad money. :-(
It would be specially criminal to waste Rs.2000crore on people who are capable of earning a good living and who are already in the middle class.
This money would be better utilized in connecting up villages or even setting good top class schools in some 200 villages or towns.
What govt. can do however, is make speedy investigation and cease all properties belonging to Raju family (Riches which is the product of a poisonous tree) , and give that money through some legal process to Satyam. They scammed satyam – not tax payers!!
Alternatively, What govt. can do is facilitate the transfer of majority of teams in satyam to other mid-tier IT companies along with their projects. Govt. can identify the salvageable teams (Which may be about 80% of satyam), and let the rest of the 20% go with a sustenance amount of about 2-3months pay, that would be recoverable from Raju’s properties.
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@T.M.
You seem to be living in fool’s paradise.Cong govt both at the centre and state,do you really think centre takes action on its own CM.
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Hi,
Being an ex-satyamite, I know that lot of people there are taking lavish salary, for which they are not worth for.
Most of the guys ( Not all ) spend part of their salary on Luxury lifestyle. Most of the yougsters spend lot of money on Bars, pubs, movies etc.
I completely feel that it is not justified to give money or bailout satyam.
And again this is not a bankruptcy, It is a FRAUD.
I have my sympathy for all satyamites. But this was choosen by them. No body can help for this current situation. Only raju should be blamed.
Also, I have seen many associates of satyam are there on BENCH for more than 1 year. It is internally run just like a Govt office. There is no accountability for the resouces.
Many of them just come, play TT, Carom etc., spend time in canteen and go home.
I strongly feel that poor mans tax money should not be used to bail out satyam.
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They should make Raju personally bear some of the cost of the bailout. He was the guy fudged figures and sold his stock when Satyam stock soared. He bloody well pay up.
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The role of Chandra Babu Naidu and NDA govt shud be thoroughly scrutinized coz they hushed up the income tax expose in 2003.
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Why bailout ? what the company has done to the govt ? It has paid some tax on unreal profits, which is negligible. Instead the company would have got lot of benefits from govt. being fourth largest software exporter in the country [?]. It is surprising that no in the board was aware of the foul smell in the balance sheet for over 7 years. What a kind of board it is? whether they have promptly received their board fee and perks ? Truely many are invovled in it. Let govt. bring out all the culprits in to books and punish them. Seize all illgotten assets and ajdust towards the loss. Then if found merge with some good software company and retain the staff, by paying salary they deserve.
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No. Govt. should not bail Satyam out because:
1. It will set a bad precedent. Aspiring white collar crooks will cook their books knowing that the govt. will step in with a ‘bail out’ package. It will only serve as an incentive to suited booted criminals.
2.Satyam’s clients will move their business to other IT companies. Employees will be picked up by other IT companies, which gets the new business from Satyam.
3. Best to let brand Satyam die. Who will bear the cost of lawsuits? which will run into millions of dollars? Surely it cannot be a bankrupt Satyam? Surely it can’t be me – I wouldn’t like my tax money to be wasted on fighting a case for a crook.
4.Raju and Gang should be made to bear the charges for the bail out. Sell their properties, their immovable and movable assets and whatever else they own.
5. in addition, Raju and his chor gang should be made to work free of cost for 10 years(from jail) to satyam’s clients. In that way, Satyman clients can pay this money to other shareholders over a period of time.
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Why should we spend government money to save the jobs of well fed people? They are not poor farmers or villagers who don’t even have food to eat. Satyam employees are qualified and may get job somewhere else.
They need money to pay car loan, house loan installments etc . The same corporate people led by IT employees and their bosses literally attacked the UPA govt for its Rs. 60,000 crore farm loan bail out package.
Their salaries obscene and defy all logic and reasoning. Let them realise the difficulties of ordinary people.
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Why should we spend government money to save the jobs of well fed people? They are not poor farmers or villagers who don’t even have food to eat. Satyam employees are qualified and may get job somewhere else.
They need money to pay car loan, house loan installments etc . The same corporate people led by IT employees and their bosses literally attacked the UPA govt for its Rs. 60,000 crore farm loan bail out package.
Their salaries are obscene and defy all logic and reasoning. Let them realise the difficulties of ordinary people.
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Yahoo group to discuss Bailout
http://groups.yahoo.com/group/SatyamBailOut/
Venkat
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Why only Satyam, the Govt will also bail out Maytas (Satyam in reverse):
Metro man E Sreedharan suggested that a “big political scandal” was brewing in the Hyderabad Metro project in September last year, the Andhra Pradesh government threatened him with defamation.
But, with Satyam chairman Ramalinga Raju confessing to defrauding his own company of over Rs 7,000 crore and accepting the charge that the aborted buyout of Maytas was also part of this fraud, Sreedharan’s apprehensions appear to be justified.
The Hyderabad Metro project is being developed by Maytas Infra, a company promoted by Teja Raju, son of Ramalinga Raju, and other members of the Raju family.
Sreedharan dubbed the Hyderabad Metro a real estate play, a sale of family silver and a political scandal waiting to happen.
The Hyderabad Metro model has support from the Planning Commission. It was Gajendra Haldea, principal adviser to the panel’s deputy chairman, Montek Singh Ahluwalia, who drafted the concession agreement and also the procedure to short-list bidders on the basis of their financial and technical qualifications
The Planning Commission appreciated the process and termed the project a model for the entire country.
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IT Employees can live without a job for an year or two since they have earned and saved much. Besides they have earned so much to even upset the delivcate balance of the economy.
This is a vulgar stunt by the Congress in an election year.
IF THE GOVT WISH TO BAIL OUT LET IT BAIL OUT THE ENTIRE INDUSTRY SUFFERING FROM RECESSION. WHAT ABOUT EMPLOYEES IN OTHER INDUSTRIES WHO ARE LOOSING JOBS? GOVT SHOULD NOT INDULGE IN VOTE BANK POLITICS.
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Truely, this is the time NRN and Azim Ji and others learn and contrubite their obscene profits 25-30% to the other sections of the society too. All round Development of India is the need of the hour. It will ensure a strong and stable economy. The top creamy layer of IT/ ITES should look at the perspective as a whole an not as individual entities.
What Infosys Foundation and Wipro Foundation etc are doing for the poorer sections is far below their abilities.
The Government should look at other sections. If we loose a Satyam, it may not matter much. Believe me whatever changes are brought into management, 70% of the current Satyam Clients (especailly all overseas)will not do business with Satyam for the next two years. Come what may, most of these companies follow ethical business practices to such an extent they avoid exposure to Satyam like companies. This is the reason why Wipro kept its blacklisting by WB under the carpet for so long. Thay revealed it when they had no other option but to do. The WB decision will definetely come as a poser when they negotiate new contracts.
In the manner of Satyam we have lost several organisations 9many Public Sector giants) in the past. loosing these did not spell doom for our economy. The industry has the capacity to digest and find a way forward to move.
How many Satyams can Govt bail out in future? Is the Govt willing to answer the other let down sections of the society with such bailouts? What will the Govt negoitate with Satyam and its employees for the bailout package? Will Satyam pay 25% or so nett profit (industry average) to the Govt. If so what is the guarantee. Anything that is given free has no value. Freebies are the ones that destroys the economy.
The Govt has formed a board and is now paying their salaries. This itseldf id too much. Stock market investors have run the risk. They cant ask to be compensated when they loose, since any how they do not share their profits with the Govt. Risk is a risk is a risk.
The Govt should stay away from all these as it has always done inthe liberalised economy. We are a different economy compered to US and let the Govt not draw lessons from US bail outs.
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One more aspect is that, if Satyam looses, Infosys/ Wipro/ TCS or someone surely gains. Satyam Employees have an option to ask for a Infy/ Wipro/TCS take over. Or they can join any of these as they stand to gain and will have to expand their work force. Let the private sector help themselves.
No double standards by the Govt.
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Folks think about how we the citizens can stop this bailout from even getting started. If the crooks get a taste of this then no one can stop the juggernaut. For starters the Real estate crooks like DLF, Unitech etc will wipe the gov’t clean if this precedent is set, before anyone can spell b of the bailout.
We should let people and companies fail. That is the only way we get the rot out of the system. USA has decided not do this and is thus set on a path to disaster. We must not follow them down that path.
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How about the other IT companies take care of Satyam’s employees?
Why should the government spend anything trying to save a fraud organization?
The IT crooks have got enough tax subsidies and subsidized land. And they still want bailouts!
How about Vinay contributing half his salary for the next few months towards someone in Satyam?
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One satyam, they said does not make the IT industry. I am sure the employees of Satyam and its clients can easily move to other IT companies. How much of the Govt bailout money will really reach the real workers of Satyam?
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The Government should not bail out Satyam with tax payers money. Satyam employees must reduce their exorbitant salaries first. It is strange. The government has still not resolved the sixth pay commission anomalies for our loyal and valiant armed forces which cost only 450 crores, then why the hurry to give 2000 crores to bail out highly paid private sector employees? I think the government must invest its money well by paying more to its own deserving loyal armed forces employees first rather than wasting money on the much more highly paid and over-pampered IT sector people.
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bomma the bum:
In this case, I certainly agree with you on the fact that Satyam need not be “bailed out” by the Government. The market will take care of absorbing those employees that need to be absorbed, and the market will take care of projects and clients that will choose to leave Satyam now. I do hope that someone bails out their humanitarian concerns and NGO activities though.
And now, to respond to your half-ass attempt at sarcasm, I will probably be doing something far better than your moronic suggestion – I will probably try to poach a few Satyam employees – we need quite a few new resources in our team anyway.
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The whole concept of “bailout” seems to be not understood.
Giving “loan” to Satyam to avoid liquidity crisis and to let them pay salaries etc – Yes required.
Giving free money – Absolutely no.
Govt should help avoid people losing salaries and clients being dumped because of wrong deeds of one person.
New management should take over, and stabilize with support from Govt in form of technical support and loans.
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Vinay,
Let us know how your ‘resource’ acquisition goes. But that wont prevent government from wasting more ‘resources’ on this IT fraud. Far better is if you do can do something real instead of talking so much.
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ahem: lots of “against the bailout” opinions. Well for once if our Govt is trying to interfere and help i dont see it as a bad thing but i wonder of the 2000 Cr – how much is actually gonna help in tha bailout proces. with corruption reaching new heights i wont be suprised if they swallow most of it. But yea we need a bail out for different reasons. think about the 53000 families, think about the subsidiatries who lose jobs(the security guys, the infra structure guys, ppl who do much of the manual labour), ppl lose mediclaim, family members in the hospital will have no cover… This is the situation – yes i agree there are people who stay on bench(by choice) get paid for doing nothing, but who is to be blamed for that? the mgmt who hired the staff… the process should be blamed, if possible extract every penny from the person who ditched the company at a time when all the contracts were up for renewal – see that justice is given…
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@Srikant,
What is chance of the ‘loan’ being repaid?
Imho, apart from the 70 billion cash, Raju has also vanished
something called “trust” from the market, clients & banks.
Common sense would prevent any lender to handover money to an ‘untrustworthy’ borrower unless ofcourse the borrower does something to earn the trust back, partially at least. To qualify for a loan, Satyam needs to get back on its own feet, completely change the leadership structure and run the operations for atleast an year with salary cuts, if required.
In all probability, it will the get taken over or merged but only after its true valuations are known when the new auditors prepare the financial statement.
But if the clients decide to move enmasse to its competitors , then that will be the end of the story for Satyam.
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compare this speed of response to bailout of the farmers at the mercy of vagaries of nature and corruption in irrigation department not to mention patents in seeds, fertilizers and other such shylock-atva.
even if they are being bailed out, why should the government pay IT rates, when the govt itself pays pittance to its employees and hardly has any money for much needed civil and public works in our health and education?
raju et al., have money. any or a good part of the money must come out of the rajus and his political handlers’ purse.
this is bad precedent. i mean under nurm, if you want to layout much needed sewage pipes for the city or renovate dodd aspatre, the government waxes eloquent about governance reforms, proposals, plans and whole bunch of checks and balances. and you dont think twice to bailout a fraudster? what nonsense is this?
what is the big deal if raju and his cohorts hit the streets?
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MAYTAS fund RS 4000 crore in SBI india can be used for SATYAM employees salary as it belongs to Satyam Employees.Govt should swiftly act and divert those fund and MAYTAS should be dissolved.
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A lot of people make valid points here but the term “taxpayer’s money” needs to put in the proper perspective here. By the best estimates only about 50 million people pay taxes (in a country of a billion plus people where at least 20% of those are potential taxpayers). The income tax paid by various individuals constitutes only about 7 to 8% of the GDP. A significant amount ( around a quarter) comes from trade, of which software or services exports form a chunk. Another significant chunk comes from revenues from various industries. The Satyam story has a potential to impact services and other sectors due to reduced investments and affect the country’s growth prospects. Which is why the government is reacting to this at all levels.
If the bailout option using government funds (not necessarily tax payer money) helps the company run for some time to limit the damage, it might not be such a bad idea.
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I too need bailout package from the government!
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At this stage loan is also not an option. When banks are reducing credit limit of Satyam employees to 3ooo/-, where the questin of a huge Govt loan out of tax payers money?
Dont hoodwink people.
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It is foolish to let a company that is functioning die. Yes it’s management had rotten bastards — lets get behind bars and bailout the company.
A bailout does not have to mean free money. It shouldn’t. It means a government stake in the company or a government facilitated take over by other IT giant(s), a la WaMu – BearStearns by JPMC or Merril-Countrywide by BoA. Wipros and INFYs can step up and absorb a pinch for longer term gains — they gain domestic-international goodwill, new customers/accounts, more manpower, infrastructure/capacity that is ready and alive. If done right, it’s a win win for the government as welll as the taking over company ….
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I personally feel Satyam needs a loan/bailout, for the listed reasons,
1. Look at who is loosing the money, it’s the share holders. Some of them who have invested their entire life’s savings.
2. Failing a company would leave a bad taste with the company’s doing business with India again.
3. Because of one man’s greed you cannot let down 53000 people. People who are opposing for a bailout should consider the families of 53000 people. Yesterday one of the news channel was showing ICICI bank has reduced their credit card limits for 90%.
4. And I am sure they can recover the money by 4-5 years with intrest.
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Nastika : the complicity of Andhra CM, Planning commission, Ex Cabinet Secretary…show this is a scam from a very high level. Nothing will happen. Indian Inc, IT industry will suffer because of this in the long run.
Bail out or not, most important now is: punish ALL those who are guilty. Including politicians, bureaucrats.
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bomma:
Satyam has clarified that they DO NOT need and DO NOT WANT Government bailout. All the are requesting for is a loan from banks. I respect the new board for their statement. Does that give you some peace now?
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If at all the gov’t is planning to do a salary bailout for the employees (which is the worst kind, but might happen due to elections in the near future) then it shud be at the NREGS rate, i.e 100 days/yr Rs.125/day and nothing more.
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Faldo:
It is flawed logic to think that only 50million folks pay tax!
Even a child who buys a lollipop in a store is paying tax. Almost every transaction in India has a tax component in it. goods, Service or Income. No one is spared.
The difference is 50million people may pay ‘direct tax’. But, Govt. don’t rely on direct tax alone.
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Our country generally hangs by history. If the Government bails out Satyam, it will be a precedent by which other scamsters will be bailed out. We will be condemned to repeat history. Why divert taxpayer’s money from more vital projects? Instead, why not recall money that Donga Raju diverted to his sons’ real estate project? After all, that money belongs to Satyam!
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Despite the scandal Satyam is still supposed to be a profitable company. ie. Assuming what Raju said when he left is true.
Where is the question of Gov bailout if it’s a profitable co. What is required is immediate working capital which any bank can provide.
It’s too early to ask this question. Wait for the auditors to go through the books first.
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SBI has offered a loan now. The key directors are abroad and dond do not know if at all afew of them will return. The company will eat up the loan with in no time. In this recessionary period nothing could be predicted including getting collections from the client let alone new business. Govt / RBI will bail out SBI later. Every move should be looked with the merits. This should not be accepted.
The banks and other institutions may be asked to increase their stake in Satyam. With this these institutions have more say in the decisions and policies of the board and at the same time they are judged in turn by their public stake holders. The stock investors (that is the public) indirectly decide whether Satyam need to be bailed out and revived. Afterall it is the confidence of the stake holders and investors that have to decide the course of a business like Satyam.
The banks, financial institutions and other business should come forward. Let the Govt stay out from direct/ indirect involvement.
Someone (ex- Satyamite) earlier naratted the way Satyam employees work internally. Any freebie is not going to do good for them. Can we ever say management will encourage stealing of data from World Bank? It is the people. As long as they do not cultivate right ethics management could become helpless. It may be said that these are just minor aberrations. But the effects of these aberrations have adversely inpacted, which is important. Satyam has bad blood and that should be let out for anyone to regain hopes on Satyam’s abilities. In this hour we should look beyond the obvious. Unconditional bailing out will be like further encouraging and already spoilt kid.
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If we had half the anger against politicians for similar (or worse in most cases) scandals, country would have done a little better.
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Satyam should not take any help from the corrupt socialist government of our country.
The future of Satyam should take its natural course. If the company has to make some hard decisions, it shall make but it should not take help from the government simply because a very very small
percentage of the educated population of the country has built this industry and have tried their best to keep the corrupt goverment from the affairs of the industry. This is just a case of one bad apple that has already been isolated from the rest.
Taking help from this socialist government which has no respect for merit is like jumping from frying pan into the fire at this moment. If satyam takes help today the rest of the industry will suffer tomorrow..
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Ramalinga Raju should be held responsible for the fiasco and be forced to pay whatever damages happen. Include his sons and grandsons too, if it is not possible in his lifetime. After all, when they have a claim to his property they also need to share his mistakes. Such a strict action will keep pther crooks at bay.
I also agree with KK, taking help from such a socialist government is useless. In all probability, some guy who has become an enterpreuner on the basis of reservations will float a company tomorrow. This company will be doomed from the day it started as the founders have no qualifications. Then they will expect the government to bail them citing the example of Satyam. Do we want that to happen.
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ಕನ್ನಡಿಗ – “In all probability, some guy who has become an enterpreuner on the basis of reservations will float a company tomorrow.”
– Huh?? What prompted this diatribe?
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Just like any other corporate body Satyam is a Public Limited Company it should be dealt in that way only. Why should the Government fund this Company or IT sector alone? In fact many other Industries like Automobile and Textile employing millions of laourers are also passing through difficult time.They deserve funding by the Banks and Financial Institutions first.
Interestingly the entire Satyam fiasco is know to the world only after Mr. Ramalinga Raju gave the statement voluntarily for reasons better known to him. Till then no one else and none of the regulators bothered to look into the accounts statements of the Company. When Mr Raju admittedly made profits out of the scrips others also enjoyed the benefits. I presume the Accounts were available with Registrar of Companies, SEBI and other regulatory authorities. What they have been doing all these years with them. If they had any doubts in the accounts they should have called for details and explanations to clarify the same. But none seem to have been done. What the Directors were doing with the periodical Statements that are furnished to them. The entire Board should take responsibility for the lapse.The Company of this magnitude must have had good internal Audit checks apart from Tax Audit and Statutory Audit. What is the responsibility of these Auditors? Fudging and manipulating accounts are not new in the world of business small and big, it is called “avoiding” the law, not “evading” the law (?).
It is time that the Accounts of Limited Companies should be made more transparent and the Finance andCompany Law Ministries should be more vigilant than exhibiting knee jerk reaction when everan economic crime is unearthed.
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I guess It is already decided that there will be no bail-out for Satyam. End of controversy..
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The assets of all the sister companies like Myrta should be confisticated along with assets like Raju’s home and other real estate properties given to his company by state governemnts.
the big business pink press started howling about 10,000 crore bail out to farmers(5 lakh suicides)as immoral business practise.
Here is a guy who loots the company he owns with impunity and he goes scot free with 27 lawyers(whose fee is 50,000 rupees per hour) defending him.He is being protected by filing a case in police station which is supposed to investigate this scam and all books being kept there!!!!!!!!!!
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@Palahalli
It is just an example of what may happen.
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Infy was doing some grand standing by announcing that it wont poach from Satyam.. Murthy Angadi should be asked to bail out Raju Angadi.
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Looks like there is no end to the stupidity and greed of Raju. He must be thinking that the whole world is corrupt like the politicians and bureaucrats and he can take them for a jolly ride.
If the facts behind the disappearance are any thing like the following article in NY Times, then Raju’s Satyam is a replay of the US Enron. We are likely to see many skeletons of politicians and bureacrats. Will we also see the dismantling of their accounting firm like Anderson?
Indian Executive Is Said to Have Siphoned Cash
HEATHER TIMMONS
Published: January 17, 2009
NEW DELHI — The founder of Satyam Computer Services, B. Ramalinga Raju, skimmed huge amounts of cash from the company, rather than padding its books as he has claimed, a person involved in the investigation of the company said on Saturday.
Investigators looking into the fraud that has been called India’s Enron have found a “maze” of about 300 companies related to Mr. Raju that were used to “siphon” as much as $1 billion in cash from Satyam, said a senior official involved in the inquiry, who was granted anonymity to discuss developments in the case.
The picture emerging from the investigation of Satyam, one of India’s largest technology outsourcing companies, is vastly different from the one painted by Mr. Raju in a confession that stunned corporate India earlier this month.
Mr. Raju, who was Satyam’s chairman, said in a letter to the company’s board on Jan. 7 that about $1 billion of the company’s cash was “non-existent” and that he had falsified its profits for years to avoid losing control of the company. But the person involved in the investigation said that despite Mr. Raju’s claim that he had padded profits, he relied on hundreds of companies to divert money from Satyam.
These companies are registered to Mr. Raju and members of his family. Figuring out what, exactly, happened at Satyam “is becoming increasingly complicated,” this person said, adding that investigators had not figured out where all the missing money wound up.
In his letter to the Satyam board, Mr. Raju said that a marginal gap in the balance sheet had grown over several years to “unmanageable proportions,” and he said he had dressed up the company’s profits to avoid a takeover. He said he had kept the illusion going with the help of his own shares and loans against his assets, and that neither he nor his brother, B. Rama Raju, “took even one rupee/dollar from the company.”
Instead, the person involved in the investigation said, the entire $1 billion Mr. Raju said was faked might have actually been earned by the company but then skimmed from it.
S. Bharat Kumar, the lawyer for the Raju brothers and the company’s chief financial officer, did not return phone and text messages seeking comment.
The three Satyam executives Mr. Kumar represents are being held in a Hyderabad jail on counts of forgery, breach of trust and cheating. On Saturday a Hyderabad judge ordered the executives to be placed in police custody for four days to be questioned.
India’s prime minister, Manmohan Singh, on Saturday called the events at Satyam “a blot on our corporate image.” Satyam’s decline “indicates how fraud and malfeasance in one company can inflict suffering on many and can also tarnish India’s image more broadly,” Mr. Singh said.
The Satyam fraud has shocked India in part because Satyam, like most Indian technology companies, was seen as a corporate governance leader. Satyam’s auditor, Price Waterhouse, a unit of PricewaterhouseCoopers, signed off on the company’s financial statements for years and is now being investigated by India’s accounting board.
A new, government-appointed Satyam board met Saturday to discuss how to alleviate a severe cash squeeze at the company and to fill the vacant management positions. Board members had said previously that Satyam might ask some of its 600 customers, which include General Electric, General Motors and Nestlé, to pay bills early.
Satyam has some 17 billion rupees ($350 million) in payments pending from customers, the new board said last week.
The board has not named a chief executive or chief financial officer and said it would meet weekly until one was found.
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A new version of Jack and Jill went up the hill (lampoon)
Raju brothers went up the ladder
To make their company shine brighter
Raju brothers came crashing down
And Vadlapani came tumbling after
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ಕನ್ನಡಿಗ – Wrong example, in my opinion. “Reservations” do not ensure “Corrupt Possibilities”.
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