India names new board at Satyam
New Delhi, January 11, 2009
India appointed members to the new board of embattled outsourcer Satyam Computer Services on Sunday, two days after dissolving the previous board in the wake of the country's biggest corporate scandal.
Police charged Satyam chairman Ramalinga Raju and his brother with criminal conspiracy and forgery on Friday after Raju said profits had been falsified for several years and quit.
The brothers, co-founders of Satyam, based in the southern Indian city of Hyderabad, are being held in jail. Police officials said the company's chief financial officer would appear before a magistrate on Sunday.
The accounting fraud at Satyam has battered its stock. The company was valued at $330 million at Friday's stock market close from more than $7 billion six months ago.
Deepak Parekh, chairman of the Housing Development Finance Corp and Kiran Karnik, former president of technology lobby group, the National Association of Software and Service Companies, were appointed to Satyam's newly constituted three-member board, Corporate Affairs Minister Prem Chand Gupta told a news conference in New Delhi.
C Achutan, a former official of the capital market watchdog, the Securities & Exchange Board of India, is the third member on the new board of India's No. 4 software services exporter.
'Further appointment to the board will be made accordingly, these three members will chart the future course of action for the time being,' Gupta said.
Analysts said the quick move to name new board members was a step in the right direction.
'I think it's a first good move towards restoring client confidence,' said Sudin Apte, country head of Forrester. 'But we still have a long way to go. We still have to see how quickly the reality of this scandal comes out in the world.'
In his letter sent to stock exchange authorities last week, Raju admitted about $1 billion, or 94 percent of the cash and bank balances on Satyam's books at end-September, did not exist.
Gupta said the government would soon make a decision on appointing additional board members. Satyam specialises in business software and back-office services for clients including General Electric and Nestle.
Several securities fraud class action lawsuits have been filed in the United States on behalf of investors who bought Satyam American Depository Receipts (ADRs) in the last five years. - Reuters