Satyam Computers Is Reaping the Seeds of Its Past Sins

Ramalinga Raju was denied bail by High Court but granted by Supreme Court

Ramalinga Raju meeting visitors at NIMS The main accused in Satyam Computers scam
Ramalinga Raju meeting visitors at NIMS The main accused in Satyam Computers scam | Source

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Ramalinga Raju and Rajasekhara Reddy wrecked havoc with Satyam Computers

Crisis Not Over Yet

Satyam Computer crisis is not over still even after many years have passed by. Mahindra & Mahindra has taken over the company and renamed it as Mahindra Satyam. The company is doing reasonably well, overcoming the past bitterness. Mahindra Satyam will be merged with Tech Mahindra soon. But the past shadow is engulfing the company even now. When the crisis happened, 53000 employees of the company spread over in 66 countries were stunned and did not know whether they would receive their next month’s salary. The total amount of salary disbursal was Rs.500 crore. The company owed customers and service providers another Rs.2000 crore. It was because two of the banks were prepared to lend the company $135 million in a crisis that these problems disappeared. All the statutory dues were cleared with the help of the funds.

Internal Audit Handed Over To External Agency!

The first thing Satyam Computer management did immediately after the crisis was to hand over its internal audit to an external agency and recast its accounts. It was the auditors of the company including the world famous Price Waterhouse Cooper (PwC) that was responsible for the financial loot of the company. Ramalinga Raju, the erstwhile owner of the company along with the then Andhra Pradesh Chief Minister Late Rajasekhara Reddy colluded with PwC and other auditors to siphon off the company’s funds. Auditors are appointed to check any financial misappropriation or irregularities that might happen in a company. But when auditors themselves decide to loot the company, what is the remedy? A doctor has the responsibility of saving the life of his patient. But if the doctor himself decides to murder the patient during surgery, what is the remedy? A teacher has the responsibility to take care of his students. But if the teacher himself misbehaves with the girl students, what is the remedy?

Case May Be Hushed Up By the CBI

After the scam came to light, society has stopped trusting the auditors. Auditors have become the most discredited fraternity in India. ICAI has found ex-CFO Vadlamani Srinivas and PricewaterhouseCoopers (PwC) guilty of professional misconduct. RBI and SEBI are also looking into the Satyam auditors’ lapses. ICAI has barred two auditors from attesting financial statements of companies for life. In addition, the two auditors also face a penalty. The two auditors are S Gopalakrishnan and Srinivas Talluri. Ramalinga Raju has been denied bail by an Andhra Pradesh city court. But the Supreme Court granted bail to him after a gap of 32 months. Raju’s brother has also been granted bail. CBI opposed Raju’s bail. CBI is pruning the witness list of the case for prosecution. CBI has sought change of Special Court location in the case. But I doubt very much whether the CBI will dig the truth and expose the company’s erstwhile management including Ramalinga Raju as that would also expose Rajasekhara Reddy’s role in the scam and tarnish the image of the Congress Party in Andhra Pradesh. Congress secured the largest number of MPs from Andhra Pradesh and it will not like to spoil its name in the State. Therefore the matter may be hushed up by the CBI. Some lower level officers may be sent to jail for the purpose of eyewash.

PricewaterhouseCoipers lost its credibility

PricewaterhouseCoopers  willingly associated itself with the Satyam Computers scam
PricewaterhouseCoopers willingly associated itself with the Satyam Computers scam | Source

Satyam Computers Is Reaping the Seeds of Its Past Sins

SEBI Also Suffers a Jolt

Satyam’s head of global sales Atul Kunwar has resigned. SEBI has imposed Rs.5 lakhs to the company’s Compliance Officer G Jayaraman for his failure to adhere to the market regulations. SEBI also suffered a jolt in the case as SAT (Securities Appellate Tribunal) has rejected its review plea.

BT Group Is Waiting To Hear the Share Swap Ratio

Andhra Pradesh High Court has stayed Income Tax Department’s provisional order to attach the properties of the company. This has given a breather to the company for the time being. The British telecom major BT Group has postponed its plans to sell its stake in Tech Mahindra and has decided to wait for the merger of Satyam Computer with it. BT group is not only a shareholder in Tech Mahindra, but also its client. BT group is waiting for the share swap ratio to have greater clarity in the matter. Inspite of the financial scam, some business still goes on in the company. Its BPO arm has renewed an order with geospatial services provider NATVEQ for two years.

Past Ghost May Continue To Haunt Even After Merger

After Mahindra & Mahindra management took over Satyam Computer, the company was provided with finance and managerial support. It has come to black in the June quarter of the current financial year. Its troubles seem to be over now. The company reported a net profit of Rs.225 crore in Q1 ended 30.06.11 compared to the net loss of Rs.327 crore reported in the corresponding period of the previous year. US investors’ Satyam suit has been settled by PwC for $25.5 million. This clearly proved that PwC played a major role in the financial irregularities of the company. The ghost of the financial fraud is haunting the company time and again even after its new birth has provided it a big push and put the company in the reboot mode. The government of India has served a tax notice on the company, slapping it with a Rs.617 crore tax liability. But after hearing of the case by the Supreme Court, the government has set aside its demand and will give a fresh hearing to the company’s plea. Even though the future of the company is safe at the hands of M&M, it seems that the past ghost will continue to haunt the company even after it merges with Tech Mahindra.

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