The Satyam saga gets murkier by the minute. Here's a quick Cliffs' Notes version of recent findings:
- Raju allegedly inflated employee strength by 13,000
- Siphoned-off funds were used to purchase 147 fraudulent companies (promoted by Raju himself)
- Apart from Raju, the authorities believe that the CFO, and probably additional company directors, were in on the scheming
- Fraudulent accounts operated by Raju and his family members were used to divert funds from the company. These funds, in turn, were used to buy land throughout India.
- In fire-fighting mode, PwC has suspended Gopalakrishnan and Srinivas Talluri, auditors embroiled in the saga (they actually signed some of Raju's balance sheets), following the resignation of PwC top exec Thomas Matthew
So what does this all mean for Satyam? One thing is for sure: The company will not cease to exist ? at least not any time soon. Salaries for the month of January were paid with the help of state-run financial institutions, including LIC, IDBI and Bank of Baroda, which extended collateral backed loans (totalling $184 million) to the company. Goldman Sachs and Avendus Capital have been roped in as investment bankers to the estranged firm, and Boston Consulting Group (which has agree to work for free!) has been appointed as the company?s management advisor.
India?s engineering major Larsen & Toubro has already upped its stake in Satyam to 12.04 percent, and if it crosses 15 percent mark, it will have the right to acquire another 20 percent stake making it the owner. Speculations of selling the company in parts have been beaten down as India's government has specifically disallowed such a move. As a knee-jerk reaction, the government has also elected to dissolve the entire management of the company and has appointed banker Deepak Parekh, IT expert Kiran Karnik and former SEBI member C. Achuthan to Satyam's board.
Though everyone over here is voicing concerns on issues of corporate governance, no concrete plans or measures have materialised so far. In such a scenario, it won?t be surprising if many more Satyams and Rajus come to light. As it is usually stated, no market is immune to frauds, but can we accept that as an excuse?
-- Posted by Vishal Ingole, Vault India
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