Satyam audit team in place

Jan. 17: The board of directors of Satyam Computer Services today named an internal auditor and formed an audit committee but failed to name a chairman, a chief executive or a finance head after its second huddle in less than five days.

In a related development, a court in Hyderabad sent Satyam founder B. Ramalinga Raju, his brother Rama Raju and former chief financial officer Vadlamani Srinivas to police custody till January 22. Investigating agencies have been allowed to interrogate them in the presence of their counsel between 7am and 5pm over the next four days.

Satyam’s expanded board of six directors will meet again within a week. The directors will chair these meetings in rotation until the government picks one of them as a chairman. Deepak Parekh chaired today’s meeting.

The board said it had started talks with banks and financial institutions to raise cash to run the company’s operations and pay salaries to its employees. Reports said officials from several banks, including Citibank and ICICI Bank, visited the Satyam headquarters for meetings with the new leadership.

A statement issued after the board meeting said an audit committee had been formed with T.N. Manoharan as chairman and C. Achuthan and S.B. Mainak as members. It named Brahmayya & Co — a Chennai-based chartered accountancy firm — as its internal auditor with immediate effect. Amarchand & Mangaldas and Suresh A. Shroff & Co were appointed legal advisers to the board.

The statement did not spell out the board’s views on the objections raised by the Institute of Chartered Accountants of India (ICAI) to the appointment of KPMG to restate Satyam’s accounts. The ICAI had asked the board to reconsider the appointment since KPMG was not registered with the institute.

Confirming that the search for a CEO and CFO was on, the directors decided that until these appointments were concluded, “the board will continue to meet on a weekly basis to address ongoing issues”.

The board said collections from customers had improved in the past week but did not quantify it.

Funds ‘siphoned out’

In Delhi, P.C. Gupta, the minister for corporate affairs, said money had been siphoned out of Satyam and the investigators may have to travel abroad to track it down.

Sleuths from the Special Frauds Investigation Office believe the promoters had siphoned out money and the trail could lead to a few offshore funds in Mauritius.

In Mumbai, Manmohan Singh told business barons the government was “determined to unravel the full nature of the (Satyam) fraud and to punish those involved under the due process of law”.

“The Satyam episode is a blot on our corporate image. It indicates how fraud and malfeasance in one company can inflict suffering on many and can also tarnish India’s image more broadly.”

He urged them to “set the highest standards for Indian industry so that the world can say that we emerged from the Satyam scandal stronger and more credible”.

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