The Satyam Computer Services fraud grows murkier. According to police sources,former chairman B Ramalinga Raju has now confessed that he diverted Satyam funds to family-owned Maytas Infra and Maytas Properties since 2004. The two had earlier denied receiving any funds from Satyam.
The latest admission intensifies pressure on the reconstituted board to contain the damage,given that clients have threatened to ditch the beleaguered company. Two large customers have given us notice on leaving. But there are others and many of them have indicated that they would like to renew and expand their contracts, said Satyam board member Kiran Karnik.
On Thursday and Friday,the board will hear presentations on a potential buyout by a clutch of suitors. L&T is seen as the frontrunner in the race. Others,including IBM and HP,are also said to be in the reckoning. However,IT major Wipro on Wednesday ruled out taking over either Satyam or Maytas Infra. We have no interest in them, Wipro chairman Azim Premji told the media on Wednesday.
Deepak Parekh,chairman of HDFC Bank and another board member,said the directors on Thursday would also discuss the appointment of investment bankers and an operational team of senior executives.
Meanwhile,the board of L&T,whose chairman AM Naik had met minister of company affairs PC Gupta on Tuesday to discuss issues related to his companys stake in Satyam,met in Mumbai on Wednesday. Although the L&T board meeting was called to discuss upcoming quarterly results on January 30,sources said matters related to Satyam were also discussed.
Sources said senior company officials,besides Naik,would make a presentation to the Satyam board on ways to put the IT firm back on track. Besides reports of a flight by some top clients,there is growing panic among the companys staff regarding its future. L&T will suggest some of its own executives who could form part of Satyams operational team.
As these developments takes shape,Life Insurance Corporation of India (LIC),a key investor in Satyam with 4% stake,has said it would not exit the company,and favours any merger or buyout. LIC is one of the few institutional investors that have stayed invested in the IT firm.
We have always maintained that we will support whatever is good for the company. Now that the government is in command of the affairs at Satyam,we would go by the governments decision, said a senior LIC official. LIC also has a large investment in L&T and a member on its board.
In a related development,Sebi chairman CB Bhave has said that all listed companies would have to declare promoter holdings that have been pledged. Although officials belonging to the regulator had still not been able to question Raju,Bhave also said the Sebi board had reviewed the progress made so far in the Satyam investigations.