Tags:
Journalism of Courage
More than 100 days after the government began its multi-pronged damage control exercise over the Satyam Computer Services accounting fraud,it turns out that at least one central government agency the Employees Provident Fund Organisation (EPFO) was in a position to raise a red flag about the firms operations as early as August 2006.
Documents accessed by The Financial Express reveal that Satyam may have submitted forged challans to the EPFO as proof of PF contributions for the months of August 2006 and December 2006. The challans indicated that nearly Rs 13.13 crore was deposited with EPFOs designated banker for each month.
This is not confirmed in the banker statement, the EPFO has found after an internal review of the Satyam group firms PF accounts. It admits the challans were forged. Following B Ramalinga Rajus admission of fraud,it emerged that deposit certificates from top private and foreign banks were forged as well.
For the PF default of these two months and December 2008,when the failed Maytas buyout burst Satyams bubble,the PF authorities have now initiated action for assessment of dues. Taken together,the default for these three months adds up to Rs 41.74 crore.
But its not just Satyam Computers defaults that were ignored by the department. Ten of the 12 Satyam group firms registered with the EPFOs Hyderabad office havent been complying or filing challans with the PF office.
These include Satyams joint venture with General Electric,Satyam GE Software Services Limited (no challans filed since June 2005),Satyam Venture Engineering Services Private Limited (no challans since December 2006),and Satyam BPO (last challan filed in November 2008).
Of the 14 Maytas group firms registered with the Hyderabad PF office,action has been initiated for assessing dues against 11. Two of these firms,Maytas Global E Services Pvt Ltd and Maytas-NCC (PF Code# AP/51092),havent submitted challans since February 2006.
Labour Minister Oscar Fernandes told Parliament that of the Rs 14.81 crore PF dues for December,Satyam had remitted the employees share of Rs 7.73 crore on February 6,the day it got a Rs 600 crore line of credit from the LIC of India. The EPF Act of 1952 requires firms to pay PF dues by the fifteenth of the following month.
After dues for each of the Satyam and Maytas firms are assessed,penal damages will have to determined and levied for the delay in payments under section 14 B of the EPF Act. These dues and damages will add up to a substantial sum.
The EPFOs efforts to recover current dues were stymied after the Company Law Board granted immunity to the government-appointed Board at Satyam. Though recovery action may be on hold,past dues would have to be recovered eventually.
The suitors for embattled Satyam Computer Services may be ready to face the legal liabilities likely to emanate from the multiple lawsuits filed in the US. But they could also be liable to pay for past dues that are not covered under the Company Law Board.
Whether the buyer has to pay these past dues would depend on how the firms sale takes place. If the company is bought over in its entirety,the legal entity would be the same and hence the new shareholders will inherit the PF dues, a consultant close to the developments told FE.
