Although Raju’s letter sought to absolve Satyam’s employees and other board members of the blame, the ministry for corporate affairs said the matter would be referred to Serious Fraud Investigation Office.
“Stern action under the law would be taken against the guilty after verifying the facts,” minister Gupta said.
While declining to comment on what action will be taken, spokesperson for the New York Stock Exchange, Christiaan Brakman said that they were “closely monitoring the situation, including the latest developments”.
Satyam spokesperson said that “its immediate priorities are to protect the interests of its shareholders, protect the careers and security of its approximately 53,000 associates, and meet all its commitments to its customers and suppliers”.
Following the revelations the spotlight is now sharply focused on the auditors for the company, Price Waterhouse as well as Satyam CFO Vadlamani.
“It is a monumental fraud. How can Rs7,000 crore be hidden in the books without the knowledge of CFO and statutory auditors?” asked Omkar Goswami, an independent director on Infosys’ board and chairman of that company’s audit committee.
“We have learnt of the disclosure made by the chairman of Satyam Computer Services and are currently examining the contents of the statement. We are not commenting further on this subject due to issues of client confidentiality,” a PricewaterhouseCoopers spokesperson said.
Price Waterhouse is one of the audit arms of audit and consulting firm PricewaterhouseCoopers.
However, Ved Jain, the president of the statutory body that regulates the profession of chartered accountants in India, the Institute of Chartered Accountants of India, said the audit firm will be banned from practising in India if it was found to be involved in this fraud.
Shock and disbelief
National Association of Software and Services Companies, or Nasscom, the industry grouping of the software sector, expressed its shock at the disclosures made by Raju.
“While the law will take its course, this incident is particularly unfortunate as the Indian IT-BPO (information technology and business process outsourcing sector) industry had set very high standards of ethics and corporate governance,” Nasscom said in a statement released on Wednesday hours after Raju’s resignation news hit the street. “This is a stand-alone case of failure of corporate governance and it is critical that it be viewed in this light.”
“What is happened is very sad, shocking, and truly unbelievable. I will hope the authorities in India (act) pretty quickly, investigate it, and then punish the guilty,” chairman of Infosys N.R. Narayana Murthy said.
“If the Securities Exchange Commission acts quickly and our authorities don’t, it won’t look good on India. So, it is extremely important that authorities investigate and take appropriate action before the US SEC. India would score few brownie points in the eyes of FIIs.”
Suresh Senapathy, executive director and chief financial officer of Wipro, sought to emphasize that the Satyam development was an isolated incident.