Hyderabad/New Delhi: In a decisive move aimed at restoring customer and investor confidence in Satyam Computer Services Ltd, roiled by an accounting fraud involving founder-chairman B. Ramalinga Raju, the Union government named three respected business professionals to the board of directors at the software firm, empowering them to expand the board and, if necessary, appoint a new chief executive officer.
In the net: Satyam chief financial officer Srinivas Vadlamani arrives at Chanchalguda jail after being arrested in Hyderabad. Mahesh Kumar / AP
The new members—Deepak Parekh, chairman, Housing Development Finance Corp. Ltd, or HDFC; Kiran Karnik, past president of software industry body National Association of Software and Service Companies, or Nasscom; and C. Achuthan, a director on the board of the National Stock Exchange and a former member of the stock market regulator—are expected to meet on Monday.
“The (new) board, which will be independent, is expected to meet in the next 24 hours and decide further course of action,” minister for corporate affairs Prem Chand Gupta said on Sunday. “The board’s first priority would clearly be to restore the company’s credibility, customer confidence and employee morale as also to safeguard the interest of investors and other stakeholders.” His ministry had disbanded Satyam’s board on Friday night.
The Satyam management called the government move “the best news we’ve received in the past four weeks”. A company spokesperson said, “This is a vital stabilizing development for Satyam, and it marks the beginning of a new chapter in the company’s history.”
Raju on Wednesday shocked peers, investors, analysts and Satyam’s 52,000 employees with his admission of falsifying accounts to the tune of at least Rs7,136 crore. He and his brother Rama Raju, who was managing director of the firm, were arrested on Friday night.
The board appointments were announced less than 24 hours after Satyam’s chief financial officer Srinivas Vadlamani was arrested. He was produced before a metropolitan magistrate on Sunday evening and sent to the Chanchalguda Central Prison in Hyderabad for judicial remand till 24 January.
“We have arrested Vadlamani under the sections of Indian Penal Code that pertain to criminal conspiracy, cheating and dishonesty, criminal breach of trust, falsification of records and forgery,” said V.S.K. Kaumudi, inspector general of the Andhra Pradesh criminal investigation department, or CID.
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CID is also conducting searches at the houses of the Raju brothers, Vadlamani and directors on the former Satyam board.