New York: Satyam Computer Services Ltd has agreed to pay $125 million to settle US shareholder litigation arising from an accounting fraud that in 2009 turned into India’s biggest corporate scandal.
The settlement does not cover various individuals including Ramalinga Raju, the outsourcing company’s founder and former chairman, according to settlement papers filed late Wednesday in the US district court in Manhattan.
Raju shocked investors in January 2009 when he said Satyam had overstated earnings and assets for several years, in a fraud estimated to exceed $1.5 billion and sometimes referred to as “India’s Enron.”
The revelation caused shares of the software servicing company to plummet, leading to the lawsuit. The company is now known as Mahindra Satyam Ltd .
Wednesday’s settlement would resolve claims that Satyam misled investors about its business performance.
It covers investors who bought Satyam’s American depositary shares in the five years ended 6 January, 2009, the day before Raju revealed the fraud, court records show.
Four institutional investors served as lead plaintiffs: the Public Employees’ Retirement System of Mississippi, Britain’s Mineworkers’ Pension Scheme, Norway’s Skagen AS, and Denmark’s Sampension KP Livsforsikring A/S. The litigation consolidated several lawsuits that had sought class-action status.
David Kessler, a lawyer for the lead plaintiffs, in an email said he was pleased with the “substantial” settlement, which would resolve his clients’ claims against Satyam. Their litigation will continue against the remaining defendants, which include former Satyam officers, directors and auditors, he added.
A lawyer for Satyam did not immediately return a request for comment.
According to court papers, various individuals including Raju, as well as onetime Satyam auditor PricewaterhouseCoopers, are not among the defendants to settle the case.
The accord requires court approval, and a hearing to consider preliminary approval is set for 24 February.
Once India’s fourth-largest outsourcing company, Mahindra Satyam in September posted a net loss of 1.3 billion rupees for the fiscal year ended the previous March. It was the first time it had revealed financial results since the scandal.
Raju surrendered to authorities in November after his bail was cancelled.