New Delhi: This is one insurance that has failed to bring relief to Satyam as the company’s claims towards the legal costs have been rejected by Tata group’s insurance venture Tata AIG.
Tata AIG has, in its preliminary view, disputed the claim sent by Satyam under its Directors & Officers Liability Policy (D&O Policy), subject to the company providing additional documentation and information.
Satyam, once the fourth largest IT exporter, had purchased the policy to protect its executives against legal costs in defending suits brought against them for wrongful acts and any awards, including out of court settlements.
The D&O Policy also protects the company if it is exposed to a ‘Securities Claim´. The primary policy was issued by TATA AIG, along with The New India Assurance and ICICI Lombard, forming multiple layers of cover.
Satyam sent claim notifications regarding receipt of notices from several regulatory authorities and the Class Actions. It had also enclosed copies of letters from directors and officers on likelihood of potential claims.
However, TATA AIG has sought additional documentation and information. Satyam expressed its disagreement with positions taken by TATA AIG, but agreed to furnish additional details.
Satyam had incurred insurance cost of Rs three crore in October-December 2008 and Rs one crore each in January and February.