Hyderabad / Bangalore: Removing the fig leaf that its embattled management had actually followed proper governance and disclosure practices for recommending a $1.6 billion (Rs7,808 crore today) deal which investors quickly saw as an egregious case of corporate self-dealing, three more independent directors on the board of Satyam Computer Services Ltd resigned.
In a day of fast moving developments that sharply underscored the mounting woes of Satyam chairman and promoter B. Ramalinga Raju, the company confirmed that some shares owned by its promoters and pledged against borrowings had been sold by lenders, further diluting a fairly small 8.6% stake of the Raju family.
And India’s fourth largest computer services company contradicted itself once more by admitting it failed to meet a key deadline set by the Registrar of Companies (RoC) to provide information that it had sought on a 16 December board meeting where the deal was discussed. Over the weekend, a Satyam spokesperson had claimed that a 27 December story by Mint that the company would indeed miss the deadline as a “rumour”.
Director’s cut: Executive MD of venture firm NEA-Indo US Ventures Vinod Dham, dean of Indian School of Business M. Ramamohan Rao (Bharat Sai / Mint) and professor at Harvard Business School Krishna Palepu Business Today).
On Monday, Satyam’s company secretary and head of corporate governance G. Jayaraman said, “The minutes of board meeting held on 16 December are not yet approved by the board members and in the absence of certified copy of minutes of board meeting, we cannot submit the details that RoC wanted us to.”
Mint couldn’t immediately ascertain if the RoC would grant an extension. The serious nature of Satyam’s problems was further underscored on Monday when the Union government said it would refer the controversial transaction proposed by Satyam management to the Serious Frauds Investigation Office (SFIO) if the RoC detects major irregularities during its investigation into the issue.
“If the RoC and regional director say that the case is of serious nature, and a serious fraud has been committed, it will be referred to the SFIO,” an unnamed corporate affairs ministry official told PTI. The same official said the issue could also be sent to the Company Law Board, a quasi-judicial body that also looks into the working of companies in the interest of minority shareholders.
On 16 December, Satyam’s management unveiled two related transactions to buy Maytas Infra Ltd and Maytas Properties Ltd citing the need to diversify. Both firms are promoted by the family of Satyam chairman Raju. Within 12 hours, Satyam abandoned the deal as its overseas stock listing took an unprecedented pounding. The company’s India-listed shares have lost 40% since then.