Satyam Probe Almost Complete, Says Khursheed

Chennai, Feb. 7 (ANI): Union Corporate Affairs Minister Salman Khursheed has said that the probe into the fiasco of Satyam Computer Services Limited is almost complete and the trial would take place in a fast track court.

Interacting with the media on the sidelines of a conference here Khursheed said: “The courts have been designated and I hope that it will move in the fast track as far as courts are concerned. We have given an outstanding team of lawyers headed by the Solicitor General himself.”

“Investigations are now complete, unless the court requires something more. And now it was for the court that what they want to do… I do hope that we will be able to show progress during this year,” he added.

Investigating agencies had filed fresh charges against Satyam Computer Services Limited founder and five others over an accounting fraud that hit the software services company early last year.

The Central Bureau of Investigation (CBI) had also filed a third charge sheet against the six accused in a court in Hyderabad, where Satyam is headquartered, for filing false tax returns that resulted in loss to Satyam shareholders.

The CBI filed its first charge sheet against Raju and others in April last year, followed by another in November for falsification of accounts, cheating and criminal breach of trust, among other charges. (ANI)

Satyam scam has hurt PwC brand: Global Chairman

Audit-firm PriceWaterhouseCooper has had a tough year in India, starting with the hit the brand took when the Satyam scam came to light. But the company is continues to bet on India as a growth market.

CNBC-TV18's Menaka Doshi caught up with PwC Global Chairman Dennis Nally who spoke about the audit-firm’s India plans and the road ahead.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Its been a spectacularly difficult year in India, starting in January with Satyam and last few months there have been people issue in the firm. What is your outlook on India and what you are doing to be able to regain, a perception point of view, the number one spot?

A: Without question the firm has had real challenges in India but that has not changed my outlook and view on the importance of India economy to global economic picture. It’s clearly one of our most strategic markets. I think it offers tremendous opportunity for growth and we are very much committed to this market place for the future. We are investing heavily. We will add significant number of jobs in India this year versus a year ago – not only to service our clients from insurance, tax and advisory standpoint but also adding jobs in our global service delivery centre that exists in India today.

We are very optimistic about what the prospects are for India. I visit India many times and it is very important to me and to PriceWaterhouseCoopers to capitalize on what those opportunities are. It is a very important market for us.

Q: What will it take to put the brand back on track?

A: It is going to take sustained performance and nothing short of that. Everything we do is a matter of focus. It’s a matter of excellence, quality – everything that we are doing. We just need to continue to deliver, service our clients, respond to their needs, help them deal with their issues and challenges. If we do that and we do that consistently over a period of time the PwC brand in India will be as strong and as good as it has been in the past and where we want it to be into the future.

Q: But do you think at all that one-off instance like this can hurt the brand in any fashion?

A: Any one-off instance can do harm to your brand and that is the reality. Our job is to make sure we are doing everything and we have done a number of things in India to ensure that this would not happen again, we are very much focused on it and time will tell as to how successful we are really to make that happen.

Operation Satyam, a job half done

The government's failure in quickly bringing to trial Mr Ramalinga Raju and others involved in the Satyam scandal is as spectacular as its success in saving Satyam, the company, says RAGHUVIR SRINIVASAN.

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The singular aim was preserving Satyam, the company, and finding a new owner of repute for it.

On January 7, 2008, Mr Ramalinga Raju dropped a bombshell — confessing to a Rs 7,136-crore fraud — on an unsuspecting market, shareholders, employees and, indeed, even the government. Mr Raju's letter bomb, emailed in inconspicuous fashion to the Bombay Stock Exchange, caused massive value destruction for Satyam Computer's shareholders, created huge uncertainty for its employees and clients and posed a major challenge to the government.

A year later, the dust has settled on the company which was rescued by a brave knight in shining armour in the form of Tech Mahindra. Save for the sword of class-action suits filed by shareholders in the US hanging over its head, Mahindra Satyam, as it is now known, has weathered the worst of the storms that it faced.

There were some high-profile employee exits as also some clients moving on to competitors, but these were largely well managed. In short, Satyam, the company has been saved and is now back on its feet. The credit for this should go to the government-appointed Board, peopled by eminent personalities such as Mr Deepak Parekh, Mr Kiran Karnik and professionals such as Mr T. N. Manoharan, chartered accountant and Mr C. Achuthan, a former SEBI member.

The singular aim was preserving Satyam, the company, and finding a new owner of repute for it.

Today, the members of the government-appointed Board can look back with satisfaction at a job well done. A large part of the credit should also go to the then government which gave the new Board a free hand and facilitated the eventual sale of Satyam to Tech Mahindra by relaxing some regulations.

The imperatives

Yet, Operation Satyam remains a job half done. There were two clear imperatives when the scandal became public. The first was to ensure that Satyam, the company, did not collapse while the second was to get after the perpetrators and facilitators of the scandal and put them on trial. The government's failure in the second objective is as spectacular as its success in the first.

Yes, Mr Raju and a few other characters from the supporting cast are behind bars now, but do we know exactly what happened in the whole scandal other than what Mr Raju confessed to? Do we know how he managed to pull the wool over the eyes of regulators, employees and even the auditors?

Still in the dark

Talking of auditors, do we know what their roles in the scandal were — was it just benign negligence or was it tacit acquiescence? Are we aware of who were the beneficiaries of Mr Raju's swindle, apart from the man himself? In the days following the revelation of the scandal, there were dark rumours of the tentacles of the scam reaching political circles. Do we know if such rumours are true?

The answer to all these questions is a resounding No. A year after Mr Raju's confession, we are still in the dark about the extent of the scam.

But is this how it should be? Should the government not make earnest efforts to get to the bottom of the most serious corporate fraud ever perpetrated in the country's history?

Swift retribution

Corporate scandals and swindles are an integral part of free markets. The very freedom that allows enterprise to flourish and grow is often subject to misuse and abuse by unscrupulous minds. You only have to look at the list of recent scandals in that bastion of free markets, the US. Kenneth Lay and Jeffrey Skilling of Enron fame and, most recently, Bernie Madoff's $65 billion Ponzi scheme fraud and Sir Allen Stanford, are all excellent examples of scams facilitated by benign regulation.

Yet, there is a critical difference between the US and us in this respect. Retribution in the US is swift and the long hand of the law comes down hard on those caught with their fingers in the till. For instance, the Madoff scam surfaced at about the same time as Satyam but Mr Madoff was tried and convicted to 150 years in prison within six months in June 2009. The US justice system is now working to monetise whatever assets that they were able to seize to return at least a part of the money to the victims.

Contrast that with the situation in India where investigations and trials can drag on for so many years that the perpetrators are eventually administered divine justice, as had happened in the Harshad Mehta case. Indeed, How many frauds can you recall that have gone on to eventual conviction and sentencing?

Corporate governance

This situation has to change. The biggest motivator for a scamster is the secure thought that he will never be caught and, even if he is, he can keep justice at bay indefinitely. Towards end-December, the government observed what it called “India Corporate Week” and, as always in this country, it was just an occasion for industry bodies and professional associations such as the Institute of Chartered Accountants of India (ICAI) and the Institute of Cost and Works Accountants of India (ICWAI) to make the right noises about their commitment to corporate governance.

What we need are not events or shows such as this as much as action on the ground. Acting quickly in areas that have a critical bearing on corporate governance such as independent directorship and audit committees by clearly specifying their scope of responsibility and their liability is more important than events that only help professional bodies such as the ICWAI or the ICAI to prove their loyalty to the government through full-page advertisements in newspapers.

The government also probably needs to turn its attention to the ICAI, whose reputation plumbed the depths when an incident of booth-capturing was reported during elections to its central and regional councils last month.

Little is known of what the government thought about this unsavoury incident that you would generally associate with antisocial elements.

Punish the guilty

Whether the ICAI has got to the bottom of the role of its members in the Satyam scam is unclear. While Price Waterhouse, the firm that audited Satyam's accounts, has overhauled its Indian set-up, the ICAI has been sitting tight on its findings.

As we mark the first anniversary of the Satyam scandal tomorrow, it would be nice if the government redoubles its efforts to bring to trial Mr Raju and his accomplices, whoever they may be.

If future Satyams are to be avoided, the government has to act resolutely in punishing the guilty and making public the contours of the scandal.

Raju made gardeners, drivers rajas

HYDERABAD: In disgraced Satyam boss Ramalinga Raju’s land, even gardeners were made maharajas! Several gardeners, truck drivers and others, who were working in the mango gardens and orchards — belonging to Raju brothers — for meagre salaries of Rs 4,000 to Rs 5,000 per month, have been found to possess more than 50 acres of land worth crores of rupees.

Not only this, these workers were also made directors of several fictitious companies floated by Raju. And a majority of these lands are situated in a single village called Loyapalli of Ibrahimpatnam mandal in Ranga Reddy district.

Records with the Enforcement Directorate (ED) show that the Raju brothers had purchased as much as 4,200 acres of land in this village alone in 2006. Though official records state that the entire land was purchased for a mere Rs 30 crore, its actual price is much more and its present value is not less than Rs 4,200 crore at the rate of Rs 1 crore per acre. The ED has so far attached 312 properties acquired by the Raju brothers allegedly with the Satyam scam money.

In 2006, for example, a 54 acre plot in Loyapalli village was purchased for Rs 36 lakh and was registered in the name of Ch Suryanarayana Raju, a gardener working in the mango orchards of Raju brothers at a monthly salary of Rs 5,000. When the ED sleuths quizzed this gardener on his source of income, he revealed that the land was purchased by the Raju brothers through SRSR Holdings company and the sale deeds and other papers were also lying with them.

“They have just used my name and the question of my paying income tax for this amount does not arise because this is not my income and I never filed any IT returns nor do I possess a PAN card,” the gardener told the ED authorities. Interestingly, after this purchase, the Raju brothers made this gardener a director in several of their fictitious companies floated for holding the land.

The same is the case with K Venkatapathi Raju, another gardener in whose name 54 acres were purchased and M V Suryanarayana Raju, a garden supervisor whose name was used for registering a 56-acre land. Likewise, S V Samba Murthy Raju, a truck driver working with the Rajus has 53 acres of land registered against his name. Samba Murthy Raju was also made director of two companies — Sahayadri Green Lands Company and Devagarbha Agros.

The EDs Hyderabad Zone authorities had attached all these properties.

Satyam, slowdowns make 2009 hard for software industry

PTI

NEW DELHI: The Satyam Computer accounting scam, slowdown and resultant hiring freeze by many made 2009 a forgettable year for the Indian Information Technology industry.

There was never a dull moment for bad news during the year, given the fact that Satyam's founder B Ramalinga Raju came out of the closet with an accounting fraud on January 7. The scam tarnished the credibility of India's IT story, requiring others to do a lot of convincing to retain clients.

As dramatic it was, the World Bank, within a week of the Satyam scam coming to light, announced it had banned, besides Satyam, Wipro and Megasoft from working for it for allegedly "providing improper benefits to the Bank staff" during the course of their projects with it. While the cases dated back to mid-2007, the timing of the disclosures only helped compound the woes of the IT industry.

To give the government its due credit, it acted swiftly by superseding the Satyam Board, which brought in new auditors to restate accounts, and ascertained employee count and within months found a new owner in Tech Mahindra. Satyam has since been renamed Mahindra Satyam.

Multiple agencies probed the scam, whose size was initially estimated at Rs 7,800 crore, and Raju, once a celebrated IT icon, is in custody awaiting trial.

Satyam employees fooled to work on fake projects

Hyderabad: Satyam ex-chairman Ramalinga Raju's fraud game did not spare even its employees. While it inflated revenue through fake invoices, the company created teams to work on the fake projects. The employees working on these 'projects' were made to believe there were clients waiting for these products to be delivered.

According to the finds of the Central Bureau of Investigations (CBI), the employees were also regularly sent emails about the product and project progress as if they were all coming from the clients abroad. But the emails were fake and were used only to keep the employees engaged, reports DNA.

The fraudulent chairman along with the finance in-charges and the core team created at least seven projects, showing that clients were waiting for these products to be delivered. There was regular exchange of mails from the management to the employees to give an impression of the keen interest of management in execution of these projects.

The investigation also found the invoices do not match with the ledgers of banks with which Satyam had transacted in the U.S. "However, the ledgers maintained by Satyam were dishonestly and fraudulently forged pertaining to these seven customers to incorporate the collections pertaining to all the 63 invoices," the CBI said in its latest chargesheet.

What has caught the investigators by surprise is the way the emails to employees for monitoring the progress of the fake projects were generated. The CBI found that they were all generated from Hyderabad. "Detailed analysis of the emails revealed that the internet protocol addresses from which the emails were sent at the relevant time and date were all from within Hyderabad itself, which clearly shows that such emails have never emanated from these seven foreign customers. Further, it was also established that these emails were relayed by the Rediffmail server which has got a paid service facility called Domain Services, which facilitates its clients to create email IDs at their own domain names.

In this case, it was found that the payments for the said services were made through Bank of Baroda Visa credit card which belongs to D Venkatapathy Raju (one of the accused)," the chargesheet said. These email IDs were freely used by the core team working on fabricating the accounts to give sanctity to the fake projects. "For the purpose of executing the projects, which were never delivered to the customers, the accused have wasted thousands of man hours of the associates of Satyam there by incurring a wasteful expenditure to the tune of Rs65.88 crore towards the salaries of the associates and other overheads," the CBI said.

Top honchos named in cases against Satyam

HYDERABAD: The former Cabinet Secretary T.R. Prasad, the former Director of IIT-Delhi and Madras, V.S. Raju, and the former Dean of the Indian School of Business (ISB) M. Rammohan Rao, have been named by the Serious Fraud Investigation Office (SFIO) for the first time in the Rs. 11,000-crore fraud in Satyam Computers.

They are among 11 ex-directors and other top managers of the company against whom the SFIO, an arm of the Ministry of Corporate Affairs, has filed seven cases in the special court for economic offences here, under various provisions of the Companies Act, 1956. The court summoned all 11 persons accused in these cases to appear before it on December 11.

The other accused include Vinod K. Dham, known as the father of Pentium; Krishna G. Palepu, a professor of the Harvard Business School; and Mangalam Srinivasan, a U.S.-based academician. All of them were independent directors until they resigned from the board when the fraud came to light.

The former company chairman, B. Ramalinga Raju, and two other ex-bosses, B. Rama Raju and Srinivas Vadlamani, who are in jail facing police cases, were also shown as accused.

Two top mangers who were not brought to book by the police but have now been named by the SFIO are Ram Mynampati and G. Jayaraman. While the former was considered the right hand man of Ramalinga Raju with control over 60 per cent of the company’s business, Jayaraman was the company secretary.

The SFIO filed the case against Ram Mynampati showing him as a resident of the U.S., where he ‘fled’ before the police could lay hold on him. The agency accused him of receiving remuneration much in excess of the payout due to him. The company accounts for 2007-08 showed that Mynampati’s salary package was Rs. 3.5 crore, while all other directors together got only Rs. 2.6 crore in the whole year. Ramalinga Raju collected Rs. 60.4 lakh and the seven non-executive directors Rs. 1.56 crore.

The prosecutors told The-Hindu that the cases were filed against them on various charges, including exaggeration of balance sheets and showing as paid unpaid dividends.

Meanwhile, the Directorate of Enforcement has attached another chunk of immovable properties, mainly agricultural lands, belonging to Ramalinga Raju and his family members, with the adjudicating authority in New Delhi under the Prevention of Money Laundering Act. The purchase consideration of the 25 properties was shown as Rs. 20 crore.

The first chunk of 287 properties with a purchase consideration of Rs. 170 crore and 34 lakh Satyam shares were attached in August.

2-3 Satyam seniors face arrest

Hyderabad: The Central Bureau of Investigation (CBI) is gearing up for a speedy trial in the multi-crore scam in Satyam Computer Services, now known as Mahindra Satyam.
According to a source, the CBI is making some brisk moves to effect some more arrests in the case.

"There are at least three more people on the radar," the source said, adding these could be company seniors. The CBI has filed a memo in a local court seeking to frame charges against the accused. This will formally commence the trial process and the accused will get to respond to the charges leveled against them.

However, the counsel for the accused objected to the application on the ground that the framing of charges and asking the accused to defend themselves before the supplementary charge-sheet is filed by the CBI would jeopardise the interests of the accused.

MELBOURNE: The Australian government is introducing new measures to assist overseas students, including many Indians, affected by the closure of an international education provider, a minister said.

Minister for Immigration and Citizenship Senator Chris Evans said that from Jan 1, 2010, overseas students who require a new visa to complete their studies at another school or college will be exempt from paying the A$540 (approx. Rs.22,500) visa application charge.

Just this year alone, 12 education providers have closed affecting about 4,700 students.

Evans said that although most students will be able to complete their studies on their existing student visa, some may need to enrol in a new course that finishes after their existing student visa expires and will require a new visa.

"In situations where an education provider can no longer offer a course, the government's primary concern is the welfare of the student."

"We understand that these situations are not the fault of the student and the introduction of a fee exemption will ensure they are not shouldered with an additional financial burden," Evans said.

Students will be able to apply to the Department of Immigration and Citizenship (DIAC) for a refund of their visa application fee if they have been affected by the closure of an education provider in 2009 and have had to apply for a new student visa.

The government is also increasing the minimum financial requirements for overseas students to ensure they can meet their living costs while in Australia.

From Jan 1, 2010, prospective overseas students will need to demonstrate that they have access to at least A$18,000 (approx Rs.748,000) a year to fund their living costs in Australia, instead of the current A$12,000 (approx Rs.498,000).

Evans said: "It is important that students understand these financial requirements are only the minimum amount required for a student visa."

"International can supplement their income through part-time work in Australia but the primary purpose of a student visa is to study and students should not rely on part-time work to meet their expenses."

The measures target parts of the student visa caseload in India, Mauritius, Nepal, Brazil, Zimbabwe and Pakistan.

There are over 500,000 international students in Australia pursuing university education and vocational studies of which about 94,000 are Indians - the second highest after the Chinese.

Thousands of Indians are enrolled in vocational courses in government and private Technical and Further Education (TAFE) institutes.

In recent years, Australia's education industry has boomed to become the country's third-largest foreign currency earner after coal and iron ore, generating about $12 billion in revenue in 2008. Indian students in Australia alone contribute $3.5 billion a year to the economy.

An official said since these enhanced integrity measures were introduced, there has been an increase in the number of applications being withdrawn, from five percent in July to 17 percent in September.

"To date, more than 150 agents have had their eVisa access suspended due to evidence of fraud or inactivity."