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Thu, Jan 08, 2009 - Page 10 News List

Satyam chairman, director resign after admitting to fraud

DPA , NEW DELHI

The chairman of India’s leading software firm Satyam resigned yesterday after admitting a fraud of 40 billion rupees (US$823 million), which resulted in the country’s key stock index tumbling by more than 6 percent.

In a notification to the stock exchanges, Satyam, India’s fourth-biggest software exporter based in the southern city of Hyderabad, said founder and chairman B Ramalinga Raju and managing director Rama Raju resigned early yesterday.

In a regulatory statement, Raju said the firm had fraudulently incorporated a non-existent cash component and inflated the bank balance to reflect 50.4 billion rupees against 53.61 billion rupees, the IANS news agency reported.

Paring early gains, India’s benchmark 30-share Sensex tumbled 624.47 points or 6.04 percent to 9,711.46 at about 1pm in reaction to what local media termed as the biggest financial fraud in India in recent years.

Satyam’s stock was also hammered by investors and had lost nearly 72 percent of its value.

The broader 50-share Nifty index of the National Stock Exchange also fell by 5.59 percent to 2,938.90 at the same time.

“I am now prepared to subject myself to the laws of the land and face consequences thereof,” Ramalinga Raju was quoted by the PTI news agency as saying in his statement to the stock exchanges.

Satyam, which is listed at the New York Stock Exchange, could face regulatory action in the US.

Senior officials told the news agency that the government would refer the Satyam case to the Serious Fraud Investigation unit.

CB Bhave, chief Indian market regulator of the Securities and Exchange Board of India, said financial wrong-doing at Satyam was an event of “horrifying magnitude.”

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