Indian police on Friday arrested B. Ramalinga Raju, the founder and former chairman of beleaguered outsourcing giant Satyam Computer, days after he admitted he doctored the company’s accounts to the tune of US$1 billion.
Satyam’s balance sheets were riddled with “fictitious” assets and “nonexistent” cash that could no longer be concealed after a deal intended to save the struggling company was abandoned, Raju said on Wednesday in a letter to the company’s board.
Raju and his brother, former managing director B. Rama Raju, were arrested in the southern city of Hyderabad, said S.S. Yadav, the top police official of Andhra Pradesh state where the company is headquartered. Hyderabad is the capital of Andhra Pradesh.
The brothers resigned their posts in the company on Wednesday.
Yadav said the men were being investigated for cheating, forgery, criminal breach of trust and falsifying documents. They may face up to 10 years in prison, he said.
Several investors in Satyam were considering suing PricewaterhouseCoopers LLC, the auditor of the company’s doctored accounts, an attorney said on Friday.
Satyam shares fell another 45.5 percent on Friday to 21.75 rupees in Mumbai, following an 80 percent plunge on Wednesday.
Trading was closed on Thursday because of a holiday.
“PricewaterhouseCoopers would be responsible in certain circumstances. I mean they are supposed to check on the accounts and their audit report is relied upon by various people,” said Ravi Nath, a lawyer with the Rajinder Narain law firm, which has been contacted by several investors intending to sue the auditor. “On my first impression, PricewaterhouseCoopers needs to answer a few things.”
The auditing firm said in the statement that they had worked “in accordance with applicable auditing standards and were supported by appropriate audit evidence.”
“Given our obligations for client confidentiality, it is not possible for us to comment upon the alleged irregularities. Price Waterhouse will fully meet its obligations to cooperate with the regulators and others,” the statement said.
The international accounting firm, PricewaterhouseCoopers International Ltd, is based in London.
Beginning tomorrow, the Bombay Stock Exchange will replace Satyam with Sun Pharmaceuticals Ltd on India’s benchmark SENSEX stock index.
Top Satyam executives have struggled to reassure investors, employees and clients since news of the scandal broke.
Satyam Computer Services Ltd employs 53,000 people — among the 2 million Indians working in the country’s booming high-tech industry, which last year brought in an estimated US$40 billion. Satyam’s clients include a slew of Fortune 500 companies including Nestle, General Electric and Ford Motors.
Ram Mynampati, the company’s interim head, said the company’s top executives relied on audited accounts and were “shocked” by Raju’s admissions.
The company’s chief financial officer V. Srinivas resigned on Thursday.
Meanwhile, Archana Uttapa, a company spokeswoman, denied Indian media reports that Satyam was considering firing 10,000 of its 53,000 employees.
“There is no such move,” she said.
Employee salaries have been paid through last month and cleared for this month as well, she said.
The scandal comes at a delicate time for India’s information technology companies, which are struggling against a global slowdown and waning economic growth at home.
India’s IT firms derive 40 percent of their global revenues from financial services clients.
Andhra Pradesh’s chief minister wrote on Thursday to Indian Prime Minister Manmohan Singh asking him to appoint a management team that could restore confidence in the company and help protect its employees and investors.
Holders of the company’s US-listed shares — which have been halted from trading on the New York Stock Exchange while regulators investigate — have filed two class action suits against Satyam, the law firms representing the investors said in separate statements.
The suits filed by Vianale & Vianale LLP and Izard Noble LLP allege Satyam and its top executives issued false and misleading financial statements and violated federal securities laws, the statements on their Web sites said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft