If former independent directors on the board of embattled Satyam Computer Services thought that by merely tendering their resignations they would be absolved of all offences, they could be mistaken.
The government has held these directors equally “responsible” for alleged financial “fraud” in Satyam Computer Services and has proposed invoking appropriate provisions under the Companies Act 1956 to debar them from joining any other company’s board.
They cannot “evade responsibility for the affairs in the company or its actions which are tantamount to fraud, misfeasance, persistent negligence and continuous default in carrying out their duties,” the internal findings of the corporate affairs ministry said.
The report, a copy of which is available with Hindustan Times held these directors guilty for “improper conduct.”
According to the ministry, founder chairman B Ramalinga Raju, his brother B Rama Raju, interim CEO R Myanampati, the six directors, auditors Price Waterhouse and company secretary G Jayaraman were “privy to the company’s inner working.”
The six directors named in the report include Mangalam Srinivasan, Krishna G Palepu, Vinod K Dham, Rammohan Rao, VS Raju and TR Prasad. “The entire board of directors has, through its omissions and commissions, committed a serious breach of trust,” it said.
All directors except former cabinet secretary TR Prasad and VS Raju had resigned after the aborted bid of Satyam to acquire Maytas Infrastructure and Maytas Properties in December. Prasad and Raju also resigned subsequently.
“False disclosures and representations in the financial statements have resulted in effectively duping the investors and have misled them,” the report stated.
The findings of this report assume significance as it will be considered as a major input during the hearing of the case by the Company Law Board (CLB).
“The need of the hour is to create confidence in the minds of all those connected with the company and also assure that regulatory mechanism in India is alive and active to take immediate and positive steps,” the CLB noted in its interim order last week that allowed the government to reconstitute Satyam’s board.