Raju arrested as Govt cracks down on Satyam
Founder of beleaguered Satyam B Ramalinga Raju, along with his brother was arrested on Friday night, two days after making a startling disclosure of about Rs 7,800 crore financial fraud in the IT company, within hours of government disbanding the Board. Ashok Das, Gaurav Choudhury and Sandeep Singh report.india Updated: Jan 10, 2009 01:29 IST
Satyam Computer Services Ltd founder B Ramalinga Raju was arrested after he came out of hiding and surrendered before the police in Hyderabad on Friday, the day the government disbanded the beleaguered company’s board.
Raju’s brother Rama Raju, former Managing Director, was also arrested. The Hyderabad police were said to be charging them under five criminal sections, including one for falsification of records.
The ICAI, the apex institute of chartered accountants, will serve a show-cause notice on PricewaterHouse by Saturday.
In Delhi, the government bulldozed its way into Satyam’s management with a plan to pack the board with 10 of its own nominees.
It will supersede the current lame-duck board left after Raju’s stunning confessions unravelled India’s biggest corporate fraud earlier this week.
Worried about the fate of 53,000 employees, the government said the current board had failed and it was imperative to ensure uninterrupted operations at the company.
“The government is considering appointment of suitable persons as directors of Satyam,” minister of corporate affairs Prem Chand Gupta said in a statement. He said the names of the 10 directors would be announced soon.
Gupta blamed “greed and misdeeds” of a few persons for the developments. He promised “prompt, effective and coordinated” action.
A Satyam Computer Services spokeswoman said the company would comment only after receiving the official communication from the government.
The institutional investors who continue to hold stake in the company said this was an important step. “It is a welcome move on the part of the government and should lead to the revival of the company,” said a senior official of ICICI Prudential Life Insurance, which holds 2.47 per cent stake in Satyam.
Corporate captains welcomed the government’s move that was taken after approaching the Company Law Board, the nodal judicial body on corporate disputes.
“This is an unprecedented decision and is very much welcomed by the corporate sector,” said HDFC chairman Deepak Parekh. “The move will restore the confidence of investors, employees and the clients of the company.”
Lawyer Diljeet Titus said there were several provisions in the Companies Act 1956 which empowered the government to “prevent oppression or mismanagement”.