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Satyam waits for its new boss

The newly appointed board of Satyam Computer Services said on Monday finding a new CEO for the scam-hit company and restating its finances were its top priority. A possible merger with a rival company is also on the table.

On their first day at work, the three members of the board touched down in Hyderabad, held a quick review with company officials at Satyam’s headquarters and then addressed the media, in an attempt to talk up sentiments and restore confidence among employees and customers. They picked their words carefully.

They expressed optimism, but didn’t seek to undermine the challenges that lie ahead. They didn’t set a timeframe for putting Satyam back on track, but promised to give it their best shot.

All told, the best possible scenario for Satyam, experts said, would be one wherein the company eventually finds a buyer. Deepak Parekh, who anchors the new board for now, said the option of merging the company with a rival firm “is always open”, but gave no details.

To find a buyer, Satyam has to first come clean with its finances, which were rigged by its disgraced former chairman, B. Ramalinga Raju, allegedly to the tune of at least Rs 7,100 crore. Parekh said an independent auditor would be appointed within 48 hours to restate Satyam’s finances.

This is also crucial to raising money to pay salaries of its 53,000 employees and meeting running expenses. “There is a doubt (about financial numbers) in everyone’s mind, including ours,” he said.

“Unless we get some authenticated numbers, no bank will give money.” The board will also persuade Satyam’s clients to pay earlier for the services they have already received.

Former NASSCOM president Kiran Karnik, who is also on the new board, said the speed and decisiveness with which the government intervened had helped restore some confidence among Satyam’s stakeholders. “It’s not completely gone.

There is perception of some stability now,” Karnik said. On Monday, Satyam’s shares rose 44 per cent to Rs 34.40, on hopes of a revival.

But most analysts maintained that it would be difficult to entirely undo the company’s slide. As Parekh said himself, getting a good chief executive officer isn’t going to be easy, because “very few want to leave their job and come to a company with such uncertainty”.

Moreover, employees and customers need continuous assurance, and all of that has to be done in a transparent manner, in public glare. Already, clients are looking to switch and employees are passing on resumes to headhunters.

The board needs to be expanded, but few competent candidates are available in the market. Meanwhile, Prime Minister Manmohan Singh held a meeting of senior government officials in Delhi to review the Satyam issue.

“It’s a hell of a job,” said Omkar Goswami, economist and an independent director on the board of Infosys Technologies. “The best thing that can happen to the company is that it finds a buyer.

In the worst case, it faces liquidation, but I hope that doesn’t happen

January 13, 2009 Posted by | news | , , , , , | 2 Comments

World Bank names blacklisted Indian IT firms

The World Bank on Sunday said it plans to publish in the future the names of all companies it bans from doing work with the poverty-fighting institution, and immediately listed three Indian companies.

The Bank said the move aligns its disclosure practices for companies involved in wrongdoing that work on development projects financed by the World Bank and those that provide goods and services directly to the institution.

“This change was made in the interest of fairness and transparency,” the Washington-based lender said in a statement.

Until now, the World Bank has only published the names of debarred companies involved in Bank-financed projects, but has not listed blacklisted firms that receive direct contracts from the institution under its corporate procurement program.

“There are currently three companies that have been debarred along with their affiliates under the Bank Group’s corporate procurement program,” the Bank said.

It said it debarred Satyam Computer Services, India’s fourth-largest software company, for eight years in September 2008, and Wipro Technologies, India’s No. 3 software company, for four years in June 2007 both for “improper benefits to bank staff”.

In addition, it said it had also barred India’s Megasoft Consultants for four years in December 2007 for “participating in a joint venture with Bank staff while conducting business with the Bank”.

All three companies were involved in different contracts and their debarments are not related.

The World Bank has long been under pressure to step up its fight again fraud and corruption within the institution and in projects it finances in developing countries.

Satyam’s chairman and founder Ramalinga Raju resigned last week after revealing years of accounting fraud in India’s biggest corporate fraud. Raju admitted last week that about $1 billion, or 94 percent of the cash on the company’s books was fictitious.

The World Bank acknowledged only in December it had debarred Satyam following press reports that the company had been blacklisted three months earlier for “improper benefits” given to Bank officials.

In Mumbai, Wipro Ltd said in a statement its revenues from the World Bank were insignificant and the decision by the Bank to bar it would not affect business and earnings.

Shares in Wipro fell more than 12 percent after the World Bank said it had barred the company from its direct contracts.

January 12, 2009 Posted by | news | , , , , , , , , | Leave a comment