Almost three years after they acquired the erstwhile Satyam Computer Services Ltd., and renaming the company as Mahindra Satyam, Mahindra Satyam has filed a case against Mr.Ramalinga Raju,the other directors and a few former senior managers like the CFO and also the auditors of the company, namely PricewaterhouseCoopers(PwC) in a Hyderabad court. While I am not an expert about whether the suit is maintainable or not, the move is surprising since Tech Mahindra bought the company after the government superseded the Satyam board, appointed their nominees and also after the necessary due diligence. Tech Mahindra must have been aware of all the existing and potential liabilities and might have bid for the company accordingly. Since Satyam was listed on New York stock exchange, the company should have even expected even class action suits in US. There were many bidders including L&T who quoted less , presumably considering the existing and potential liabilities.
The government had already initiated legal proceedings against the company for the fraudulent acts of the promoters and amounts realized if any, at the end of the trial and verdict must go to the claimants, including Tech Mahindra/Mahindra Satyam. The only reason which I can think of is the frustration that Mahindra might be feeling that it is taking longer than expected to turn the company around to robust profitability.
A Belated Verdict by ICAI
January 7, 2012
The Institute of Chartered Accountants Of India(ICAI), the professional body to regulate the accounting profession in India, has, after three-years of probing ,ultimately found the CFO (Mr.Vadalamani Srinivas) and the PriceWaterhouse auditor(Mr. Srinivas Talluri) of Satyam Computer Services Ltd. guilty of professional misconduct(Satyam CFO, auditor found guilty of professional misconduct, Business Lines January 6, 2012). One can only wonder why it took so long for the professional body that is ICAI to finish the probe and punish the guilty. Satyam episode has already made its exit from the minds of majority of the public, as they may be anxiously waiting for the next one. If a professional body took so long to book the people, how can one expect the government machinery and judiciary to deal with any issue in an expeditious manner.The CA in question has already filed a writ-petition against ICAI which is likely to further delay any of the implementation of action against him.
