Tech Mahindra plans to appoint two auditors at Satyam Computer Services as part of its initiative to enhance the corporate governance standard of the fraud-hit software exporter, said a top Tech Mahindra executive. But, the appointments will have to be ratified by Satyam shareholders.
Satyam’s corporate governance practices and the role of its auditors came under serious questions after its founder Ramalinga Raju confessed to a Rs 7,000-crore fraud in January, which eventually led to sell out of the company to Tech Mahindra.
Tech Mahindra president (international operations) CP Gurnani said that the company’s chairman Anand Mahindra will personally drive the corporate governance initiative. The new Satyam management is also in favour of appointing advisory boards to oversee governance in some of the key regions that Satyam does business, Mr Gurnani said.
The advisory board will consist of regulatory and legal professionals in the key regions in which Satyam operates. The US contributes to over half of Satyam’s revenues, according to data released by Satyam at the end of September 2008.
The other focus areas for the new management are retention of key Satyam employees, growth of customers and optimisation of assets. Since Tech Mahindra became the new owner of Satyam, there have been no customer exits. The firm has also added three new clients in 14 days since it took over. These are multi-million- dollar contracts in Satyam’s core areas of competence — SAP and business intelligence, Mr Gurnani added.
Mr Gurnani, who is set to be inducted in the Satyam board after Tech Mahindra gets all the relevant regulatory clearances, said the new auditors will be of the size and repute of KPMG and Deloitte, who are preparing re-statement of accounts of Satyam. The re-statement that will reflect the true financial position of Satyam is expected to be completed by December this year.
Questions have been raised on the role of two statutory auditors of Price Waterhouse S Gopalakrishnan and Srinivas Talluri in the Satyam scam. And, for the first time in the history of corporate India, the two auditors were taken into judicial custody on charges of criminal conspiracy and cheating.
The auditing firm, which has appointed lawyers to defend both the auditors, later went on record to say that Satyam’s accounts cannot be relied upon. The government-appointe d board to salvage Satyam removed the audit firm Price Waterhouse and appointed KPMG and Deloitte to re-state Satyam’s accounts.
Meanwhile, earlier this month, the Central Bureau of Investigation has charged the auditors for conspiring with Raju to perpetrate the scam. The agency said that the two auditors “did not match sales realisation (of Satyam) with the bank statements, deliberately did not take into account the huge variation in the figures of the fixed deposit balance between the bank confirmation received directly and the one received from the company, did not verify the advice of domestic and international transfers issued by authorised signatories of banks…Thereby accommodating the fraudulent and dishonest acts of Raju and the other co-conspirators” .