The new chief executive officer of fraud-hit Satyam Computer Services sold 40,000 shares of the company in the days before the previous board’s aborted decision to buy two related firms, stock exchange data shows.
A.S. Murty was named chief executive with immediate effect by the new government-appointed board on Thursday, Satyam said in a statement after a two-day board meeting in the southern city of Hyderabad.
Disclosures sent by Satyam to the Bombay Stock Exchange in December show A.S. Murthy sold 7,000 shares in the company on Dec. 12, 14,000 on Dec. 15 and 19,000 on Dec. 16.
The sales left him with 50,065 Satyam shares. Some other senior company officials also sold shares in December, stock exchange filings show. Hari Thalapalli, a Satyam spokesman, said the board was aware Murty sold shares in December and had consulted market regulator the Securities and Exchange Board of India and lawyers before finalising his name as the chief executive.
“He had sold those shares because of personal reasons and he did not know anything about it, none of us knew about it,” Thalapalli said, referring to the accounting fraud at Satyam.
Satyam shares closed at Rs 220.75 on Dec. 12, Rs 225.40 on Dec. 15, and Rs 226.50 on Dec 16. The shares closed at Rs 46.25 on Thursday.
After Indian market hours on Dec. 16, Satyam announced plans to buy two firms in which its founder, Ramalinga Raju, and his family held stakes.
In the face of an investor revolt and a sharp fall in the company’s shares in New York, the plan was quickly abandoned. Raju resigned as Satyam’s chairman on Jan. 7, saying profits had been overstated for years and $1 billion of cash and bank balances on the company’s books did not exist.
In his resignation letter, he said the move to buy the related companies was a final attempt to resolve the problem of the fictitious assets. Raju, who is now in jail, said in the letter that senior executives at Satyam, including Murthy, were unaware of the issues.