Satyam controversy
Friday, December 19, 2008
Satyam attempted to acquire (Maytas Infrastructure and Maytas Properties) founded by family relations of company founder Ramalinga Raju for $1.6 billion, despite concerns raised by independent board directors. Both companies are owned by Raju's sons. This eventually led to a review of the deal by the government, a veiled criticism by the vice president of India and Satyam's clients re-evaluating their relationship with the company. Satyam's investors lost about INR 3,400 crore in the related panic selling. The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism as Satyam's shares fell 55% on the New York Stock Exchange. Three members of the board of directors resigned on 29 December 2008.
Event list
The World Bank had banned Satyam from doing business with it for 8 years due to inappropriate payments to the World Bank's staff. The World Bank accused Satyam of giving improper benefits to its (the Bank's) staff and of failing to maintain documentation to support fees charged for its subcontractors. However, it clarified that Satyam was not involved in incidences of data theft or malicious attacks that had been made on the Bank's information systems. [9]
In addition to other controversies involving Satyam, Chairman Raju resigned after publicly announcing his involvement in an accounting fraud. Ramalinga Raju is currently in a Hyderabad prison along with his brother and former board member Rama Raju, and the former CFO Vadlamani Srinivas.
UK mobile payments company Upaid Systems is suing Satyam for over 1 billion US dollars on complaints of fraud, forgery and breach of contract on 9-December-2009 Satyam has settled the lawsuit with UPAID for $70MM, of which $45MM is payable upon regulatory approval, and the remaining $25MM is payable a year after the initial payment. The settlement requires Upaid to give Mahindra Satyam a worldwide royalty-free licence on its patents, and provides for the dismissal of all pending actions including the litigation between the companies pending in the U.S. court.