New Delhi/Hyderabad (IANS): A new, three-member board was named Sunday to bring back financial order to the fraud-hit Satyam Computer Services and restore confidence of employees, investors and clients into its future operations, even as its former chief financial officer Vadlamani Srinivas was sent to jail.
The new board comprises former National Association of Software and Service Companies (Nasscom) chief Kiran Karnik, Housing Development Finance Corp (HDFC) chairman Deepak Parikh and former markets watchdog Securities and Exchange Board of India (SEBI) member C. Achuthan.
The board members are reaching Hyderabad Sunday night and the first meeting is scheduled for Monday morning at Satyam headquarters in Hitec city.
"We will ensure that Satyam continues to function in the best interests of the company and its shareholders," Corporate Affairs Minister Premchand Gupta told reporters in New Delhi, announcing the names of the new board members.
"The new board will meet in next 24 hours," the minister said a day after the company's founder chairman B. Ramalinga Raju and his brother Rama Raju surrendered before the authorities for financial fraud and were remanded into judicial custody till Jan 23.
"Having considered all aspects, the government has decided to reconstitute the Satyam board with experts in different fields," Gupta said. "Such a board will provide necessary vision and accountable leadership to the company in the hour of crisis."
He, however, declined comment when asked if investors in Satyam like Lazard and Life Insurance Corp of India would also be given representation on the company's board eventually.
Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy made this suggestion during a press conference in Hyderabad Sunday, adding that his government would refer the case to the Central Bureau of Investigation (CBI), if necessary.
In a development that jolted corporate India and raised questions about the level of corporate governance in the country, the 54-year-old Satyam chairman Wednesday admitted to perpetrating a Rs.70-billion ($1.4 billion) fraud on the company that saw its revenues cross the $2 billion mark last fiscal.
Gupta said the reconstituted board will make its own assessment of the situation and take appropriate decisions. "It would restore credibility to the company, customer confidence and boost employee morale."
The minister briefed Prime Minister Manmohan Singh Saturday on the developments surrounding Satyam, including the names of those proposed to become board members of the Hyderabad-based company, officials said.
The government sacked all members of the Satyam board Friday. the officials said the prime minister wanted a credible management at its helm so as to instil the necessary confidence among various stakeholders.
"This is not only a welcome step but also a speedy decision. The government must be congratulated for prompt action which was the need of the hour," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
"All three people named are leaders in their respective field - one knows the IT industry inside out, the second is an expert regulator and chartered accountant, and the third has phenomenal understanding of corporate governance," Banerjee told IANS, referring to Karnik, Achuthan and Parikh, respectively.
"I am sure the government will consider more such people," he added.
Nasscom president Som Mittal said: "We are confident that this will help ensure business continuity, build confidence and protect the interests of all the stakeholders - the employees, customers and investors.
"By acting in this bold and coordinated manner, the government has sent the right signals to the global community and set an example of what governments can do to protect stakeholder interests while ensuring strict adherence to the rule of law."
The Hyderabad-based Satyam welcomed appointment of three members to the new board and pledged full cooperation.
"Satyam welcomes this key development, which will ensure the company's continued operations, help maintain customer confidence and associate morale, and restore investor trust," a company spokeswoman said.
"This is a vital stabilising development for Satyam, and it marks the beginning of a new chapter in the company's history. It is the best news we've received in the past four weeks," the spokesperson added.
Officials familiar with the developments said that the markets regulator would soon seek permission from Sixth Additional Chief Metropolitan Magistrate D. Ramakrishna, who has the Satyam brass under custody, to record their statements.
The two Raju brothers spent Saturday night inside the Chanchalguda jail in Hyderabad, sleeping on the floor along with 26 other prisoners accused of petty crimes like theft. Prison authorities said they will be treated like ordinary under-trials with no special arrangements.
The magistrate remanded Satyam's former chief financial officer Vadlamani Srinivas into judicial custody till Jan 23. He was also taken to Chanchalguda central jail.
The Criminal Investigation Department (CID) arrested him late Saturday and interrogated him during the night and Sunday.
Rajus' lawyer S. Bharat Kumar said he would move a bail petition for the Raju brothers and Srinivas before the court Monday.
Earlier, CID officials searched the residence of Srinivas in Habsiguda and confiscated a few documents relating to Satyam accounts. CID officials also conducted raids on Ramalinga Raju's house.
CID has not ruled out interrogation and arrests of some former Satyam directors.
SEBI, which is conducting a separate investigation, is also likely to move a petition in the court Monday, seeking custody of all the three arrested Satyam officers.
SEBI chairman C.B. Bhave met Minister Gupta Saturday to discuss the investigation. Senior SEBI officials have been checking the firm's books of accounts since Thursday.
Auditing firm PriceWaterhouseCoopers (PwC) that had certified the accounts of the company as "true and fair" is also under scrutiny, officials said.
A top functionary of the Institute of Chartered Accountants of India (ICAI) said in Chennai Saturday that the auditing firm was bound to disclose all the facts and could not hide under the client confidentiality clause