The brothers who founded Satyam Computer Services spent most of Friday night under interrogation and will spend Saturday night in jail, according to the authorities, and they may soon be joined by Srinivas Vadlamani, who resigned as chief financial officer after a huge fraud was disclosed at the outsourcing company.
“We expect to arrest him, but we have not yet,” Inspector General V.S. K. Kaumudi of the police crime investigation unit said in an interview. Mr. Vadlamani tendered his resignation soon after one of the founders, B. Ramalinga Raju, resigned as chairman in a letter to the company Wednesday in which he confessed to faking profit and revenue. Charges being considered against Mr. Raju and his brother, B. Rama Raju, include cheating, forgery, criminal breach of trust and falsifying documents.
Satyam, one of India’s largest outsourcing companies, is struggling to survive after the revelations of fraud, and the government has taken control of the company’s board. B. Ramalinga Raju said in his letter that none of the board members were aware of the fraud at the company. S. Bharat Kumar, lawyer for the Raju brothers, said in an interview that he believed the two had a “good case” for being released on bail.
News source: nytimes Satyam, which counts one-third of the Fortune 500 companies among its clients, employs some 53,000 people, about two-thirds of them in India. Government agencies have moved quickly since Wednesday to shore up the company and to reassure investors that Indian publicly traded companies are safe. They passed new rules Friday that will require the largest public companies on India’s stock exchange to submit their numbers to additional review by outside auditors. The authorities also removed Satyam’s board members and said they would be replaced with 10 government-appointed directors.
In advance of a meeting to discuss the case Saturday between India’s corporate affairs minister and the chief of the market regulator, SEBI, the Confederation of Indian Industry welcomed the new initiatives. The confederation, a trade group, said, however, that the “events at Satyam needs to be seen as one-off and not a reflection of the prevalent corporate governance standard in India.”