In separate lawsuits filed in US courts, Satyam Computer has been charged with duping thousands of American investors of billions of dollars by artificially inflating share price.
Demanding trial by jury against Satyam Computer, its chairman Ramalinga Raju, managing director and CEO B Rama Raju, the complainants have said that each of them is "liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit..."
The IT firm has also deceived the investing public regarding Satyam's business, its finances and the intrinsic value of shares, leading investors to purchase shares at artificially inflated prices, said the class action suit filed by lawfirm Vianale & Vianale LLP on behalf of shareholders.
Another lawfirm Izard Nobel LLP also filed an identical class action suit on the issue at the US District Court for Southern District of New York.
"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.
The class action complaint filed by Vianale & Vianale LLP in Manhattan Federal Court said that there are thousands of such shareholders throughout the US who have been affected by "a series of false and misleading statements, containing materially inaccurate financial information about the company, which served to artifically inflate the value of its ADSs.
Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to 0.85 dollars in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800 crore fraud in the company.
"When the truth was revealed the company's ADSs lost nearly their entire value and investors lost billions of dollars as a result," the suit filed by Vianale said.
The suits also charged Raju and his brother B Rama Raju with having engaged "in such a scheme to inflate the price of Satyam ADSs in order to 1) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; and 2) enhance the value of their personal holdings of Satyam stocks."
"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter to the Board of Directors yesterday, while announcing his resignation as chairman.
Agencies
Thursday, January 8, 2009
Is Dell likely to cut 1,900 jobs from Ireland?
Dell Inc, the world's No. 2 PC maker, will cut about 1,900 of 3,000 jobs at its manufacturing plant in Limerick in the west of Ireland, Dell said on Thursday.
Dell, which ranks itself as Ireland's largest exporter, largest technology company and second largest company overall, said it would move production of computer systems for customers in Europe, the Middle East and Africa to its Polish plant and third-party manufacturing partners.
Dell cut more than 8,000 jobs last year and struggled to regain market share it lost to larger rival Hewlett-Packard Co. It also said last year it would outsource more manufacturing to cut costs.
Agencies
Dell, which ranks itself as Ireland's largest exporter, largest technology company and second largest company overall, said it would move production of computer systems for customers in Europe, the Middle East and Africa to its Polish plant and third-party manufacturing partners.
Dell cut more than 8,000 jobs last year and struggled to regain market share it lost to larger rival Hewlett-Packard Co. It also said last year it would outsource more manufacturing to cut costs.
Agencies
Satyam saga developments on Thursday
The developments of the Satyam Saga continues even on Thursday with the following highlights:
* Satyam assures its customers that business is as usual
* Where is Ramalinga Raju, former chairman of Satyam Computers
* Satyam top leaders pledge to stay on
* SAP, Oracle Assure Customer Support
* Foreign Firms Wary as Satyam Trial Looms
* YSR Urges Team to Manage Satyam Affair
* Infosys Will Not Buy Tainted' Satyam
To read the actual statement drafted by Ramalinga Raju of Satyam Computers click on the link below
http://online.wsj.com/public/resources/documents/Satyam.pdf
And to follow up on interesting issues like what drove to this extreme situation at Satyam, continue to browse through
http://editor-manu-sharma.blogspot.com/ on a regular basis.
* Satyam assures its customers that business is as usual
* Where is Ramalinga Raju, former chairman of Satyam Computers
* Satyam top leaders pledge to stay on
* SAP, Oracle Assure Customer Support
* Foreign Firms Wary as Satyam Trial Looms
* YSR Urges Team to Manage Satyam Affair
* Infosys Will Not Buy Tainted' Satyam
To read the actual statement drafted by Ramalinga Raju of Satyam Computers click on the link below
http://online.wsj.com/public/resources/documents/Satyam.pdf
And to follow up on interesting issues like what drove to this extreme situation at Satyam, continue to browse through
http://editor-manu-sharma.blogspot.com/ on a regular basis.
Wednesday, January 7, 2009
Has Raju left India after admitting of financial irregularities?
Amid speculation over his whereabouts, B Ramalinga Raju, who stepped down as Chairman of Satyam Computer after admitting to financial irregularities, is believed to have left for the US in connection with a court case.
Speculation mounted tonight when a TV channel reported that Raju may have gone to Dubai.
"We have no idea of where Raju is," a Satyam spokesperson told the media over phone when asked if he had left for the US in connection with a case filed by a British Telecom solution firm Upaid.
Raju was also not reachable on his mobile phone despite several attempts, but police sources said that Raju left here for Texas this morning from the Hyderabad Airport.
Earlier in the day, Andhra Pradesh Chief Minister Y V Rajasekhara Reddy had said that he would refer the Satyam matter to CB-CID for investigation.
Upaid had filed a petition in Texas seeking details of the USD 1.6 billion dollars acquisition of two Maytas firms, promoted by Raju's family, before Satyam dumped the deal after attack from investors.
In its petition, Upaid had demanded presence of Raju and senior directors of Satyam for questioning by its lawyers.
Speculation mounted tonight when a TV channel reported that Raju may have gone to Dubai.
"We have no idea of where Raju is," a Satyam spokesperson told the media over phone when asked if he had left for the US in connection with a case filed by a British Telecom solution firm Upaid.
Raju was also not reachable on his mobile phone despite several attempts, but police sources said that Raju left here for Texas this morning from the Hyderabad Airport.
Earlier in the day, Andhra Pradesh Chief Minister Y V Rajasekhara Reddy had said that he would refer the Satyam matter to CB-CID for investigation.
Upaid had filed a petition in Texas seeking details of the USD 1.6 billion dollars acquisition of two Maytas firms, promoted by Raju's family, before Satyam dumped the deal after attack from investors.
In its petition, Upaid had demanded presence of Raju and senior directors of Satyam for questioning by its lawyers.
Probe into Satyam market operations: SEBI
Startled by the disclosure of fudging of accounts by Satyam founder B Ramalinga Raju, market regulator SEBI on Wednesday ordered probe into share market operations and inspection of the IT company.
"SEBI has ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers," it said in a release.
The probe follows a letter written by Raju in which he disclosed that "accounts provided to the stock exchanges were not true".
The investigation, SEBI said, will ascertain whether any provision of the Act or regulation has been violated.
As a first step, SEBI today ordered an investigation into affairs relating to buying, selling or dealing in shares of Satyam to ascertain if any regulatory provision was violated. Besides, it ordered inspection of Satyam Computer (books).
Giving details of the irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books)."
It also carries "an accrued interest of Rs 376 crore which is non-existent, understated liability of Rs 1230 crore on account of funds arranged by me, overstated debtors position of Rs 490 crore (as against Rs 2651 crore in the books."
The USD 2-billion Satyam also reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue).
"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said, adding that the gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years.
Satyam, meanwhile, said Board member Ram Mynampati has been appointed interim CEO. "We are obviously shocked.. immediate priorities are to protect interest of shareholders, protect the careers and security of its approximately 53,000 associates..," Satyam said in a statement.
A shocked industry called for deeper regulation. "This fraud on the investors and employees... shows a systemic breakdown in audit and board oversight... questions will need to be asked," FICCI President Rajeev Chandrasekhar said.
FICCI and CII, however, said the Satyam episode should not be seen as a blot on all the Indian firms.
Corporate Affairs Minister Prem Chand Gupta said stern action would be taken under the law.
Agencies
"SEBI has ordered an investigation into the affairs relating to buying, selling or dealing in the shares of Satyam Computers," it said in a release.
The probe follows a letter written by Raju in which he disclosed that "accounts provided to the stock exchanges were not true".
The investigation, SEBI said, will ascertain whether any provision of the Act or regulation has been violated.
As a first step, SEBI today ordered an investigation into affairs relating to buying, selling or dealing in shares of Satyam to ascertain if any regulatory provision was violated. Besides, it ordered inspection of Satyam Computer (books).
Giving details of the irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books)."
It also carries "an accrued interest of Rs 376 crore which is non-existent, understated liability of Rs 1230 crore on account of funds arranged by me, overstated debtors position of Rs 490 crore (as against Rs 2651 crore in the books."
The USD 2-billion Satyam also reported a revenue of Rs 2700 crore for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenue).
"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said, adding that the gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years.
Satyam, meanwhile, said Board member Ram Mynampati has been appointed interim CEO. "We are obviously shocked.. immediate priorities are to protect interest of shareholders, protect the careers and security of its approximately 53,000 associates..," Satyam said in a statement.
A shocked industry called for deeper regulation. "This fraud on the investors and employees... shows a systemic breakdown in audit and board oversight... questions will need to be asked," FICCI President Rajeev Chandrasekhar said.
FICCI and CII, however, said the Satyam episode should not be seen as a blot on all the Indian firms.
Corporate Affairs Minister Prem Chand Gupta said stern action would be taken under the law.
Agencies
Strong reactions by CXOs on the Satyam saga
The Satyam “Saga” took a dramatic turn on Wednesday with B. Ramalinga Raju, the chairman of Satyam Computer resigning from the company’s board. In a shocking disclosure, he admitted some financial irregularities in the company, including an inflated cash balance of Rs 5,040 crore.
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
Is IBM likely to layoff 16,000 jobs?
International Business Machines Corp, the biggest technology employer, may cut thousands of jobs this month amid the global economic slowdown, according to the employee group Alliance for IBM.
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said in an interview.
Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s website said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002. The worldwide slump has tightened companies’ technology budgets and IBM may report a 1.6 per cent drop in sales last quarter to $28.4 billion, based on the average analyst estimate.
“There’s likely to be production cutbacks at IBM,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in Bedford Hills, New York. “There will be job cuts. For now, reducing the workforce to benefit the viability and competitiveness of the company makes sense.”
Solaris, which oversees $2 billion, held 29,000 shares of IBM as of Sept 30.
IBM rose $2.41, or 2.8 per cent, to $89.23 at 4 pm in New York Stock Exchange composite trading. The shares lost 22 per cent last year.
‘Rebalance our workforce’ IBM has frequently pruned its staff over the past few years. The company had two waves of job cuts in 2007, totaling more than 2,000 positions. IBM had $318 million in job-reduction costs that year, compared with $272 million in 2006.
“We constantly rebalance our workforce and continue to invest in growth areas,” said Ian Colley, a company spokesman. He declined to comment further when asked about the Alliance posting.
IBM had 386,558 employees at the end of 2007. Palo Alto, California-based Hewlett-Packard Co, the world’s largest personal-computer maker, had 321,000 as of Oct 31, and Panasonic Corp, based in Osaka, Japan, had 313,594 as of Sept 30.
Agencies
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said in an interview.
Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s website said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002. The worldwide slump has tightened companies’ technology budgets and IBM may report a 1.6 per cent drop in sales last quarter to $28.4 billion, based on the average analyst estimate.
“There’s likely to be production cutbacks at IBM,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in Bedford Hills, New York. “There will be job cuts. For now, reducing the workforce to benefit the viability and competitiveness of the company makes sense.”
Solaris, which oversees $2 billion, held 29,000 shares of IBM as of Sept 30.
IBM rose $2.41, or 2.8 per cent, to $89.23 at 4 pm in New York Stock Exchange composite trading. The shares lost 22 per cent last year.
‘Rebalance our workforce’ IBM has frequently pruned its staff over the past few years. The company had two waves of job cuts in 2007, totaling more than 2,000 positions. IBM had $318 million in job-reduction costs that year, compared with $272 million in 2006.
“We constantly rebalance our workforce and continue to invest in growth areas,” said Ian Colley, a company spokesman. He declined to comment further when asked about the Alliance posting.
IBM had 386,558 employees at the end of 2007. Palo Alto, California-based Hewlett-Packard Co, the world’s largest personal-computer maker, had 321,000 as of Oct 31, and Panasonic Corp, based in Osaka, Japan, had 313,594 as of Sept 30.
Agencies
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