The Hindu Business Line : Gupta talks tough, wants RoC to submit report on Satyam in a week

New Delhi, Jan. 7 Taking a tough stance, the Ministry of Corporate Affairs (MCA) has directed its field office to submit in a week’s time the report on the financial irregularities disclosed by the promoters of Satyam Computer Services. Though the Ministry does not want to give any numbers to the cumulative financial overstatement made by the company, it said that ‘no leniency’ would be shown if the company was found to be erring.

“Depending on the Registrar of Companies (RoCs) report, which I have directed to be submitted by January 14, my Ministry will decide the future course of action to be taken against the company, its officials and auditors. Though prima facie it appears that the case deserves to be probed by Serious Fraud Investigation Office (SFIO) only after examining the RoC report we will decide whether the case would be referred to it,” Mr Prem Chand Gupta, Minister for Corporate Affairs, said.

The Minister told Business Line that “I have asked the Institutes of Chartered Accountants and Company Secretaries to examine the allegations and submit their report at the earliest and also take necessary actions immediately.” The Ministry will be working in close coordination with the Securities and Exchange Board of India and the two professional institutes.

As regards whether the company would be first booked under the Indian corporate laws or the US legislations, as Satyam is listed at NYSE as well, Mr Gupta said, “there is not going to be any overlap. The regulatory authorities of that country can take their own decisions under their norms, which in no way intervene with the regulations of our country.”

On the issue of time taken by the legal systems in the country and whether a special court could be set up to expedite the process, Mr Gupta said, “Before we take any action, the entire investigation process has to be completed. There are procedures involved. Let us not push something beyond a limit. We would like to make it an exemplary case in order to avoid any such future incidents. So we would ensure that the guilty are punished, but after due investigations.”

First priority

“Our first priority is to protect the stakeholders – investors, shareholders and employees – interest,” he said.

Whether action could be initiated against the erring auditors, in this case, PricewaterhouseCoopers (PwC), Mr Gupta said, “Any auditor operating in India has to follow the norms.”

Asked if the investors’ sentiments would be affected by such blatant violations of corporate governance norms, he said, “I agree it is a very unfortunate case. But my message to investors is that there is nothing to panic. We have a fairly good regulatory mechanism. This case does not mean that the Indian corporate world suffers from such similar episodes.”

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