The Hindu Business Line : Satyam case referred to Serious Fraud Office

New Delhi, Jan. 13 Getting a clear indication of serious financial irregularities by the erstwhile management of Satyam Computers Services Ltd, the Government has referred the matter to the Serious Fraud Investigation Office (SFIO).

A multi-disciplinary body, SFIO, was set up to look into white-collared crimes.

“Subsequent to the report submitted by our field officers investigating into Satyam Computers, we have ordered investigations by SFIO.

“The SFIO has been asked to submit its report in three months,” said the Minister for Corporate Affairs, Mr Prem Chand Gupta.

“The Investigation Office would look into the entire gamut of irregularities and any other related anomaly, including accounts of the company, and other related acts of commission and omission. It will also look into irregularities by the auditors, promoters and directors,” he told newspersons here.

He, however, declined to share the detailed findings of the Registrar of Companies (RoCs), based on which the Government has referred the case to SFIO.

Sources told Business Line that the RoC report submitted to the Ministry on Monday has found irregularities in books of accounts of Satyam, and it has also observed that the document did not give a true and fair picture of the financial affairs of the company, thus, seeking a wider investigation.

On the role of the auditor, the Minister was empathic that “the law will take its own course and nobody will go scot-free. We are looking into the role of the auditors and if found guilty, action will be taken.”

When asked whether the Government will appoint more directors on the board of the company, he said, “We will take necessary decisions when required. The Secretary, Corporate Affairs is in constant touch with the new board members.”

The newly constituted three-member board has sought additional members. Indications are that in the next two to three days, the Government will appoint more members.

“Lot of issues have to be considered, including legal implications. While the Indian laws protect the new directors from any legal liabilities of the past board, we have to see whether a similar dispensation is available in the US laws,” sources said.

Satyam’s former Chairman, Mr Ramalinga Raju, who quit last week and is currently under arrest, said he had falsified accounts for years. This had shattered investors’ confidence and put the country’s reputation at stake in the global market.

The Government’s announcement follows its decision to sack the board of Satyam and replace it with its three nominees on Sunday.

SFIO conducts investigations into cases that are complex, involve public interest and lead to a clear improvement in systems, laws or procedures.

On the possibility of a merger of Satyam with another IT company, he said, “you are asking me something which is not a concern of today”.

Later in the day, the Corporate Affairs Minister met the Prime Minister and apprised him of the situation. Sources said a bailout package for Satyam was discussed.