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Five former directors of the disgraced Satyam Computer Services can heave a sigh of relief.
The US District Court in New York has dismissed charges made in two class action suits against them for alleged violations of the Exchange Act and common law claims for fraud, negligence and negligent misrepresentation.
The Director Defendants who approached the court asking it to dismiss the charges included Mangalam Srinivasan (distinguished faculty at Harvard University’s Kennedy School of Government), Krishna G. Palepu (Harvard Business School), Mendu Rammohan Rao (the then Dean of Indian School of Business), T. R. Prasad (former Union Cabinet Secretary), and V. S. Raju (former IIT professor) and Vinod K Dham.
They had participated in the controversial Board of Directors meeting on December 16, 2008, where a decision had been taken to buy the two Maytas firms owned by the family of Ramalinga Raju, the main accused in the massive Satyam fraud case. This decision had led to the collapse of the original management. The Maytas firms too approached the court for dismissal of the claims made by the class action suits. Their plea to dismiss some charges against them was also granted by the court.
The complainants argued that the audit committee (comprising the five directors) of Satyam Computer Services had been reckless in the discharge of its duties. The former also alleged that the committee did not care to fathom why PwC was paid excessive fees. They argued that the committee members should have smelt the fraud, taking cues from the hints on deficiencies in internal controls.
“They, however, fail to identify what information the directors had a duty to monitor and which they failed to monitor,” the court had observed in its 71-page order on Wednesday.
>kurmanath.kanchi@thehindu.co.in
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