Kiran Karnik appointed chairman of Satyam

The union government appointed Mr Kiran Karnik, former president of software industry body NASSCOM, as chairman of Satyam, a day after Satyam veteran Mr A S Murty was named the company's CEO.

Karnik is one of the six-man Satyam board, constituted by the government in the wake of the massive accounting fraud at the company.

The govt. announcement was made by Corporate Affairs Minister, Mr P C Gupta, whose ministry had earlier moved the Company Law Board to disband the erstwhile Satyam board after disclosure of fraud by company founder Mr Ramalinga Raju.

Pursuant to the directions of the Company Law Board, the government initially constituted the board of Satyam with three members including Mr Karnik, HDFC chairman Mr Deepak Parekh and past presiding officer of Securities Appellate Tribunal, Mr C Achutan.

The government later expanded the board of Satyam by nominating three more members including CII chief mentor Tarun Das, LIC nominee Mr S Balakrishnan and past president of ICAI, Mr T N Manoharan.

The board had held several meetings at the IT company's headquarters and had cleared the appointment of Mr A S Murty and two other advisers. Karnik, who will head Satyam, was NASSCOM president in 2001-02 and has earlier held several key positions in the IT sector.

KPMG and Deloitte - new auditors for Satyam Computer Services

The government appointed board for Satyam Computer Services has taken first step for survival of the company and has named new auditors.

KPMG and Deloitte were appointed as the new auditors. The new audit firms replace PricewaterhouseCoopers.

The Reserve Bank of India has sought details of banks' exposures to Satyam and other firms run by the founding family, including Maytas property companies.

Satyam's market value has dived to less than $450 million from more than $7 billion six months ago.

According to company affairs minister PC Gupta, "different possibilities" were being examined.

Deepak Parekh - Kiran Karnik - C Achuthan – First Three Board Members of Satyam Computers

Indian authorities have installed three prominent business leaders to run scandal-hit software giant Satyam Computers.

The government appointees replaced the company's own interim board of directors who took charge after Satyam founder and chairman B. Ramalinga Raju admitted that his company's accounts and assets had been falsified.

According to company affairs minister P.C. Gupta, “the new board would provide necessary vision and accountable leadership in this hour of crisis to restore credibility, customer confidence and employee morale”.

Gupta described Satyam as "a company of national and international fame" as he announced the first three new board members.

"It has many professionals on its roll who are amongst the best and the brightest in the world. It is therefore important to ensure continuity of the company”, he said.

Satyam, which has clients in 65 countries and 53,000 staff, has been on the investment list for several top Indian and global mutual funds but its future existence now looks bleak.

The Indian government has said the financial mismanagement at Satyam had "resulted in serious damage to the reputation of Indian corporate sector and the regulatory mechanism in the eyes of the world."

The new board members include Deepak Parekh, head of one of India's largest private banks, and Kiran Karnik, former chief of the National Association of Software and Service Companies. The third member of the new board is C. Achuthan, eminent lawyer and former boss of the Securities and Exchange Board of India, India's market regulator that is probing the billion-dollar scandal.

In his resignation letter Raju had written that heading the company as the deception grew was like riding a tiger, not knowing how to get off without being eaten.

Satyam Scandal - Biggest Corporate Fraud of India

Satyam Computer Services, the country's fourth-largest software company, had served more than a third of the Fortune 500 companies in the past. There is plenty of humiliation to go around now that Satyam Computer Services has admitted to a huge fraud.

The Satyam fraud has been unraveling for some time now. First the World Bank denied to do business with the company as Satyam had stolen data and bribed bank officials. Then in December, Satyam’s investors revolted after the company proposed buying two firms with ties to Mr. Raju’s sons. Also several directors quit, and the founders suffered margin calls that forced them to sell stock.

The chairman, B. Ramalinga Raju, resigned on Wednesday (6th of January 2009) after revealing that he had systematically falsified accounts as the company expanded from a small firm to a large MNC.

Mr. Raju said that 50.4 billion rupees of the 53.6 billion rupees in cash and bank loans the company listed as assets for its second quarter were nonexistent. Revenue for the quarter was 20 percent lower than the 27 billion rupees and the company’s operating margin was a fraction of what was declared.

Mr. Raju said he sincerely apologized to shareholders and employees and asked them to stand by the company. “I am now prepared to subject myself to the laws of the land and face consequences thereof”, he said.

In the four-and-a-half page letter distributed by the Bombay stock exchange, Mr. Raju described a small discrepancy that grew beyond his control.

“What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew,” he wrote.

News of the scandal quickly sent jitters through the Indian stock market, and the benchmark Sensex index fell more than 5 percent. Shares in Satyam fell more than 70 percent.

Satyam trading in the New York Stock Exchange has been suspended indefinitely. The India Stock Exchange has also taken Satyam out of its Nifty Fifty stock index.

Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world. Clients included General Electric, General Motors, Nestlé and the United States government. The revelations could cause a major shake-up in India’s enormous outsourcing industry and may force many large companies to investigate and perhaps revamp their back offices. It also spreads doubts over accounting standards in India as a whole.

The FIFA (Soccer) World Cups in South Africa in 2010 and 2014 in Brazil may need a new “official IT services provider as Satyam might not be able to meet its commitments.

The London-based World Council on Corporate Governance revoked the “Golden Peacock Global Award for Corporate Governance” it awarded the company in September.