A month after Satyam’s Maytas fiasco, board minutes surface

HYDERABAD - A month after Satyam Computer Services founder B. Ramalinga Raju’s aborted bid to buy two firms promoted by his sons, minutes of the board meeting on the issue became public Saturday, showing that the independent directors had their doubts about the move.

Raju had claimed that the board, which had the likes of Pentium father Vinod Dham, Harvard professor Krishna Palepu, former Indian cabinet secretary T.R. Prasad and dean of the Hyderabad-based International School of Business M. Manmohan Rao, had unanimously approved on Dec 16 his proposal to buy Maytas Properties and Maytas Infra for $1.6 billion.

Within 12 hours he abandoned the plan as it was strongly opposed by investors, both institutional and public, who felt that the buyout was to help the promoter’s family with the investors’ money.

The fiasco raised questions about the role and integrity of the independent directors on the board of India’s fourth largest software firm.

Four of the six independent members quit the board. First to leave was Mangalam Srinivasan, a US-based professor, who was on the board since 1991. Dham and Palepu followed soon and the last to leave was Manmohan Rao.

When Ramalinga Raju resigned as Satyam chairman Jan 7 after admitting to a fraud of Rs.70 billion (Rs.7,000 crore/$1.43 billion), the only two independent members still on the board were T.R. Prasad and V.S. Raju. The other one was whole-time director Ram Mynampati.

The Indian government disbanded the truncated board Jan 9 and said it would appoint a new board to restore credibility and confidence in the company among its 53,000 employees, clients and all stakeholders.

It appointed three members Jan 12 and added three more Thursday.

Even as the new board met for the second time here and Ramalinga Raju, his brother B. Rama Raju, who was managing director, and former chief financial officer Vadlamani Srinivas were fighting a legal battle to get bail, the details of the Dec 16 meeting started circulating Saturday.

The minutes show that several independent directors had doubts about the benefits for Satyam in buying Maytas Properties and Maytas Infra.

They were also concerned that the board may be seen as being used as ‘rubber stamp’ if the buyout came through without proper valuation of the two firms and assessment of the benefits for Satyam’s investors.

While no former member of the Satyam board has spoken to the media after quitting the board, Prasad had issued a statement that he was ready to answer all the questions any investigating agency has.

His statement followed media speculation that he may be arrested following Ramalinga Raju’s starling confession of fraud and his subsequent detention.