Satyam’s new board hunts for CEO and CFO

HYDERABAD - The government-appointed board of directors for scam-hit Satyam Computers has begun the hunt for a new chief executive officer and a chief finance officer as part of measures to restore credibility and confidence in the country’s fourth largest IT bellwether and ensure business continuity, Deepak Parekh, one of the new directors said Monday.

There will also be a new accounting firm in two days to go over the company’s finances and present a correct picture.

‘We will appoint a new accounting firm in 48 hours to restate the financial position and are in talks with two auditing firms (for the job),’ Parekh, chairman of the Housing Development Finance Corporation (HDFC), told a press conference after the first meeting of the three-member board, appointed by the central government Sunday to steer the company.

Parekh and other two board members, former president of NASSCOM Kiran Karnik and former SEBI member C. Achuthan, met at Satyam Corporate office through the day familiarising themselves with the firm’s financial position and talking to several senior staff. Satyam’s founder-chairman B. Ramalinga Raju resigned Jan 7 after admitting to the country’s biggest financial fraud of Rs.70 billion (Rs.7,000 crore).

Flanked by Karnik and Achuthan, Parekh said the first priority of the new board ‘is to restore credibility of and confidence in the company among employees, customers and investors’.

‘This is an enormous task,’ he said in his opening remarks at the press meet.

He said restating the financial position was another priority as ‘none has faith in the figures (given by Ramalinga Raju)’.

Parekh said a few more members will be appointed to the board soon. ‘The full board will elect the chairman (of the board),’ he added.

He said finding a CEO and CFO was not going to be easy. ‘Not many will like to leave their current position for this job. It will take time. We are hopeful of finding people soon,’ he added.

On Satyam’s cash position, Parekh said there was not much outstanding against receivables (payment from customers). ‘We expect payments to flow regularly. We may also offer incentives for early payment,’ he said. Most of the software companies give their customers up to 60 days time to make payment for their completed services.

He denied that his being on the board of directors of WNS Global Services, a BPO company, was in conflict with being a Satyam board member.

‘We have been appointed by the government which has taken into account these issues. We are known as special directors,’ Parekh asserted.

He said Karnik had resigned Monday as director of Emergency Management and Research Institute (to avoid conflict of interest as EMRI was promoted by the disgraced Satyam founder).

Responding to questions, Karnik said he ‘does not expect clients to move away because Satyam has been been handling their mission critical applications’.

‘The fact that the government has moved in swiftly (to appoint a new board) gives enough hope to clients and employees that the company will be put back on track,’ Karnik said.

Achuthan said Ram Mynampati, a wholetime director whom Ramalinga Raju named as interim CEO when he resigned, was no longer a board member. ‘That board is no longer there.

‘Mynampati is, however, an employee of Satyam,’ Achuthan said.

On whether the new board was open to merger of Satyam, Parekh shot back ‘do you expect us to discuss merger in public?’

The new board met as a Hyderabad magistrate postponed to Jan 16 hearing on a bail plea by Ramalinga Raju and his brother who are sharing a cell at Chanchalguda Central Jail with people accused of petty crimes like theft.

On that day a SEBI plea to interrogate the Raju brothers and an Andhra Pradesh police application seeking their custody will also be heard.

Raju and his brother and Satyam’s managing director B. Rama Raju were arrested late Friday, the day the central government sacked the remaining board members and announced it will appoint new members to save the company from collapse.

Besides the Raju brothers, the third person behind bars in connection with the fraud is Satyam’s former CFO Srinivas Vadlamani.