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Fraud-Hit Satyam Names New Auditors

14 January, 2009

Fraud-hit Satyam Computer Services Ltd named new auditors on Wednesday, the first step by the government-appointed board as the company battles for survival after unveiling the country’s biggest corporate scandal.

KPMG and Deloitte were appointed as the auditors, said Deepak Parekh, a senior Indian banker and part of the outsourcer’s new three-member board.

Satyam’s founder and chairman Ramalinga Raju quit last week and confessed the company’s profits had been falsely inflated for years. Raju, his brother and the company’s former chief financial officer are being held in judicial custody.

The scandal has hit Indian stocks and the currency, as investors worried over the damage to foreign investment in Asia’s third-largest economy and the once-booming outsourcing sector, a magnet for thousands of young job seekers.

The new audit firms replace PricewaterhouseCoopers, which said on Tuesday it was assisting agencies investigating Satyam.

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

Shares in Satyam, which counts Nestle and General Electric among its clients, were down 5 percent on Wednesday. Satyam’s market value has dived to less than $450 million from more than $7 billion six months ago.

The prime minister met key ministers on Tuesday to discuss Satyam. Company affairs minister PC Gupta said afterwards that “different possibilities” were being examined.

A government bailout, which local media has put at up to 20 billion rupees ($410,000) to ensure enough liquidity for three months, was key to restore flagging investor confidence, analysts said.

 


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Fraud-Hit Satyam Names New Auditors

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