Satyam cautious on damages claim against former board, PWC
Mahindra Satyam, formerly Satyam Computer Services, is exercising caution on damages claimed in a suit filed against its former board of directors, certain employees and audit firm PWC to avoid paying a higher non-refundable court fee initially, sources said.
According to sources, the company has to pay 1 per cent of the total damages claimed in the petition as court fee and in future, it may seek more damages once they settle all the issues.
The damage claim will assume significance once the trial against former chairman B. Ramalinga Raju and others in a local court is finished. If the judgement goes against the accused, the damages claim will have strength, sources explained.
"One per cent becomes big if the damage runs in to thousands of crores. It is not wise to pay such amount initially as the company is yet to make payments in some of the issues that the company agreed to settle," sources told PTI.
"Though the company agreed to settle some issues which involved huge payments, the total cash has not been paid. Once they are settled, the damages may go up. To that extent, the company reserved the right to seek more damages," sources added.
"We believe the company suffered incredible loss... We suffered losses in customers, we suffered reputational loss, specific losses in terms of class action suit, what we had to pay to Upaid and the fines SEC imposed on us," Mahindra Satyam Chairman Vineet Nayyar told a private news channel recently.
Mahindra Satyam has named around 123 people as defendants, including B. Ramalinga Raju, Rama Raju, V Srinivas, and former directors including Ram Mynampati and Krishna Palepu, according to sources.
"Four former employees of the finance department who are also being prosecuted by the CBI at this point of time and then PW India, PW US and their partners were also named," sources explained.
In January, 2009, Satyam founder chairman B. Ramalinga Raju admitted to an accounting fraud at the IT firm. Termed as India's own Enron scam, the alleged Rs 14,000 crore scam cast a shadow of doubt on the credibility of the Indian IT sector.
The government soon stepped in and set up a new board, following which Tech Mahindra bought a 46 per cent stake in Satyam through a formal public auction process. The company was later rechristened Mahindra Satyam in July, 2009.
Last year, Mahindra Satyam agreed to pay USD 125 million (over Rs 587 crore) in an out-of-court settlement to end a bunch of class action suits filed in the US. It had also agreed to pay USD 70 million in a legal settlement with British firm Upaid Systems.
The Indian tax authorities have also slapped an income tax claim of about Rs 2,500 crore on the company.
Post new comment