Cracking down on scandal-ridden Satyam, the Government tonight disbanded the IT Company’s Board, cancelled its meeting on Saturday and announced that it will soon nominate 10 new directors.
The high-profile Board, which was to meet in Hyderabad on Saturday to discuss the crisis that have engulfed the company and its over 50,000 employees, had virtually disintegrated in recent days in the wake of the Rs 7,800 crore fraud.
Founder B Ramalinga Raju, who has been summoned by market regulator SEBI on Saturday, had resigned as Chairman after disclosing staggering financial fraud.
Five other directors had also resigned leaving the strength only at three.
Announcing the decision, Corporate Affairs Minister Prem Chand Gupta said "The current board ceases to exist and there would not be any meeting tomorrow... the new board will meet in the next seven days."
Government's decisive action came nearly 60 hours after the startling disclosure by Raju, presumed to have strong political friends, that put the company and its over 50,000 employees fate in limbo.
While the apex IT industry association NASSCOM welcomed the government move, Satyam spokesperson said "we have not heard from the government officially (about the disbanding of the Board and nominating new directors). The interim management is in place as of now." SEBI also tightened its noose around Raju, whose whereabouts were still a subject matter of speculation for the last three days.
His lawyer S Bharat Kumar said Raju would appear at 1600 hours on Saturday before the investigating team dispatched by regulator to Hyderabad on Thursday.
Meanwhile, there was panic among employees caused by rumours relating to salaries and downsizing, but the spokesperson said that there was no such move.
Perturbed over the seriousness of the Satyam scandal, the market regulator SEBI also announced a probe into the accounts of 30 Sensex companies, which include Reliance Industries, Bharti Airtel, Larsen & Toubro and a host of IT firms.
The investigation would also cover 50 Nifty companies as well as some companies out of two indices.
Meanwhile, investors at domestic bourses continued to sell shares of Satyam, which plunged by over 40 per cent after dropping by close to 80 per cent on Wednesday.
Trading in the company's shares in the US and Amsterdam remained halted for the third day in a row, after the stock lost over 90 per cent to plunge below one-dollar level in pre- market trade on Wednesday.
Charging the company, as well as Ramalinga Raju and his brother Rama Raju for duping investors of billions of dollars, a third class action lawsuit was also filed in the US courts on Friday.
In Hyderabad, a team of Serious Fraud Investigation Office and Hyderabad Registrar of Companies (RoC) searched the Satyam headquarters.
Gupta said that the new board would decide on the new management for Satyam Computer and there was no decision to take over the management as yet.
He also said that the IT firm's auditors PwC, if found guilty, would be banned in the country. "The government has decided to approach the Company Law Board to ensure that the operations of the company continue uninterrupted," Gupta said, adding that the current board has failed in what it was supposed to do.
The government had approached the CLB, which has allowed it to restrain the current board members from functioning as the directors at the company.
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