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Govt moves CLB to supersede boards of Maytas firms
BS Reporters in New Delhi/Hyderabad | February 18, 2009 09:17 IST
The government on Tuesday moved the Company Law Board to remove the current directors of Maytas Infrastructure and Maytas Properties from their respective boards and declare them ineligible for appointment as directors of any other company. The CLB will consider the matter on February 24.
According to Press Trust of India, CLB will take a decision on the petition of the government after hearing the counsel of the two Maytas companies, which had filed a caveat with it about a week ago to prevent the government from seeking any ex-parte decision in the case.
Howerever, television reports claim that CLB has reportedly turned down the government plea seeking immediate restrain on board
Both the Maytas firms are owned by relatives of Satyam Computer Services [Get Quote] founder and former chairman Ramalinga Raju who admitted to a Rs 7,800-crore (Rs billion) financial fraud on January 7.
"We have approached the CLB to remove the directors of Maytas Infra and Maytas Properties from their respective boards," said P C Gupta, minister for corporate affairs. The government, in order to prevent any harm to these two companies, has requested the CLB to restrain all current directors of these companies from acting as directors, from alienating, mortgaging, creating charges or liens or interest in the properties and assets owned and controlled by them without CLB permission.
The government has also asked the CLB to nominate government directors on the board of the two firms, Gupta added.
"On the basis of information available, the government finds a strong possibility of the affairs of these two companies having been conducted by its current management with fraudulent intent, breach of trust to the stakeholders, and persistent neglect of the obligations and functions," he said.
Maytas Infra Chief Executive Officer B Teja Raju could not be reached despite several attempts. A company spokesperson, however, said: "We came to know about the government's move to supersede the Maytas boards through the media. I do not have any further details. We will be able to clarify anything only tomorrow (February 18)."
A questionnaire sent to the company on this issue was unanswered.
Meanwhile, the government also told reporters that it has ordered a Central Bureau of Investigation (CBI) probe into the Satyam case. Replying to supplementaries during Question Hour in the Rajya Sabha on Tuesday, Gupta said, while the Serious Fraud Investigation Office (SFIO) under his ministry had been given three months to wrap up its probe into the Satyam scam, no time-frame has been set for the CBI.
"Yesterday, the government ordered a CBI investigation into the whole issue," he said.
The Andhra Pradesh High Court, on its part, on Tuesday asked the counsel for CBI and the central government to update the court about the CBI formally taking over the investigation of Satyam scandal. Currently four agencies -- the SFIO, market regulator Securities Exchange Board of India (Sebi), the Institute of Chartered Accountants of India (ICAI) and Andhra Pradesh Police -- are investigating the fraud.
Gupta did not comment on whether an investigation would be launched into accounts of the companies audited by Price Waterhouse -- the statutory auditors for Satyam. "Sebi has ordered a peer audit review of companies listed on Sensex and Nifty. Once the peer review is over, government will decide what to do," he said.
Gupta said the RBI had, in October 2004, had issued advisory to banks not to engage Price Waterhouse for audits after unearthing of accounting deficiencies in Global Trust Bank (GBT), whose account it was auditing. "The case of Satyam is a very unfortunate case... (but) this is only an aberration," said Gupta and added that the government is concerned about 53,000 employees of satyam.
Buyer by end month?
The scam-tainted company is also likely to finalise a buyer by the end of this month, according to senior Satyam board member Deepak Parekh. Speaking to reporters on Tuesday, he added there would not be any further senior-level resignations in the company.
He was referring to reports that more top-level resignations would follow on the back of two senior vice-presidents, Anil Kumar and Subu D Subramaniam, putting in their papers in the past few days. "They were not sacked. It was worked out in an amicable way," a Satyam spokesperson told this paper earlier in the day.
In a related development, the sixth additional chief metropolitan court on Tuesday reserved the orders on Sebi's request to question former chief financial officer of Satyam Computers Srinivas Vadlamani and Price Waterhouse auditors to tomorrow.
On Monday, the court had reserved the orders on a plea filed by the Income-Tax department seeking its permission to question Ramalinga Raju for three days to February 18.
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