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Satyam appoints Deloitte as auditor, Damodaran on board

Source: PTI
Last updated on: December 09, 2009 19:19 IST
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IT firm Mahindra Satyam (formerly Satyam Computer) on Wednesday appointed Deloitte as auditors, within days of CBI charging Price Waterhouse of complicity in the Rs 14,000 crore (Rs 140 billion) accounting scam.

The company also brought on board former market regulator M Damodaran, and former World Bank executive Gautam S Kaji.

"The board has also appointed Damodaran and Gautam S Kaji as members of the Audit Committee," the company said in a filing to the stock exchanges.

Deloitte Haskins & Sells, one of the two audit firms roped in by the post-scam Satyam Board to restate accounts, will vet the accounts of Mahindra group company for the 2008-09 and 2009-10 fiscals as statutory auditor.

The company, which was acquired by Tech Mahindra in April, has secured time until June 2010 from the Company Law Board to file financials, including quarterly results, in the aftermath of founder B Ramalinga Raju disclosing that he fudged accounts for years. He has since been arrested and is awaiting trial.

Deloitte is also the principal auditor of Tech Mahindra, which owns 43 per cent in Mahindra Satyam, as well as that of Mahindra group flagship firm M&M.

Ramesh Rajan, who was Price Waterhouse India head, when the scam came to fore, has since stepped down.

The Mahindra Satyam Board, while naming Vineet Nayyar as Chairman, also agreed to settle the forgery related lawsuits brought by British Virgin Islands based Upaid, the company's former client.

The company further said, besides being the Chairman Vineet Nayyar would continue as a whole time director of Mahindra Satyam.

In his over 40 years of career, Nayyar had worked with the government, had a decade old association with the World Bank and was the founding chairman and managing director of HCL Corporation and Vice Chairman of HCL Technologies.

Mahindra Satyam has also roped in former chairman Damodaran, who in his 30 years of experience also held various positions in the Ministry of Finance, the Ministry of Information and Broadcasting and the Ministry of Commerce.

The former market regulator was also the Chairman and Managing Director of Industrial Development Bank of India and the Unit Trust of India.

While, Gautam S Kaji was the former Managing Director for operations of the World Bank with responsibility for Africa, East Asia and the Pacific and South Asia. He is currently the Chairman of Contennial Group, a Washington based policy and strategic advisory firm.

Regarding the appointment of Deloitte as the statutory auditor, the company said "It has considered various past non-audit services rendered by Deloitte and its affiliates to Mahindra Satyam and the steps undertaken to ensure Deloitte's independence for the assignment."

Approves settlement with Upaid

Mahindra Satyam said its board has approved settlement of lawsuits brought by its former client Upaid Systems by paying $70 million.

The company would make the first payment of $45 million to Upaid, which had filed a forgery case against Satyam, within 10 days of getting necessary regulatory approval for the same, Mahindra Satyam informed the stock exchanges.

Further, the troubled Indian outsourcer would make a payment of $25 million within the next 12 months of making the first payment.

Upaid had filed the lawsuit in a Texas court seeking damages exceeding dollar one billion. The proceedings against Satyam commenced in 2007, alleging forgery of documents necessary for transfer of proper title to its under an assignment agreement entered into in 1998.

Satyam had assigned and transferred its rights, title and interests in certain computer software to Upaid by getting assent from all the employees who had worked on the project, but the signature of one of the employees was found to have been forged.

The settlement would also involve Upaid giving Mahindra Satyam a worldwide royalty-free licence on all of its patents, and provides for the dismissal of all pending actions between parties, the filing said.

Shares of Satyam closed at Rs 102.65, up 1.33 per cent on the BSE.

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