‘AP govt sold land at low prices to Satyam, Maytas’

Q: Your view apparently seems to be that there have been very serious regulatory lapses in this whole Satyam episode, could you please detail them out?

A: I think so, because I wrote to the Department of Company Affairs on December 17 for instituting a very quick inquiry. In Andhra Pradesh, Satyam Computers and Maytas are two favoured companies of the state government. In many cases they did not follow competitive bidding procedures and gave them a huge chunk of urban land; very valuable land at cheap rates and give them huge projects service.

When I wrote this letter to the Department of Company Affairs there was no reply. I wrote to the Chairman of Sebi on December 18 saying that this entire matter should be inquired into; the role of Directors, the role of promoters and the role of politicians in the whole thing. When I did not get a reply, again by the end of the month I wrote a letter to the Secretary of Economic Affairs to get the matter examined and wondered why the Sebi did not act immediately even till the end of the month.

I repeated my request, I suggested to the Department of Company Affairs that the role of this independent Director is extremely important. I even suggested the methods of selecting independent Directors. Yesterday, I wrote a detailed letter to Chairman of Sebi, to the Department of Company Affairs and the Secretary of Economic Affairs once again. I raised a number of important issues. In this particular case the track record of Satyam right from 2002, when their accounting practices were questioned there was an inquiry started by Department of Company Affairs but the enquiry was stopped mid-way for some reasons I don't know of. Later, this same auditor PricewaterhouseCoopers (PWC) audited Global Trust Bank, which crashed and many investors lost their money. Then subsequently of course everybody knows that World Bank banned them in February 2008 and the independent Directors would have known thi. and when PwC as an auditor the term was extended year after year, the Directors should have questioned that- normally they change the auditors and that was not done.

So, in this particular case the regulators should now look at the following issues; one is conflict of interest. We heard that one of the Directors has co-opted this promoter, as a Director on his institution and he received some donation for the institution. Similarly, there could be other instances of conflict of interest and he second thing is insider trading. So, in all this cases the way Sebi acted very late, they have send their team only yesterday I think, after the whole system collapsed. So, I believe that the regulators role and delays have to be questioned and probed.

                                                                       Continued on page 2...