 Govt supercedes Satyam managementPublished on Fri, Jan 09, 2009 at 20:15 | Source : CNBC-TV18 Updated at Tue, Jan 13, 2009 at 14:32 100644 Investors following Mahindra Satyam. Share this News with them.
Sources in the Ministry of Corporate Affairs said the process of finalising the Board may take some more time. The move - which will see appointments effected under several sections including Section 388 & 401 to 408 - was dictated by the unprecedented circumstances in the case, sources added. Staying away from giving any specific timeframe to when the new directors would be in place, ministry sources said before any announcement, the candidate's consent would be sought and that the new directors would be in place till further order. Reacting to the move, ICAI President Ved Jain said this was the first instance of such a large company being taken over by government nominees. "There have been smaller instances of such government action but this is unprecedented," he said. In another development, the Andhra Pradesh government formed a three-member panel to probe the criminal angle of the Satyam case, CNBC-TV18 reports quoting NewsWire18. Here is a transcript of CNBC-TV18's Abhijit Neogy and Menaka Doshi's comments on CNBC-TV18. PC Gupta has said the government has approached the Company Law Board for interim measures.
In the place of the current management - which includes interim CEO Ram Mynampati and the three remaining independent directors - the government will appoint a 10-member director team to take charge. Gupta, however, clarified that this wasn't a move to take over Satyam's management, "as of now". Saying that the current management failed to deliver on corporate governance, the government asked the current management from acting immediately and said the 10 directors will be appointed will meet in seven days.
This was a move that was expected. Since yesterday we have been asking why the government has not moved in. This is I would suspect many people would say a good move, but the beginning of the many steps that the government needs to take. We need to find out who these 10 nominee directors are. I think it now raises a question on the sanctity of the existing management and whether that will be superseded or not. I was speaking to Naresh Chandra today, the author of the very famous corporate governance and audit committee report and he has been in many senior positions in government. His suggestion was that the management should also be superseded. The existing management should not be alienated because you need them to ensure the smooth functioning of this company, and you need them to understand the functioning of the various aspects of this company. But I think there is very low confidence right now on the existing management especially in Ram Mynampatti considering that he was a board member for so many years and a senior management person, and he seems to be ignorant of everything that has happened in the company. So, I think to further re-establish confidence in Satyam they might need to supersede the management as well, but not alienate them. Therefore include existing management members, but allow for the team to be run by independent management, a management that has not been associated with Satyam before. So, I suspect that may be the next step. That may take some doing. At least we have had the first development today, and that is that the board of Satyam has been superseded, tomorrow's board meeting is off now, and the new board meets in seven days from now.
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