MSat sues former board members, auditor

HYDERABAD: Nearly three years after taking over the management control of the scam-hit Satyam Computer Services Ltd, Tech Mahindra moved the city civil court here on Monday against its past bo

Published: 10th January 2012 03:33 AM  |   Last Updated: 16th May 2012 06:12 PM   |  A+A-

HYDERABAD: Nearly three years after taking over the management control of the scam-hit Satyam Computer Services Ltd, Tech Mahindra moved the city civil court here on Monday against its past board members, some former employees and former auditing firm Price Water House, its affiliates and partners.

The company, renamed as Mahindra Satyam (MSat), also sought damages for, inter alia, perpetrating fraud, breach of fiduciary responsibility, obligations and negligence in performance of duties.

Some of the key employees namely Ram Mynampati, former COO, Vadlamani Srinivas, former CFO and members of the company's internal audit team including V Prabhakar Gupta will be included in the suit.

According to Vineet Nayyar, chairman of MSat, the claims could aggregate to multimillion dollars considering the money paid to settle a clutch of US classaction suits totalling $125 million, $75 million towards an outofcourt settlement with Upaid, US SEC's penalty of $17.5 billion (of which MSat agreed to pay $10 million) besides remuneration paid for independent directors.

"We have already forked out $210 million to settle liabilities. Our legal team will compute and arrive at the actual damages we will press for. We have filed a suit against all those former employees who were charged with criminal conspiracy. The suit also includes former board members, including the founder, and the then statutory auditors," Nayyar told Express.

"There was a legal overhang and we wanted to clear the existing liabilities before taking up new legal challenges."

In the past, Nayyar said, the company sought 25 per cent of the settlement amount borne for class action suits from PWC. It's unclear if PWC will be pressed for more damages.

While the company cleared legal hurdles abroad, it, however, has to steer clear of liabilities on the home turf with the department of income tax (IT) slapping a notice demanding Rs 2,114crore tax for assessement years 200203 and 200708. MSat is also contesting another petition in the Andhra Pradesh High Court filed by the IT department seeking Rs 617 crore claimed as foreign tax credit by the previous promoters.

Meanwhile, MSat also said it will recover the remuneration from former independent directors. The company boasted of some big names like management guru Krishna G Palepu, pentium chip innovator Vinod Dham, Indian School of Business former dean Mendu Rammohan Rao, former cabinet secretary TR Prasad, former IITDelhi director VS Raju and USbased academician Mangalam Srinivasan besides founder B Ramalinga Raju and B Rama Raju.

In its 2011 annual report, MSat said it intends to recover Rs 11 million paid as commission to non-executive directors during 2008-09 as the company incurred losses during the year.

Each of Satyam's former independent directors was paid a commission of Rs 12 lakh over and above the sitting fees for 2008-09.

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