Satyam mulls suing former Satyam management and PwC
19 Feb 2011
Shortly after settling a class action law suit in the US for $125 million, Mahindra Satyam plans to sue the former Satyam management and the company's erstwhile auditor PriceWaterhouse for a possible monetary damages claim. The company is looking at moving the courts both in India and the US, which would help Mahindra Satyam lower its financial liability arising out of the settlement.
Vineet Nayyar, chairman, Mahindra Satyam, said the company was looking at the possibility of suing Ramalinga Raju and PwC as they were party to the scam that resulted in security fraud and litigation. He added PwC was not only negligent but also colluded in it as it did not do its job for so many quarters.
The challenge for the company now is to make Raju liable for any monetary damages as he, as also his brother and former chief executive of Satyam, Rama Raju and former CFO V Srinivas had declared themselves bankrupt. This would also mean the US government would have to bear their legal expenses if they were to be proceeded against in US.
He added that the company was aware of it, but that would not prevent them from moving the court against them to seek damages. He said it was yet to be seen whether any money had been diverted by them or stashed away from the company.
He said investigation in the matter was on, and it was up to the courts to decide whether its claim was tenable or not. He added that during the company's AGM even investors were asking for action against Raju.
Mahindra Satyam, formerly Satyam Computer Services, was at the centre of India's biggest corporate fraud in January 2009 when founder Ramalinga Raju confessed to doctoring of the company's account books. The company was subsequently taken over by Tech Mahindra in April 2009 in a government auction.
