`Maytas board should have been superseded two weeks ago'

17 February 2009

The government has found strong possibility of fraud in Maytas Infrastructure and Maytas Properties. It has moved Company Law Board to remove the management of Maytas Infrastructure and Maytas Properties. Commenting on this development, Sandeep Parekh, Visiting Faculty, IIM-A, said this step should have happened 1-2 weeks ago. "It is a late response." He said the process of superseding will be as it was in case of Satyam.

Here is a verbatim transcript of the exclusive interview with Sandeep Parekh on CNBC-TV18. Also watch the accompanying video.

Were you expecting this given the fact that Premchand Gupta had already made it clear that the SFIO probe has been extended to both Maytas Infra as well as Maytas Properties and now the government saying that they are going to move the Company Law Board or CLB to actually supersede the board or both these companies?
It had to happen because it didn't make sense for transfer of all these stolen money to go into related companies and those related companies not being superseded and investigated properly. It was kind of an obvious thing to do and this should have happened last week or two weeks back. But I am glad that it has happened now.

The CLB has been moved so I would imagine just in the manner in which Satyam where government appointed Directors were nominated and appointed to the Satyam board – we are going to see similar process taking place as far as both Maytas Infra and Maytas Properties are concerned. Is that how you see it playing out as well?
The process should be similar in terms of particularly whether it is listed or not – both of them fall under the Company's Act. So the process of superseding the board under the Company's Act would apply just as it did in Satyam for both the listed and the unlisted companies.

This is going to jeopardize the projects that Maytas Infra and both Maytas Properties were looking at. We have already seen several companies coming out and saying that they are reviewing their contracts or projects with either Maytas Properties or largely Maytas Infra. Now given the fact that there were talks of a bailout for Satyam in that sense and then you had the government appointed board, now they are talking about strategic options which include a sale of Satyam. How do you actually see this playing out now as far as these two companies are concerned? 
As I see it the jeopardy has already come in terms of if there is a super session there will be more confidence in the boards of these two companies because at the same time if it is money stolen from Satyam which is being used for putting in tender amounts etc, there has to be some closure to that in terms of if it has stolen money from another company clearly that money has to go back to those people. There will be lot of surprises which at store both at Satyam and at the two Maytas companies. I don't really know how it will play out because I don't know how much and when the funds were stolen and used for what purpose. 

Does this tie-in now with what PC Gupta said earlier today in Parliament today that Satyam's bankers had actually said that the TDS certificates issued to Satyam were genuine?
So that in a sense seems to once again corroborate the siphoning of funds theory that has been doing the rounds and then this action coming in the evening. This all seems to now tie-up, doesn't it?