Satyam scam: Raju traceless; WB image ‘suffers’

The management of Satyam Computers has said that it has no clue about Ramalinga Raju’s whereabouts,even as a team of the Securities and Exchange Board of India (SEBI) reached Hyderabad to investigate a case of fraud related to the company. According to some sources,Raju left for Texas on Wednesday morning shortly after admitting to committing a Rs 7,0000000000 fraud. There is a petition pending over his Maytas deal for which British Telecom’s Solutions firm – U-paid had demanded the presence of Raju and senior directors of Satyam for questioning by its lawyers. As per unconfirmed TV reports,he could have also left for Dubai. The former Satyam’s Chairman is also unreachable on his mobile phone. The company is expected to hold a news conference at around 500 pm on Thursday evening. The interim CEO of Satyam Computer Services,Ram Mynampati,is likely to address the media. On Wednesday,Mynampati admitted to the outsourcer inflating profits over several years and that senior officials have been summoned to the Satyam’s headquarters in Hyderabad for further deliberations aimed at ending the crisis. Meanwhile,Corporate Affairs Minister Prem Chand Gupta said the government is verifying Raju”s statement. On Wednesday,Raju claimed that Satyam had inflated its earnings over the past few years,but no other board member had been aware of these financial irregularities. “Once the contents of the message is verified,a proper action would be taken. If it is correct,it is shameful,” said Gupta. India”s biggest corporate scandal in memory threatens future foreign investment flows into Asia’s third-largest economy and casts a cloud over growth in its once-booming outsourcing sector. Amit Mitra,Secretary General of the Federation of Indian Chambers of Commerce and Industry (FICCI) said that the systematic failure might not necessarily spread to other companies,but the incident should provoke the corporate world to have fresh thinking on corporate governance. The head of Satyam Computer Services resigned on Wednesday,saying the firm’s profits had been inflated,sending the stock down more than 80% and roiling investor confidence. Satyam’s fraud may batter World Bank’s image Report The revelation of Satyam Computer Services Limited of about a Rs 7,800-crore fraud may dent the image of the World Bank as it kept quiet until last month about its suspicion of the IT firm’s corporate malpractices,a leading financial daily said on Thursday. In 2006,the World Bank told the US Justice Department it suspected Satyam may have been involved in bribery,the ‘Wall Street Journal’ reported,citing bank officials. However,in late 2007,the bank completed an internal investigation and found that Satyam had acted improperly. Under World Bank rules,the company then had the chance to argue why it shouldn’t be banned. “The bank should have been more responsible about reporting publicly on what they knew to be misconduct at highest levels of Satyam,” the paper quoted Bea Edwards,International Reform Director at the Government Accountability Project,Washington DC,watchdog group,as saying. In February 2008,the World Bank temporarily suspended Satyam from bidding on new contracts,and then in September formally made the firm ineligible to bid on future contracts,the ‘Journal’ added. But the paper said it did not announce the ban,called a debarment,until December 23 — and then only after press reports about it. Meanwhile,a World Bank spokesperson told the ‘Journal’ that it had acted responsibly. “We took the action we needed to take as an institution to maintain our high corporate integrity standards,” the spokesperson said.