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Satyam chairman resigns amid accounting scandal

B. Ramalinga Raju, who also founded the Indian outsourcing service provider, reveals details of financial irregularities in his resignation letter.
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Written by Sol E. Solomon on

Satyam Computer Services' chairman and founder B. Ramalinga Raju resigned Wednesday amid a scandal over inflated profit reporting.

In his letter of resignation, Raju said Satyam, one of India's largest outsourcing companies, had "inflated profits over a period of [the] last several years".

In its fiscal 2008, ended Mar. 31, the company reported a net profit of Rs 1,687.89 crore (US$346 million).

Following the resignation, Satyam said in a press statement that its immediate priorities are to protect shareholders' interests, the careers and security of its associates, and meet all its commitments to its customers and suppliers.

Interim CEO Ram Mynampati, who was appointed by the company's board to guide Satyam through the crisis, said: "We recognize that our associates have committed a significant part of their careers to build Satyam. We will pursue all avenues to secure their future in the company."

In a letter to Satyam management and staff, Mynampati said a "SWAT team" has been formed, consisting of senior leaders representing all customer facing units, key horizontal competency units and critical support units.

"Many of them are Satyam veterans with a minimum of 10 years experience in our company and more than 20 years in the industry. These are the leaders on the ground and have always had the final call on most customer and associate related matters in the company, so far."

Mynampati assured the employees Satyam continues to have what is fundamentally required for its success--a strong customer base and 53,000 committed associates.

"What we are confronted with is the challenge of continuing our business operations, seamlessly. This quarter will be tumultuous for us."

The World Bank last month announced that Satyam was banned for eight years from receiving direct contracts from the bank, as a result of "providing improper benefits to Bank staff and for failing to maintain documentation to support fees charged for its subcontractors".

In November 2008, the Indian outsourcing service provider unveiled plans to acquire Motorola's software development center in Malaysia.

Must read: Inside India Blog
Satyam: India Inc.'s rude wake-up call
In Sanskrit, Satyam means truth. But what we saw today was quite the contrary. We saw how one lie led to another, resulting in one of the biggest scams in corporate India, and coming at probably the worst of times...
By Swati Prasad

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