Satyam's board selection was a careless act: ICAI to Govt

Monday, 05 April 2010, 15:19 IST   |    3 Comments
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Satyam's board selection was a careless act: ICAI to Govt
New Delhi: ICAI's probe panel has hit out at bank for not doing due diligence on Satyam Computer Services before giving loans, and government for appointing Deepak Parkeh on its board despite his HDFC group being a major creditor to Ramalinga Raju's company. The banks which gave loan to Satyam that time were HDFC Bank (530 crore), Citibank (223.87 crore) Citicorp Finance (222.28 crore), ICICI Bank (40 crore) and BNP Paribas (20 crore), totaling 1221.16 crore. In its final report, ICAI panel headed by Former President Uttam Prakash Agarwal stated, "There is no explanation as to why the banks, while sanctioning short-term loans did not seem to have posed any question as to why the company (Satyam) which was supposedly cash rich as per its financial statement was taking loans from them." The committee also questioned the appointment of Deepak Parekh. Although Parekh, who heads HDFC, is not the chairman of HDFC Bank, the reference in the report is to him only, said a member of the committee when contacted. Following the fraud came into notice in January 2009, the government superseded the then Satyam board appointing its own nominees who, besides Parekh, were Kiran Karnik, T N Manoharan, S B Mainak, C Achutan and Tarun Das. The committee also wants disciplinary action against the audit firm, its partners, the then CFO and the head of internal audit department, who are all members of the Institute, after verifying the facts.