SATYAM SCAM – TIME TO FACE FACTS »

Satyam scam is not something that will shatter the peace and tranquility of Indian public beyond repair. The robbery may be big in terms of western standards but for us its just another brick in the wall- the wall of resilience and apathy. Both these conditions are thrust upon us as prerequisite for being a patriotic Indian.How else do you explain Police promptly swinging into action and arresting that investor at Hyderabad demanding an explanation of the scam from Satyam’s Board Members? Just sample the cheek of our Administration !! Criminals who have swindled billions of Rupees and proudly proclaimed the same to the world at large, are not even considered worthy to be detained for questioning by the Police at that point in time. But the investor whose hard earned money has been swindled by these criminals,is rounded up by the Police for showing disrespect to them outside their den. As a true Indian he was expected to show resilience and lick his wounds in the shattered corner of his hearth. How dare he!!!And he also deserves the wrath and ire of public. Experts in various TV channels were totally apathetic to the plight of the investor. They questioned the very motive of the investor entering into a risky trade…you blighter of an investor…you wanted to make a quick buck…now you pay for your sins…words to that effect. So what if just 24 hours back the same channels were blaring away to high heavens that Satyam shares must be accumulated at all cost at current levels (Rs 170/180) as medium/long term investment. And Mr Expert, you also advised all and sundry to fill one’s gunny bags with Satyam shares in case it plunges to level of Rs 110. Apathy, apathy. That’s true Indian colours.In any catastrophe there is apathy from public not affected by the tragedy. Just another brick in the wall of resilience and apathy.
We are being consoled that Satyam scam is just a one off case…an exception to the otherwise honest and trustworthy system of governance of Indian companies with myriads of foolproof checks and balances. Believe all these official statements at your own peril. Otherwise seek answers to the following shortcomings :-
(a) After someone admits to a financial crime of horrendous proportion in public,does any nation accept its law-keepers to take more than 72 hours to even talk to the perpetrator, and that too after the fraudster himself walks into Police Headquarters to surrender. Under these circumstances what is left to say for our legally romantic words like Suo moto and Prima facie. Who will explain as to how the entire executive and the judiciary system of this Shining Nation got paralysed till the perpetrator of the crime got tired and said enough is enough- let me now cool my heels in police protection before some desperado acts irrationally against me. It is now believed that the Law-Loving-Raju did a Charles Sobhraj act in order to escape the long hands of the firm and draconian Law of United States of America which could put him away for 25 years for cheating its citizens. He therefore directed Indian administration to stop squabbling over who-will-bell-the-cat and initiate legal proceedings against him. In this fashion the US Law-Keepers will have to  wait for the proceedings to be over in India before they can get hold of his neck, which by conservative estimate should not be before 15 years. Here on home ground Mr R Raju can enjoy the luxury of being on bail and rub shoulders with the rich and famous, which correctly interpreted means Indian Politicians. Are we so blind as to not see the power of money calling all the shots. If that is the case then take your call to the assurance that its a one off case.
(b) Why did Raju ostensibly come clean while submitting his resignation? Did anyone ask him any discomforting questions? Not a single eyebrow was raised on the economic viability and vibrancy of Satyam before he sang. Even the Goliaths of the Financial World were rudely taken by surprise prompting them to jettison shares of Satyam from their Portfolios at fire-sale prices. The question that still begs an answer is this – what propelled Raju to tell the world that look here I am, a fraud. The extent of my fraud is Rs 70 billions and now come and catch me if you can. Something is amiss- something escapes logic. If we take his initial statement to be true that books were inflated then to find that out after his resignation would have been extremely difficult considering Board members like Mr Ram Mynampati could not even smell it even after being in the company for a decade- what a nincompoop!! How could a fresher in the Board even dream of cooked books when there is a seal of guaranteed correctness from an international audit firm, PwC. Then why did Raju do a kamikaze on Indian Economy in general and India Inc in particular? And if what he now supposedly confesses that books were not inflated but money was siphoned into land deals is true, then why didn’t he correct the situation before he resigned. I guess putting money back into the company would any day be a better option, than be crucified as a cheat and a criminal, for a man who commanded such high respect as a globally recognised Indian celebrity entrepreneur and a demigod for many Indians, especially Andhrites. Then why did he not take the logical path. Does he also have a handler? Like it or not, this is another terrorist attack on the Indian Economy like the 26/11 Mumbai attack. We can pooh-pooh it as a conspiracy theorists’ bad imagination, but the circumstances demand that we investigate the possibility of confession at a gunpoint. And this theory will pass the Litmus Test the day another Behemoth of Indian Industry sinks without a trace, euphemistically speaking.This has to happen in immediate future in a bizarre manner since many companies have plenty of skeletons in their cupboards which can act both as catalyst and ammunition for a conflagration in any giant corporate house – a la Satyam. What happens then to faith in India Inc and its checks and balances. We as Indians cannot afford to let Satyam drift away into oblivion.
So before lightening strikes again we have to strengthen our house to ward it off. We cannot afford to let Satyam be quoted in history as a failed company. As things unfold,the unshaken belief of investors and stake holders of Satyam in Satyam will be vindicated. The company never failed- there has been a robbery in the company. Some robbers have been nabbed and rest of the accomplices will also be ferreted out by the investigators. But what surprises most is the fact that Govt is juggling with the idea of a bail out package to revive Satyam. For crying out loud, why isn’t the Govt simply confiscating the cache of loot from the Robber-in Chief and restoring it back to Satyam. The first reaction to the public announcement of acceptance of fraud by Raju should have prompted the Indian administration to freeze all bank accounts and confiscate all assets of Raju and his family members,even before initiating any investigative proceedings. That would have been the proper impartial approach of any nation, except Banana Republics. After all someone is crying hoarse that he has committed mayhem like murders and our administration is found questioning the veracity of the confession of the killer!!!
Throwing red herrings like the confession letter is not signed by Raju!!! Shouldn’t such officials be also taken for interrogation for complicity in the crime. It would have happened just like that in any other civilised part of the world- but not here in India. No one questioned the self confessed villain and he was not disturbed for more than 72 hours. The authorities had various kinds of doubts…to dispel them at least get hold of the supremo for questioning. Oh what absolute power does this self confessed criminal enjoy!!! That brings us again to the fact that even after clear confession, many a times we have expressed our inability to nail him. Think of what would have happened if he had not squealed. Generations would have passed away singing praises for Raju and Satyam. At least some Raju temples would have sprung up in Andhra Pradesh, if they do not exist already.
Now can we fathom the extent of damage that India is doing by not acting in accordance with accepted norms? The global investor is gauging India and its ability to contain such individual acts of looting and daylight robbery. After all to make it a one off case there should be elaborate exhibition of swift and exemplary punitive action coupled with financial resuscitation programme for the company . Even now its not too late to show the world our sense of purpose to deliver justice and restore the stolen booty to its rightful owner,ie Satyam. In case we are unable to deliver properly on this issue of Satyam , then rest assured there will be many more Satyams that we have to deal with. And do you for even a second believe that we can ever restore faith of the global investor in Brand India? This branding exercise has taken painstaking 15 years or so, all to be blown away by our inaction. Can you not see the domino effect it will have on our industry, starting with IT industry?
You need no crystal ball gazing to arrive at the conclusion. Indian economy is at a threshold of either leapfrogging ten years ahead or retracing ten years backwards, after the global economic slow down cycle gets completed. Lets acknowledge that we are witnessing a Watershed Moment in the history of Indian Economy. Let us all pray that we play our cards properly, starting with Satyam.

A quick comment on SEBI- rather its a point for us to ponder upon.Why do we need SEBI? It is helpless in preventing crimes targetted at investors in the market. AFTER IT COMES TO KNOW OF A CRIME, IT STILL SITS ON ITS HAUNCHES TOTALLY PARALYSED, INSTEAD OF SAFEGUARDING  THE INTEREST OF THE INVESTORS.Who is SEBI actually meant for? At the end of it,if investors have to fend for themselves in terms of own safety, then why have the facade of a regulator. Did it safeguard the interest of the investor by freezing trade in Satyam scrip after receiving Raju’s letter of resignation? Such a catastrophic letter and you still feel like putting it up in public domain without freezing trade in the scrip. All this after SEBI itself commented that it doubts the veracity of the contents of the letter as also the genuineness of the letter. If SEBI felt initially that the letter being unsigned may be a prank , then why did it allow the letter to become public. SEBI is harping about Insider Trading in Satyam…well some investigating team should look for such clues in the corridors of SEBI to begin with.

Funny Side: In pics »

Auditing firms: Never short of clients

ABC of Satyam

India Inc’s tallest skyscraper?

Satyam Scam a reflection on Services Business ? »

I am sure by now all of you know about the Satyam scam and how the companies management was involved in a massive $2 billion scam. But one of the most important thing which this complete scam has brought out is the dwindling margins on the IT Services Business. Satyam as per Raju only operated on a 3% margin. Now this 3% margin can be a reflection of the gross mis-management of Satyam or simply put bitter reality of the services business. Lets leave Infosys, Wipro & TCS aside as I believe that customers might be paying them a premium for who they are which is essentially translating to the high margin.

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Satyam Scam – Separating truth from lies »

The scam at Satyam Computer Services, the fourth largest company in India’s much showcased and fiscally pampered information technology (IT) industry, has had an unusual trajectory. It began with a successful effort on the part of investors to thwart an attempt by the minority-shareholding promoters to use the firm’s cash reserves to buy out two companies owned by them — Maytas Properties and Maytas Infra. That aborted attempt at expansion precipitated a collapse in the price of the company’s stock and a shocking confession of financial manipulation and fraud from its chairman, B. Ramalinga Raju.
What is ‘known’ as of now is that over an extended period of time, the promoters decided to inflate the revenue and profit figures of Satyam. In the event, the company has a huge hole in its balance sheet, consisting of non-existent assets and cash reserves that have been recorded and liabilities that are unrecorded. According to the ‘confessional’ statement of Mr. Raju, the balance sheet shortfall is more than Rs.7000 crore.
Why did a leading company in one of India’s most successful industries of recent years need to inflate profits? After all, the revenues of India’s IT industry have grown at a scorching compound annual rate of almost 30 per cent in the past eight years, driven by exports. This is remarkable, assuming that revenue and profit inflation have not excessively overstated performance. With cheap skilled labour having shored up profits that were lightly taxed when compared with the norm, net profits must have been substantial and rising too. Why then did the fourth largest IT company choose to take the criminal route of falsifying accounts and indulging in fraud?
One possible cause could be the desire to drive up stock values. The benefits derived by promoters from high stock values are obvious, allowing them to buy into real wealth outside the company and giving them the ‘invasion money’ to acquire large stakes in other firms. This tendency was epitomised by the benefits derived by America Online when it merged with Time Warner. Although the latter had more assets, revenues, and customers, AOL’s higher market capitalisation led to that company and its chairman, Steve Case, getting more out of the deal than did long-time giant Time Warner.
There is some suspicion that Mr. Raju and his family may have sought similar benefits. The family chose to build its shareholding in Satyam Computer Services and shed it when required. For example, in year 2000 Satyam Computer merged with a related company, Satyam Enterprises. Raju’s cousin, C. Srinivasa Raju, who held 800,000 shares, or 19 per cent, in Satyam Enterprises, was reportedly allotted an equivalent number in Satyam Computer, leading to criticism that relative prices did not justify the 1:1 swap.
But the original promoter’s share held by the Raju family and their subsequent acquisitions were not for keeping. Though the precise numbers quoted vary, according to observers the stake of the promoters fell sharply after 2001 when they held 25.60 per cent of equity in the company. This fell to 22.26 per cent by the end of March, 2002, 20.74 per cent in 2003, 17.35 per cent in 2004, 15.67 per cent in 2005, 14.02 per cent in 2006, 8.79 in 2007, 8.65 at the end of September 2008, and 5.13 per cent in January 2009 (Business Line, January 3, 2009). The most recent decline is attributed to the decision of lenders from whom the family had borrowed to sell the shares that were pledged with them. But the earlier declines must have been the result either of sale of shares by promoters or of sale of new shares to investors. According to audited balance sheet figures (if they are to be trusted) available from the CMIE’s database, the paid-up equity in Satyam Computer Services rose from Rs. 56.24 crore in March 2000 to just Rs. 64.89 crore by March 2006 and further to Rs. 133.44 crore in March 2007. Overall, the number of shares held by the promoter group fell from 7.16 crore (22.8 per cent) to 5.8 crore (8.6 per cent) between September 2001 and September 2008.
This points to a conscious decision by the promoters to sell shares, which may have been used to acquire assets elsewhere. The more inflated the share values, the more of such assets could be acquired. It is quite possible that the assets built up by the eight other Raju family companies under scrutiny, including Maytas Properties and Maytas Infra, partly came from the resources generated through these sales. If true, this makes Raju’s confession suspect, since he stated that “neither myself, nor the Managing Director (including our spouses) sold any shares in the last eight years — excepting for a small proportion declared and sold for philanthropic purposes.”
This may not have been the only way in which resources were transferred out of Satyam Computer Services into other arms of the expanding Raju family empire. Money could have been siphoned out through opaque transactions with beneficiaries who were paid sums not warranted by their business profile. Satyam’s business strategy did involve unusual transactions. One example was the acquisition in 1999 by group company Satyam Infoway, which was the largest private Internet Services Provider in the country at that time, of IndiaWorld Communications, for a sum of $115 million. The acquired company operated popular portals such as samachar.com and khel.com that had no clear revenue model, and was the principal beneficiary just as in the AOL deal. According to reports, the owner of IndiaWorld was himself charged with intellectual property violations by his erstwhile employer IndiaWorld.com, an Internet services company managed by U.S.-based ASAP Solutions Inc. Satyam Infoway’s position was that it was aware of the claim being made by ASAP Solutions, but that its interest was not in IndiaWorld.com but was “limited to the URL indiaworld.co.in and the other portals under its banner,” for which it had of course paid a huge sum. There is reason to suspect that this acquisition delivered little to the company, raising questions about the motivation.
Mr. Raju’s confession is also suspect for another reason, which has been widely discussed in the media. Even if he and his colleagues were inflating revenues and profits, the actual revenue earning capacity of the company, as confessed by him, seems to be extremely low. He claims that the huge difference between actual and reported profits in the second quarter of 2008-09 was because the ratio of operating margins to revenues was just 3 per cent rather than the reported 24 per cent. But even if Satyam Computer Services was cooking its books, it was engaged in activities similar to that undertaken by other similarly placed IT or ITeS companies and it too had a fair share of Fortune 500 companies on its client list. It is known that many of these companies have been showing operating margins that are closer to the 24 per cent reported by Satyam than the 3 per cent revealed in Mr. Raju’s confession. Thus in financial year ending March 2008, the ratio of profits before tax of Infosys was 32.3 per cent of its total income, that of TCS 23.1 per cent, of Satyam 27.8 per cent, and that of Wipro 19.2 per cent.
This suggests that either Mr. Raju is exaggerating the hole in his balance sheet or there is some other, more complex, and more disturbing explanation. But whatever it is, the difference between 24 per cent and 3 per cent seems too large to be the industry standard.
Despite indicators of these kinds, which could raise suspicion, Satyam Computer Services remained a leading player with substantial investor support for many years. The promoters continued to hold control over the company despite the small share in equity they held and built an empire with land assets and contracts for executing prestigious infrastructural projects. And despite its award-winning reputation for corporate governance, its impeccable board with high-profile independent directors, and its appointment of big-four member PwC as its auditor, this still mysterious accounting fraud occurred. The full truth, it appears, is not yet out.

Reference : The Hindu – 14-Jan-2009

Satyam’s 7 steps to save employees »

I am at shock. Specially because Satyam employees with average salary of 70K per month are sure feeling helpless than I am at this time. Yet at the end of the day I think what can Satyam’s upcoming plan be? to increase the morale of it’s present employees and save them. Here are a few picks

1. Satyam and PwC may form a email marketing group called Satyam Pwc Advertisement and Marketing (SPAM) to pursue lenders through advanced email tactics in lending money.
2. Raju might provide free ebook version on budhdhism and spirituality to every employee through SAAS (Satyam Aesthetics and Advanced Spiritualism) model (who said? Dalai Lama??)
3. Satyam might ask employees to jointly produce films under bollywood banner to better the chances through box office, some films can be “Raju Bawra”, “amdani athanni, kharcha rupaya”, “EMI2 – kab du? kaise du?”, “satyam, shivam, scandalam”, “MAYTAS aapke hain kaun?” “Raaz 3 – Scandal continues..” come on…give me some titles..
4. Satyam might start body shopping employees with or can even create a career site for satyam employees like “topsatyamemployees.com” or “satyamcvs.com” or “satyamcareers.com”
5. Satyam might form a new ally with PwC and form SCAM (Satyam Creative Accounts Management) and might go for auditing other big giants of India, their average charge for audit will be 4.3 crores
6. PwC might create an awareness program to save its client Satyam (on demand by Raju). The campaign might be called “PWC – Please Wear Clothes”, which additionally means “just clothes” are allowed, employees should sale off their new SX4, Imate, Apple Mac and Handycams..
7. SATYAM might plea the government for saving them and defining the truth behind SATYAM as an acronym of “Some Accounts Tactically Yucked for Advanced Management”

No advance tax paid by Satyam in FY09 »

Satyam Computer has not paid a single rupee as advance tax in the first three quarters of the current fiscal, though the IT company paid Rs 25 cr as fringe benefit tax (FBT) till December 15. However, most of its IT peers, including Infosys Technologies, Tata Consultancy Services (TCS), Wipro, Cognizant Technology Solution, Patni Computer Systems, Veritas Software, MphasiS, iGate Global Solutions, Cisco Systems and MindTree, have paid advance tax this fiscal, sources in finance ministry told SundayET.

As payment of advance tax is always considered an indicator of profitability of a company, Satyam’s non-payment of advance tax could also imply that trouble had been brewing for a long time. Though IT companies get some tax benefits under Section 10 (A) of the I-T Act, Satyam’s zero payment of advance tax even as smaller companies coughed up the tax, has already raised questions in North Block.

Various government agencies, including Central Board of Direct Taxes (CBDT), have begun investigations into the Hyderabad-based company after its chairman and founder Ramalinga Raju stepped down after confessing a Rs 7,000-cr fraud. A source in the finance ministry has, however, said advance tax payment should be seen along with the company’s FBT and tax deducted at source (TDS) figures. “But yes, despite the slowdown, most IT companies have paid advance tax this fiscal whereas it’s zero in case of Satyam,” he added. Significantly, Satyam paid a meagre Rs 5.4 cr as advance tax last fiscal. Advance tax is paid four times a year and is paid on the basis of a company’s projection of annual net profit. SundayET did not receive Satyam’s TDS figures for the current fiscal. Satyam’s FBT payment in Q3 too was below expectation of taxmen as it paid just Rs 5.5 cr against Rs 25 cr during the same period last fiscal, indicating that the company began to cut cost on fringe benefits extended to its employees.

The total FBT collection as on December 17, 2008, stood at Rs 5,667 cr, registering a 43% rise from the same period in FY07, according to data available with CBDT.

Satyam Scam: A Shame for the nation »

The 7000 Crore Satyam Fraud has not only tarnished the very meaning of Satyam,the first of the three words describing GOD, himself (Satyam,Shivam ,Sundram) but has crashed and blasted all that stood in the name of truth, atleast in the eyes of the common man.
It may have not killed any,but its impact is akin to the aftermath of the Mumbai blasts,or even worst!The Mumbai Blasts left behind a perpetual scare in every mans mind,and this astonishing scandal besides leaving thousands jobless,and millions paupers,has created a great financial insecurity amongst the masses.
One has become accustomed over the last decade to scams running into hundreds and thousands of crores,but this is the Father of all Frauds, which has left the world numb,dumb and scaringly shocked!!!!!!! If the fraudulent accounts of such mega organizations can skip the vigilant hawky eyes of the financial auditing wizards,then no accounting or auditing system of the country of the world is above suspicion!
Its not only the investors or the employees and others related to Satyam,who have been affected,but this financial blast has created an undesirable state of disbelief in the complete corporate world,and a distrust in the investment system and stock market,that will prove to be highly detrimental for the economical growth of the country.
Besides taking all possible steps to revive the firm,and to gain back the trust of all concerned,the culprits should be given exemplary punishments which may prove to be great deterrents for all in future,to even dare to convert the Satyas of the financial and corporate world to Mithias!!!!

We stand by Satyam but no job applications, please: Infosys »

Amidst the outrage among certain Satyam employees to Infosys Co-Chairman and Chief Mentor N R Narayana Murthy’s statement last week that Infosys would not recruit employees from the disgraced IT firm based in Hyderabad, top Infosys executives on Tuesday stood by their stand. They also couched their views on the Satyam scam in decidedly softer terms.

Infosys Chief Executive Officer and Managing Director S Gopalakrishnan said that the accounting scandal at Satyam did not call into question the competence of its (Satyam) employees. “The government is trying to protect 53,000 jobs at Satyam. We believe that the employees are not to blame for the current situation,” he said. However, considering the CVs of Satyam employees for jobs with Infosys would not be prudent in the present circumstances, he added.

On whether Infosys was directing its sales forces to target Satyam clients, Gopalakrishnan said, “Not at all. Some of Satyam’s clients did approach us directly regarding projects, but we have not been proactively courting them. We will approach such requests like any other business proposition.”

“In the event of a client initiative resulting in project transfers from Satyam, we prefer to have Infosys employees working on them,” he added.

Narayana Murthy, whose statement on not hiring Satyam employees had caused a furore in industry circles, said in a separate statement on Tuesday, “At a time of crisis, it is important that the industry acts in a responsible and credible manner. We have stated our intention not to act on any CVs from Satyam’s employees. This is to ensure that nothing is done that will adversely impact Satyam’s future. This is no reflection on the integrity and competence of Satyam’s employees. We respect them as professionals.”

Gopalakrishnan said that the medium-to-long term focus should be on building a strong management at Satyam. On suggestions from some quarters of industry and the media that Murthy should take over as interim CEO of the Satyam and help reinforce ethical practices in that company, Gopalakrishnan said, “None of us (at Infosys) will serve on Satyam’s board as there is a clear conflict of interest.”

“If the new board is able to set regulatory changes in process and help stabilise the situation at Satyam, then things will be back on track again. We have to wait and see,” the Infy chief said.

T V Mohandas Pai, member of the Infosys board and head – human resources, said that Infosys would not poach from companies going through crises. Noting that it was important to restore confidence in Satyam, Pai said that Infosys’ position on recruiting from Satyam remains unchanged.

“Our hiring is fully merit-based, and we respect Satyam employees. They are people of competence. But considering their CVs for recruitment is not feasible right now considering the crisis their employer is going through,” Pai reiterated.

He said that three guidelines can prevent the recurrence of such scandals: The first would be enhanced levels of disclosure and transparency within companies; followed by an institutional framework which lays stress on shared responsibility instead of undue power being conferred upon a single individual; and a culture where regulators would be empowered to award exemplary punishment to offenders in the minimum possible time

Raju spends time in jail reading books, newspapers »

Disgraced former chairman of Satyam Computers, B Ramalinga Raju spent his fourth day in the Chanchalguda Central prison reading books, news magazines and newspapers.

Raju has been shifted from the regular admission block to the nearby barrack where he is leading a quite life and is remained to himself, a senior prison official told PTI.

Besides his routine activities in the jail, Raju is also going for a stroll in the evening hours, the official said.

As per the magistrate’s directions, Raju’s health is also being checked on a routine basis, he said.

Raju, who confessed to fudging Satyam’s accounts to the tune of Rs 7,800 crores, was sent to judicial custody on January 10 and is now spending most of his time in the jail by reading books and is keeping himself abreast with latest developments through newspapers.

Raju, considered as an IT icon from Andhra Pradesh, is being treated as ‘C’ class prisoner and is being provided with normal jail food. The only solace to him is that he is being allowed to wear his usual clothes.

As he is an under trial, Raju is wearing usual dresses and not prison uniform, the officer said, adding, “his son who visited him on Monday brought some books and news magazines besides clothes”.

Raju is sharing the barrack with his brother and former managing director of Satyam Rama Raju, Satyam’s former CFO Vadlamani Srinivas and a stranger who is an accused in a minor case, he said.

Govt plans Rs 2000-crore package for Satyam »

The Indian Government has decided to take direct action to remis looking at a salary bailout for the 53,000 Satyam Computer Services employees.

A Rs 2,000 crore package is under consideration to ensure that Satyam employees get their salary on time after it the new board said that they are looking for funds.

It’s learnt that the government is looking at giving three instalments of Rs 500 crore to Satyam for the next three months and is planning another infusion of about Rs 400 crore.

Prime Minister Manmohan Singh met senior Cabinet ministers and officials at his residence to discuss the over Rs 7,000 Satyam scandal where the bailout package was finalised.

The meeting was attended by Home Minister P Chidambaram, Commerce and Industry Minister Kamal Nath, Corporate Affairs Minister Prem Chand Gupta and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

The Centre has already directed the Serious Fraud Investigation Office (SFIO) to investigate the scam which threatens to affect India’s IT brand.

The SFIO has got three months to submit its report on Satyam. The role of Satyam’s auditors Pricewaterhouse Coopers will also be investigated.

A team of Andjhra Pradesh Police on Tuesday raided the Hyderabad office of Pricewaterhouse Coopers (PwC).

Meanwhile, Satyam’s interim CEO Ram Mynampati is in the US to reassure clients about the beleaguered company’s ability to serve them and is likely to be arrested on his return.

Others who are under the scanner for the accounting fraud in the IT major include former Indian School of Business (ISB) dean Ram Mohan Rao and former Cabinet Secretary and a Satyam director TR Prasad.

The first official report by the Registrar of Companies (RoC) into the Satyam scandal has already been sent to the government on Tuesday.

Sources say the RoC report has found serious manipulation in the company’s finances.

Satyam’s founder-chairman B Ramalinga Raju resigned on January 7 from the IT major’s board after admitting a multi-crore fraud in the company’s accounts.

In a notification to the stock exchanges, the Hyderabad-based IT firm said Raju and managing director Rama Raju resigned early Wednesday and that the Securities and Exchanges Board of India (SEBI) had been informed.

In the regulatory statement, Raju said that the company had fraudulently incorporated a non-existent cash component and inflated the bank balance to reflect Rs 5,040 crore (Rs 50.4 billion) as against Rs 5,361 crores (Rs 53.61 billion).

”No board member had any knowledge of the real situation. Accrued interest of Rs 376 crore in books is non-existent. About Rs 1,230 crore was arranged to Satyam, but was not reflected in the books,” Raju said while announcing his resignation.