Mahindra Satyam claims Rs 275 crore damages from previous management
Hyderabad, Jun 10: Mahindra Satyam has filed a suit against its former Board of Directors, certain employees and audit firm PriceWaterhouse, claiming around Rs 275 crore as damages from the previous management. In its suit,
Hyderabad, Jun 10: Mahindra Satyam has filed a suit against its former Board of Directors, certain employees and audit firm PriceWaterhouse, claiming around Rs 275 crore as damages from the previous management.
In its suit, the IT company said it has lost nearly Rs 3,000 crore revenue and Rs 70 crore profit due to actions of previous management and auditors.
"The plaintiff company suffered a loss on account of several customers cancelling or terminating contracts with the plaintiff company. The company suffered a loss of Rs 2,966.49 crore and consequent loss of profits from the said contracts. The company is entailed to recover Rs 70 crore from the defendants," Mahindra Satyam said in the petition filed in the city civil court.
The new management of the city-based IT firm also sought Rs 51 crore towards the expenses for Forensic Audit conducted after the fraud-hit company was taken over by them.
"The company paid in all a sum of Rs 51.72 crore to the entities and agencies among others, for the purpose of irregularities in the financial statements and operations of the plaintiff company when it was under the control of previous management. The plaintiff company is entitled to recover the amount," the petition said.
Mahindra Satyam named as many as 128 as defendants including B Ramalinga Raju, Rama Raju, V Srinivas, former directors including Ram Mynampati, Krishna Palepu and former auditors Pricewaterhouse and Lovelock and Lewes.
In January 2009, Satyam founder Chairman B Ramalinga Raju had admitted to the accounting fraud at the IT firm. Termed as India's own Enron scam, the alleged Rs 14,000 crore scam cast shadow of doubt on the credibility of the Indian IT sector.
The government soon stepped in and set up a new board, following which Tech Mahindra bought 46 per cent stake in Satyam through a formal public auction process. The company in July 2009 was rechristened as Mahindra Satyam.
The company also wants to recover Rs 20.85 crore the auditing fees paid to PW India and PW USA from the defendants.
Responding to the allegations, a PW India spokesperson said: "PW India is outraged that Satyam is attempting to shift responsibility to the auditors for the consequences of a carefully and deliberately concealed fraud that was undertaken at the direction of its own senior management."
"The fraud perpetrated by Satyam was specifically designed to - and did - circumvent Satyam's own internal controls and PW India's audit process, and consequently PW India was a victim of Satyam's fraud, and will defend itself vigorously against Satyam's baseless contentions," Price Waterhouse said.
PW India, meanwhile, also said that it has filed its own civil suit against Satyam and certain members of its former senior management claiming compensation and damages.
Mahindra Satyam in a statement said, "The said suit has not yet been served on the company and therefore it is unable to comment on the same."
The IT company also alleged that Ramalinga Raju and and Ramaraju collected Rs 7.76 crore under the pretext of salary and commission which they are not entitled for. The former management also paid Rs 81.4 crore as dividend whereas the company incurred loss during the scam period, it alleged.
Hence, keeping in view of all the "wrongdoing" which severely damaged the company's financials, Mahindra Satyam requested the court to direct the defendants to pay the damages. The company also requested the court to direct the defendants to pay interest at the rate of 18 per cent per annum on Rs 275 crore from the date of the suit till the date of realisation.
Meanwhile, the court is in the process of serving notices to the defendants, sources close to the development said.
In its suit, the IT company said it has lost nearly Rs 3,000 crore revenue and Rs 70 crore profit due to actions of previous management and auditors.
"The plaintiff company suffered a loss on account of several customers cancelling or terminating contracts with the plaintiff company. The company suffered a loss of Rs 2,966.49 crore and consequent loss of profits from the said contracts. The company is entailed to recover Rs 70 crore from the defendants," Mahindra Satyam said in the petition filed in the city civil court.
The new management of the city-based IT firm also sought Rs 51 crore towards the expenses for Forensic Audit conducted after the fraud-hit company was taken over by them.
"The company paid in all a sum of Rs 51.72 crore to the entities and agencies among others, for the purpose of irregularities in the financial statements and operations of the plaintiff company when it was under the control of previous management. The plaintiff company is entitled to recover the amount," the petition said.
Mahindra Satyam named as many as 128 as defendants including B Ramalinga Raju, Rama Raju, V Srinivas, former directors including Ram Mynampati, Krishna Palepu and former auditors Pricewaterhouse and Lovelock and Lewes.
In January 2009, Satyam founder Chairman B Ramalinga Raju had admitted to the accounting fraud at the IT firm. Termed as India's own Enron scam, the alleged Rs 14,000 crore scam cast shadow of doubt on the credibility of the Indian IT sector.
The government soon stepped in and set up a new board, following which Tech Mahindra bought 46 per cent stake in Satyam through a formal public auction process. The company in July 2009 was rechristened as Mahindra Satyam.
The company also wants to recover Rs 20.85 crore the auditing fees paid to PW India and PW USA from the defendants.
Responding to the allegations, a PW India spokesperson said: "PW India is outraged that Satyam is attempting to shift responsibility to the auditors for the consequences of a carefully and deliberately concealed fraud that was undertaken at the direction of its own senior management."
"The fraud perpetrated by Satyam was specifically designed to - and did - circumvent Satyam's own internal controls and PW India's audit process, and consequently PW India was a victim of Satyam's fraud, and will defend itself vigorously against Satyam's baseless contentions," Price Waterhouse said.
PW India, meanwhile, also said that it has filed its own civil suit against Satyam and certain members of its former senior management claiming compensation and damages.
Mahindra Satyam in a statement said, "The said suit has not yet been served on the company and therefore it is unable to comment on the same."
The IT company also alleged that Ramalinga Raju and and Ramaraju collected Rs 7.76 crore under the pretext of salary and commission which they are not entitled for. The former management also paid Rs 81.4 crore as dividend whereas the company incurred loss during the scam period, it alleged.
Hence, keeping in view of all the "wrongdoing" which severely damaged the company's financials, Mahindra Satyam requested the court to direct the defendants to pay the damages. The company also requested the court to direct the defendants to pay interest at the rate of 18 per cent per annum on Rs 275 crore from the date of the suit till the date of realisation.
Meanwhile, the court is in the process of serving notices to the defendants, sources close to the development said.