Fears for Satyam staff salaries after fraud

INDIA-- There were fears today that research and analytics staff working for outsourcing firm Satyam could go unpaid this month after the company's founder confessed to a massive accounting fraud.

B. Ramalinga Raju admitted in a letter to board directors and the Bombay Stock Exchange this week that he had overstated profits for the last several years and that about $1bn of the $1.1bn cash and bank balances on the company's books did not exist.

Ram Mynampati, the interim CEO appointed to steer the firm through the crisis, said at a news conference yesterday that the company's “liquidity is not very encouraging at this point” and that the firm needed “some assistance as far as liquidity is concerned to deal with the business continuity for this month”.

Mynampati said the company “places top priority” on protecting the careers and livelihood of employees and their families. “We will do our utmost to ensure that salaries can be paid,” he said.

In total, Satyam employs 53,000 people but it is not known how many work in the research and data analysis group, which was formed through the acquisition last April of the market research and customer analytics business of construction equipment manufacturer Caterpillar.

The $60m deal was billed as the first step in the creation of a global network of research and analytics professionals. At the time, Satyam said it planned to open innovation centres in India, Europe, North America, Latin America and Asia Pacific to gather and analyse data for the manufacturing, financial services, healthcare, telecoms and other industries.

Author: Brian Tarran