By Lee Wei Lian
KUALA LUMPUR, Jan 7 - The announcement of the resignation of chairman and founder of Satyam Computer Service Ltd, Ramalinga Raju, has sent shockwaves through the company and the global IT community.
Raju, considered one of the biggest names in India's IT success story, announced today that he has resigned after falsifying account and assets to the tune of 50.4 billion rupees (RM3.61 billion) according to Bloomberg.
The story also said that Raju, 53, unsuccessfully tried to sell two companies to Satyam last month in a final attempt to plug 50.4 billion rupees worth of "fictitious assets" on the company's balance sheet. Profits from the main business have been inflated "over a period of last several years," Raju said in a letter to the board.
After the announcement, Satyam's shares collapsed by over 70 per cent to 51 Indian rupees (RM3.65). Raju, an immensely soft spoken and unassuming man who professed a liking for Malaysia due to its familiar cuisine - he once said that he could find better Indian food in Malaysia than in his home state of Andhra Pradesh - and its 2 hour plus flight proximity to Hyderabad where Satyam is based.
It is understood an interim management team has been put in place to oversee corporate affairs. In a statement on its website, Satyam says that Mr. Ram Mynampati is the interim CEO, pending ratification by the board and has been mandated to steer the company through this crisis.
Satyam is one of Cyberjaya's biggest employers and has an estimated 800 employees at its sparkling office, called the Global Solution Centre or GSC in the IT hub city.
It has also been very supportive of Malaysia's IT ambitions and has trained dozens of students and university lecturers under a special programme with the government in a bid to raise IT competency levels in Malaysia.
GSC Cyberjaya was also considered one of its biggest facilities outside Hyderabad and a key location for servicing its Islamic Banking and Japanese clients.
Pavan Mullapudi, head of GSC Cyberjaya says that he is still waiting for more information from the headquarters but claims that "there is absolutely no change at Cyberjaya. It's only at the corporate level."
A government source familiar with Satyam says that they were given a quick update by Satyam and that the latter put in place an "interim SWAT team" to look after operations worldwide.
"It's still too early to tell the impact on GSC Cyberjaya," says the source.
Satyam announced a deal to buy over Motorola's software development centre in Cyberjaya, which had 128 employees, last November.
It is unclear if recent events will affect the purchase although former Motorola employees reported for work as Satyam employees as of 31st December last year.
This scandal comes just a few months after another scandal concerning an MSC status company.
Last October, Entellium CEO Paul Thomas Johnston was arrested by the FBI in the US and admitted to cooking the books and overstating revenue figures to the tune of millions in order to attract investment from the venture capital community.
The government owned be Malaysia Venture Capital Management Bhd. had invested RM7 million in Entellium last July. The Multimedia Development Corporation had also approved several million worth in government research grants to Entellium.
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They misled everyone for many years, and despite auditors, directors and other forms governance, all this did not reveal any wrong doing.
Are other Indian IT giants cooking the books? I will be very eager to look at the coming weeks to see if we have more news as this Satyam looks like a good company form outside, and only the boss knew that it is all a shell.