Satyam records not yet seized

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New Delhi:

Twenty four hours after India’s biggest accounting fraud surfaced, the authorities have still not seized the records of Satyam Computer Services Ltd. The delay could prove costly for subsequent investigations.

Instead, as Thursday was a gazetted holiday, the entire office of the registrar of companies (RoC) in Hyderabad was on leave. The only agency that had moved quickly was the Securities and Exchange Board of India, the officers of which had in the morning visited Satyam’s once iconic offices at Info City in Hyderabad.

But Sebi only has a limited mandate to investigate the offences of companies, as it does not have the powers to seize records. The RoC office was of course waiting for an instruction from the government in Delhi, which came late on Thursday.

According to legal experts, the first thing the authorities should have done is to change the passwords of the computer records so that nobody could tamper with the records. The seizure of management correspondences and account books could follow later. This is the procedure in many states in the US to ensure the integrity of the records.

This should have been executed soon after Raju made the admissions about the Rs 9,440-crore fraud to the company’s board members, Sebi and the stock exchanges. KN Vaidyanathan, CEO of Alchemy Capital Management, said, “immediacy is the key in getting to the truth and beyond.” He explained that there were too many layers in the company that must have been involved in the fraud. “It is too simplistic to accept the confession that books have been cooked. This is not like dumping inventory on distributors on the balance sheet date. IT services companies run the most democratic and federal accounting systems–that starts with the programmer. Accounts departments will have hundreds of people preparing statements daily—both for clients and internal management.”