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India appoints new Satyam bosses

12 January 09 04:30 GMT

The Indian government has appointed three leading businessmen to the board of scandal-hit software firm Satyam.

This comes two days after Delhi sacked the entire board of Satyam, a private company, as its founder and former chairman was arrested.

Ramalinga Raju and his brother Rama, also a former Satyam director, were arrested on charges including criminal conspiracy and forgery.

Mr Raju admitted last week that the firm had been falsifying its accounts.

He said the company had exaggerated its cash reserves by some $1bn (£661m).

The affair is India's biggest-ever corporate fraud.

'Restore credibility'

The three new directors are Deepak Parekh, head of the Housing Development Finance Corporation; Kiran Karnik, the former boss of technology trade group Nasscom; and C Achuthan, a former member of the Securities and Exchange Board of India.

"The board's first priority would clearly be to restore the company's credibility, customer confidence and employee morale," said Corporate Affairs Minister Prem Chand Gupta.

"Such a board will provide the necessary vision, along with responsible and accountable leadership to the company in this hour of crisis."

Mr Gupta added that further appointments will now follow.

"I think it's a first good move towards restoring client confidence," said analyst Sudin Apte of financial research group Forrester.

"But we still have a long way to go. We still have to see how quickly the reality of this scandal comes out in the world."

Fighting for life

The Raju brothers have also been charged with criminal breach of trust and falsifying documents.

They have been remanded in custody until 23 January, and could face life in prison.

Indian police have also now detained Vadlamani Srinivas, Satyam's chief financial officer, for questioning.

The company, which employs 53,000 people, is now fighting for its life.

Its clients include Nestle, General Electric and Ford.

Satyam's shares fell to 11.50 rupees on Friday, their lowest level since March 1998.

Last year they hit a high of 544 rupees.

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