December 18, 2008
Securities and Exchange Board of India,
SEBI Bhawan, Plot No. C4A,
G Block, Bandra Kurla Complex,
Sub: Probe into Satyam-Maytas deal & fiduciary role of Directors
The audacious attempt by management of Satyam Computer Services Ltd. to divert a whopping Rs.8000 crore from Satyam's shareholders to the pockets of Rajus, who control both Satyam and Maytas, was deplorable. The reversal of the decision-in light of stiff opposition voiced by Templeton and other financial institutions-does not mitigate or lessen the severity of unethical decision. For, the impact of the episode taken in its entirety is not limited to mere technicalities and corporate governance but goes well beyond them; if implemented, it would have left, overnight, the majority and public shareholders looted of the substantial wealth of the company they had invested in.
Considering the grave implications such an act is bound to have on investors (retail, Indian institutions & FII) confidence and resultantly on the Indian economy, we request that an inquiry be ordered by Securities and Exchange Board of India into the entire matter, to be carried out expeditiously in a time-bound manner. The findings of the committee are made public so as to act as a deterrent for future wrong doing and restore investor confidence. The committee may also examine the role played by the Board of Directors, particularly the independent directors, to determine whether they have carried out their fiduciary responsibility or not. It is suggested that the committee for conducting this inquiry may be headed by a retired Justice of Supreme Court and comprise of representatives from investing Financial Institutions, investors associations recognised by Sebi and apex chamber/federation of trade & industry. Last year, Sebi had constituted Justice Wadhwa Committee, on these lines, to go into the IPO irregularities. The committee (of which I was one of the members) submitted its recommendations within four months.
Further, it is suggested that a Code of Conduct for independent directors be laid down in the Listing Agreement; An autonomous committee be constituted for adjudicating grievances relating to independent directors conduct & recommend, to SEBI, appropriate action against the independent directors.
We earnestly hope that you would appreciate our demand and accede to it, in view of the larger interest involved and demonstrate, through decisive and quick action, that Indian government and regulators are serious about enforcing good corporate governance and ethical practices.
For Midas Touch Investor Association