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Satyam rebounds on rescue hopes | Satyam rebounds on rescue hopes |
(about 2 hours later) | |
Shares in Indian software firm Satyam have jumped 51% on hopes of a rescue plan for the scandal-hit firm. | |
On Sunday, the Indian government appointed three leading businessmen to the company's board. | On Sunday, the Indian government appointed three leading businessmen to the company's board. |
The board is meeting to draw up a rescue plan for the firm that has been at the centre of a scandal over the falsifying of accounts. | The board is meeting to draw up a rescue plan for the firm that has been at the centre of a scandal over the falsifying of accounts. |
Meanwhile, the World Bank revealed that Satyam and two other Indian IT firms are on a business blacklist. | |
The Satyam scandal has undermined investors' confidence in India's booming outsourcing industry. | |
Deepak Parekh, a senior banker and one of the firm's new bosses, is due to hold a news conference at 5 pm local time - about 1130 GMT. | Deepak Parekh, a senior banker and one of the firm's new bosses, is due to hold a news conference at 5 pm local time - about 1130 GMT. |
Satyam shares were up 51% at 36.05 rupees after the stock lost 87% last week. | |
World Bank | |
India's IT sector was dealt a further blow after the World Bank said that three Indian firms, including Satyam, were on a list of- companies that are banned from doing business with the bank. | |
WORLD BANK BLACKLIST Satyam barred for 8 yearsWipro barred for 4 yearsMegasoft barred for 4 years Source: World Bank | |
This was the first time the World Bank had disclosed the list of companies barred from receiving direct contracts under its corporate procurement program. | |
Satyam was banned in September 2008 for eight years and Wipro Technologies was blacklisted for four years from June 2007 for providing improper benefits to World Bank staff. | |
Wipro said it was banned for offering World Bank employees shares in its stock offer in the US in 2000. | |
Megasoft Consultants was banned for 4 years from December 2007 for taking part in a joint venture with World Bank staff while also conducting business with the Bank. | |
Shares in Wipro and Megasoft fell sharply on the news. | |
Arrests | Arrests |
The entire board of Satyam, a private company, had been sacked after its founder and former chairman had been arrested. | The entire board of Satyam, a private company, had been sacked after its founder and former chairman had been arrested. |
Ramalinga Raju and his brother Rama, also a former Satyam director, were arrested on charges including criminal conspiracy and forgery. | 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. | 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). | He said the company had exaggerated its cash reserves by some $1bn (£661m). |
The other new directors are 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 other new directors are 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 company, which employs 53,000 people and enjoyed a turnover of $40bn last year, is now fighting for its life. | The company, which employs 53,000 people and enjoyed a turnover of $40bn last year, is now fighting for its life. |
Its clients include Nestle, General Electric and Ford. | Its clients include Nestle, General Electric and Ford. |
The Raju brothers have also been charged with criminal breach of trust and falsifying documents. | 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. | 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. | Indian police have also now detained Vadlamani Srinivas, Satyam's chief financial officer, for questioning. |