Satyam Independent Director should attend one of his own courses!

Last Night I was amused and then rather angry to hear Prof M Rammohan Rao,an Independent and Non Executive Director on the Board of Satyam Computer Services Ltd

He was defending the decision taken by them for Satyam to acquire Promoter related Maytas Companies

Menaka of CNBC TV asked him which was the lesser of the Devils

  • Entering into a secondary market deal with promoter related parties where the Satyam Monies would go to these related parties directly or
  • Infusing Capital and  Investing directly into the Maytas Companies by accquiring New Shares 

Would you believe it !…Prof Rao professed that it would not have looked good for Satyam to directly invest in the Maytas Companies !…He is of the opinion that Monies directly to Promoters Sons is a better idea ! 

This Director is the Dean of ISB and as a Satyam Director earned a Commission of Rs 12 lakhs last year in addition to sitting fees of Rs 1.2 lakhs plus held 10000 Stock Options for Equity Linked Restricted Stock Units at a grant price of Rs 2 

Methinks this Dean needs to attend one of his Own Classes on Corporate Ethics and Governance at the ISB

Another Reflection…..Another Independendent and Non Ececutive Director,Prof Krishna G Palepu in addition to Commission of Rs 12 lakhs and Sitting Fees of Rs 40000 ,also received Professional Fees of Rs 79.51 lakhs from Satyam for FY 2007/8

Don’t you think such Monetised relationships will cloud the Independence of these Directors at Board Meetings ?

I mean, even if the Directors felt this Diversification was beneficial to Satyam,they surely must have realised that nearly all of Satyam’s Cash of @ US $ 1.5 billion would move out quickly to the Hands of the Promoters in this US $ 1.6 Billion Acquisition of their stake in Maytas Companies !…….Why would the Directors  have agreed to deplete Satyam of all of it’s cash !?…Defies Common Sense,Conventional Wisdom,Rationality and Logic

I have read the Conference Call transcripts to stakeholders to justify this decision as well as emails send by Satyam Founder,Ramalinga Raju to Employees and Associates after reversing the decision…..Was Delighted that SBI Mutual Fund and Templeton had the guts and courage to vehemently and voiceferously oppose Satyam’s Chairman and CFO in the Conference Call  

I too am a Satyam Minority Shareholder and I strongly advise Ramalinga Raju to keep quiet to avoid putting put his foot in his mouth and further dent “the established brand of Satyam” as he boasts of.

To appease shareholders Ramalinga Raju has now announced a Board meeting for December 29,2008 to consider Buyback of Shares

I would also advise  him to consider returning cash to shareholders through a High Special Dividend of atleast 1000 %…That would mean a dividend of Rs 20/share and an outflow of Rs 1340 crores on 67 crores shares of FV Rs 2…Even after this Satyam would yet have over US $ One Billion in Cash  

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