Wednesday, January 7, 2009

Finally, minister admits Kasab is a Pakistani

NEW DELHI: After weeks of cussed denials, Pakistan finally came around to acknowledging that Ajmal Kasab, the captured Mumbai terrorist, could be Pakistani.

The confirmation, by information minister Sherry Rehman to a news agency, is a small but significant step. She said, "We are confirming he is a Pakistani, but investigations are still going on."

Signficantly, late-night reports from Pakistan said that national security advisor Mahmud Ali Durrani had been sacked for acknowledging that Kasab could be Pakistani. According to the reports, Durrani had made the statement without checking with the government.

Although Rehman hedged her statement and Pakistani foreign secretary Salman Bashir officially refused to confirm it, the fact is, a window could have opened up. It would be the most important fallout of the dossier diplomacy by India over the past couple of days, which was as much a public relations exercise as a way to pressure Pakistan into acting. If Pakistan does indeed acknowledge Kasab's identity, it will be because it was left with absolutely no other option.

While the government here said there was no official confirmation of Pakistan acknowledging Kasab's identity, if Pakistan does so, it could break the logjam of charges and counter-charges between the two countries.

It would be seen as a huge concession by Islamabad, after weeks of denial had Indian leaders almost purple with rage and frustration. It will be seen as a diplomatic breakthrough by the US, which has said it has been pushing Pakistan to "act" on Indian demands.

But an important aspect of the Pakistani confirmation is the absolute denial of Kasab's links with any official agencies, something Pakistan has stressed since PM Manmohan Singh on Tuesday declared that Pakistan's ISI was involved. Clearly, they will want to insulate the ISI from attack.

Pakistan's hesitant acknowledgement comes as US official Richard Boucher arrives in Delhi on Thursday for talks with foreign secretary Shivshankar Menon and, unusually, to meet foreign minister Pranab Mukherjee. He is expected to brief the Indian government on his talks in Islamabad.

In fact, a series of meetings between US ambassador David Mulford and Mukherjee and NSA M K Narayanan through the day spoke of the next steps in the investigation and the diplomatic waltz that is being conducted between these three countries.

India could contemplate the next step of pushing Pakistan to investigate the training, planning and execution of the attacks, which would potentially open a can of worms in Pakistan.

But Pakistan could have the last word, by seeking access to Kasab and embarking on its own investigation.

This could take ages and India would be asked to hold its horses by the international community while Pakistan went through the motions.

But the Mumbai attacks were of a different quality and scale, so it will be difficult for India to let go of the ball.

Source: http://timesofindia.indiatimes.com/Finally_Pakistan_admits_Kasab_is_a_Pakistani/articleshow/3948424.cms

Satyam's Raju resigns, admits fraud


MUMBAI: Satyam Computer Services Ltd’S Mr. B Ramalinga Raju has tendered his resignation as chairman of the company. Reacting to the news, shares of the IT company were down 77.11% at Rs 41. Also, immediately following the news, DSP Merrill Lynch has terminated its engagement with the company.

Raju will continue in the position only till such time the current board is expanded.

In a letter to the board of directors, Raju states that Satyam’s balance sheet as on Sep 30, 2008, carries an inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 reflected in the books).

Further, it carries an accrued interest of Rs 376 crore which is non-existent.

An understated liability of Rs 1,230 crore on account of funds arranged by me. An over stated debtors position of Rs 490 crore (as against Rs 2,651 crore in the books).

For the second quarter ended Sep 30, 2008, the company reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24% of revenues) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3% of revenues). This has resulted in artificial cash and bank balances going up by Rs 588 crore in the second quarter alone.

The letter further states that the gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore).

As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones.

To quote: “It was like riding a tiger, not knowing how to get off without being eaten.”

A task force comprising imminent members such as Subu D, TR Anand, Keshab Panda and Virendra Agarwal and AS Murthy, Hari T and Murli V has been formed in the last few days to address the situation arising out of the failed Maytas acquisition attempt.

Ram Mynampati would be made the Chairman of this task force to immediately address some of the operational matters on hand. Merrill Lynch would be entrusted with the task of exploring some merger opportunities.

In the letter, Raju has apologised to all Satyamites and stakeholders for the current situation.

Raju says that neither he nor the managing director sold any shares in the last eight years except a small proportion sold for philanthropic purposes.

A net amount of Rs 1,230 crore was arranged to Satyam (not reflected in the books) to keep operations going by resorting to pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged shares by the lenders on account of margin triggers.

Raju also acknowledged that neither he nor the managing director took have benefited in financial terms on account of the inflated results. He confessed that non of the board members had any knowledge of the situation in which the company is placed


Soruce: http://economictimes.indiatimes.com/Satyams_Raju_resigns_admits_fraud/articleshow/3946209.cms

Nifty tanks below 2900; Satyam plunges 80%

MUMBAI – There was no respite for Indian markets since the Satyam Computer Services fraud came to light. Heavy selling was seen across the board as sentiments turned bearish on the mockery of corporate governance by the IT major.

Ramalinga Raju, chairman of Satyam Computers resigned from his post and confessed to indulging in fraudulent activities like inflating the books for several years.

Raju has written a letter to the board giving details of the balance sheet. Balance Sheet has inflated cash balances of Rs 5040 crore and accrued interest of Rs 376 crore is non-existent. Rs 1230 crore was arranged to Satyam and is not reflected in the books. As per the revelations, second Quarter numbers were inflated to Rs 2700 crore vs Rs 2112 crore actual numbers. No board member had any knowledge of the real situation of the books.

Benchmarks were witnessing a free fall and had conveniently breached their intermediate support levels. At 1:45 pm, Bombay Stock Exchange’s Sensex was at 9,549.69, down 786.24 points or 7.61 per cent. The index fell to an intra-day low of 9510.15 and a high of 10469.72.

National Stock Exchange’s Nifty was at 2915.10, down 6.35 per cent or 197.70 points. The broader index breached its 2900 mark and fell to an intra-day low of 2888.20 and a high of 3147.20.

Satyam Computers (-81.57%), Jaiprakash Associates (-27.71%), Reliance Communications (-17.62%), Reliance Infrastructure (-14.99%) and DLF (-14.58%) were amongst the major Sensex losers.

Realty stocks were the worst hit followed by IT stocks. BSE Realty Index was down 17.95 per cent and BSE IT Index fell 10.27 per cent.

Source: http://economictimes.indiatimes.com/Markets/Stocks/Market_News/Nifty_tanks_below_2900_Satyam_plunges_80/articleshow/3946710.cms

Satyam frauds Sensex of 7%, Nifty of 6%

MUMBAI: Indian equities ended sharply lower Wednesday as investors’ dumped realty and IT stocks after B Ramalinga Raju, chairman of Satyam Computer Invest for long term Services made startling confessions of fraudulence in company’s books.

Earlier in the day, Raju tendered his resignation as chairman admitting to gross manipulation of company accounts.

Satyam’s balance sheet as on Sep 30, 2008, carries inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 reflected in the books). Further, it carries an accrued interest of Rs 376 crore which is non existent, and understated liability of Rs 1,230 crore on account of funds arranged by Raju. It also has over stated debtors position of Rs 490 crore (as against Rs 2,651 crore in the books).

Following the announcement, DSP Merrill Lynch terminated its engagement with the company.

Bombay Stock Exchange’s Sensex which fell to a low of 9,510.15 earlier in the day, closed at 9580.31, down 755.62 points or 7.31 per cent. The index touched an intra-day high of 10469.72.

National Stock Exchange’s Nifty ended at 2918, down 6.26 per cent or 194.80 points. The index touched an intra-day low of 2888.20 and a high of 3147.20.

Selling was also seen in second rung stocks. BSE Midcap Index 7.06 per cent and BSE Smallcap fell 6.20 per cent.

Satyam Computers (-77.16%), Jaiprakash Associates (-29.70%), Reliance Communications (-17.42%), DLF (-17.08%) and Reliance Infrastructure (-13.25%) were the top Sensex losers.

Hindustan Unilever (1.44%), Infosys Technologies (1.40%), Maruti Suzuki (1.34%) and Wipro (0.51%) were the only Sensex gainers.

Market breadth was negative on the BSE with 2124 losers and 364 gainers.

Source: http://economictimes.indiatimes.com/Satyam_fraud_Sensex_dips_7_Nifty_off_6/articleshow/3947248.cms