The central government will decide how to rescue Satyam Computers after the newly-appointed board reports back on its financial health
The central government will decide how to rescue Satyam Computers after the newly-appointed board reports back on its financial health. The expanded board of six will meet on Saturday to decide how to raise funds and keep business alive even as cash runs out.
It’s not clear when the government will act, but a highly placed government source said they are in no hurry to decide. While several options are under consideration, including arranging for a soft loan from a consortium of public sector banks, the government wants clarity on the story behind Ramalinga Raju’s self-confessed fraud before it hands out a lifeline.
Much of the initial enthusiasm seems to have waned with wiser counsel prevailing as details emerge from the review of Satyam’s books. Having rushed in, under pressure from Andhra Pradesh chief minister YS Rajasekhara Reddy, to appoint a new board and help with the search for a new CEO, the government cannot wash its hands of the affair.
There is political compulsion to save Satyam, which has built for itself a formidable domestic and international reputation as AP’s foremost software company. Assembly and Lok Sabha polls are due in Andhra in April-May. The Congress has high stakes in the state, which gave it 30 MPs in 2004 and paved the way for the UPA government to seize power from the BJP-led NDA government. It would not want anything to jeopardise its fortunes, not a scandal that could burn its government in AP.
Despite obvious political imperatives, divisions surfaced in the government on how to handle the crisis. At one end of the spectrum is external affairs minister Pranab Mukherjee, who opposed a rescue act. At the other end is commerce minister Kamal Nath, who pleaded for aggressive government support to Satyam.
Prime minister Manmohan Singh is somewhere in between. While he apparently does not favour a bailout, he is concerned about the international damage to the India story if an IT major is allowed to sink under a scandal. He is believed to feel that the fraud should be treated as an aberration.
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