Satyam - Board minute gems
Sandeep Parekh -
Saturday, January 17, 2009 5:06 PM
Stop press - update: Minutes of the audit committee meeting of Nov 2008 satyamAudit.pdf (don't miss the World Bank misrepresentation on pg. 8/9)
The Satyam Board of Directors' meeting's minutes of the infamous 16th
December 08 are out and they make for interesting reading. Here is a
copy in pdf satyamBoardMins.pdf. See page 2 bottom "evaluation for
Maytas Infra has been based on the SEBI (Substantial Acquisition and
Takeovers) Regulations, 1997 and for Maytas Properties based on the
evaluation done by Ernst and Young one of the Big four accounting
firms".
Comment: SEBI(SAST)
regulations do not provide 'evaluation' - only a floor price and
E&Y has hotly debated whether it had valued these for this context.
Similarly, today's papers say the law firm Luthra & Luthra had not
done any property due diligence except for the IPO of Maytas Infra.
"In
view of the non disclosure agreement with the valuer, we are not able
to disclose the name of the valuer to the public, Mr. Srinivas further
informed" page 5.
Comment:
This is legal trash, in any relationship of this nature - even high
fiduciary relationships like attorney-client, the privilege of
confidentiality belongs to the client. A valuer has no fiduciary
relationship in the first place, secondly, there is no basis for such a
confidentiality treatment even in contract, unless there is something
very fishy going on.
An assertion is made about Maytas
Properties having a land bank of 6,800 acres on the same page -
however, a CNBC report could verfiy only 100 acres of this land (I have
posted previously on this). This view is consistent with the statement
on the bottom of page 6 that only 110 acres of 6,800 acres has been
pledged with banks for loans. Obviously, you can't pledge more than you
own. Practically every aspect of the presentation made was based on
misrepresentation.
While there are so many gems in these minutes
- it is clear the independent directors only asked enough questions to
cover their rear. Obviously no meaningful questions were asked, at
least not with any seriousness. This is reflected in their immediate
satisfaction with any answer given, howesoever irrelevant and absurd.
Lesson learned for new Board: Get
rid of the top management, as least those named in the minutes. Send
them on a paid leave without bonus, if natural justice needs to be met,
but don't let them into any office premises.