Satyam Computer Services Ltd. (fka SAYCY)

[scion]

US court declares Raju a pauper

Bloomberg
Published on Thu, Jan 28, 2010 at 10:13 IST
http://www.bloombergutv.com/industry-news/it-industry-news/43596/us-court-declares-satyam-s-raju-a-pauper.html

NEW YORK: Ramalinga Raju, who resigned as chairman of Satyam Computer Services Ltd. after saying he overstated the company’s assets by $1 billion, was granted pauper status in US litigation brought by investors.

US District Judge Barbara Jones in New York approved the status for Raju; his brother Rama Raju, Satyam’s former chief executive officer; and Srinivas Vadlamani, the company’s ex- finance chief. Proceeding “in forma pauperis” means the three men won’t have to pay filing fees and other court costs tied to the litigation because of their financial condition.

“The court finds that defendants have adequately demonstrated that they are unable to pay,” Jones wrote in a Jan. 26 order.

The three men have also been charged criminally and have been in custody in India since last January. Shares and American depositary receipts of the software-services provider based in Hyderabad, India, have plunged since Jan. 7, 2009, when Raju wrote a letter to the board explaining the financial irregularities. His letter touched off India’s biggest corporate-fraud inquiry.

In November, India’s Central Bureau of Investigation said it found $607 million of additional fraud at the company. Investors in the US suits, who say Raju’s confession wiped out $4 billion in market capitalization, filed at least a dozen class-action lawsuits that have been consolidated before Jones.

Ramalinga Raju, 55, Rama Raju, 50, and Vadlamani, 49, also asked Jones to appoint lawyers for them that they wouldn’t have to pay.

Lawyer Request Denied

She denied that request “at the present time,” finding that, because of their incarceration in India, “it would be unusually difficult for appointed counsel to meet with and otherwise competently represent defendants under the circumstances.”

The judge said they could renew the request later.

Keith Fleischman, a lawyer for the investors at Grant & Eisenhofer PA in New York, declined to comment on Jones’s rulings.

After Raju’s disclosures, India’s government fired the Satyam board and appointed new directors. Tech Mahindra Ltd., the Pune, India-based software company, gained control of Satyam in May.

American depositary receipts are issued by US banks to allow investment in non-US companies. Satyam raised $161.9 million from the May 2001 sale of its ADRs.

Satyam ADRs, each representing two ordinary shares, fell 17 cents, or 3.4%, to $4.85 yesterday in New York Stock Exchange composite trading. The ADRs have risen 5.2% this year.

The case is In re Satyam Computer Services Ltd. Securities Litigation, 09-md-02027, US District Court, Southern District of New York (Manhattan).

http://www.bloombergutv.com/industry-news/it-industry-news/43596/us-court-declares-satyam-s-raju-a-pauper.html