Satyam shadow still haunts Tech Mahindra

Even after completing the merger of Satyam Computer Services in June 2013, Tech Mahindra has not able to erase the taint of B Ramalinga Raju as it battles some legal cases linked to the scam. 

While Tech Mahindra has settled all Satyam liabilities, including Upaid, the US Securities and Exchange Commission, the US class-action suits, and Aberdeen-affiliated former investors and Aberdeen Global, it is still facing a legal battle with the Enforcement Directorate (ED) in the Hyderabad High Court.

“The company received summons dated February 26, 2014, from “Honorable XXI Additional Chief Metropolitan Magistrate Hyderabad cum Special Sessions Court” in connection with Enforcement Directorate filing a complaint under the Prevention of Money Laundering Act, 2002, against the company along with 212 accused persons,” Tech Mahindra stated while announcing its standalone audited financial results for the quarter and half-year ended September 30, 2014. 

In the compliant, Tech Mahindra said, the ED had alleged the company was involved in money laundering by possessing the proceeds of crime (Rs 822 crore in fixed deposits allegedly distorted by Raju) and projecting them as untainted. 

“The company strongly believes that the said prosecution against the company is legally untenable. The company has challenged the above complaint before the Honorable High Court of Hyderabad and also sought for interim stay of all the proceedings before the above court, which is pending,” the company further said. 

Emails sent to the top management of Tech Mahindra, including its chairman Anand Mahindra, executive vice-chairman Vineet Nayyar and chief executive officer CP Gurnani, elicited no reply till the time of going to print. 

The ED’s move is an unpleasant surprise to Anand Mahindra, who said  in an interview to PTI in August 2014: “As you know, one by one we settled all of it (legal and regulatory issues) and I am happy to say, we settled them within our targeted budget. What we did not anticipate was that the Indian government and tax authorities here will be fighting to get claims on money that we have put in. The money that Satyam had after we took over was our money.”

The ED, in October 2012, froze Rs 822 crore worth of fixed deposits of the erstwhile Satyam Computer Services held in ING Vysya Bank, Bank of Baroda, Andhra Bank, and IDBI, stating the  deposits constituted proceeds of crime derived out of scheduled offences under the Prevention of Money Laundering Act (PMLA), 2002, committed by B Ramalinga Raju and others.

“We never expected this (legal battle) to be drawn out for so long. We are the rescuers, we are trying to tell people we are the white knights, we are not people who did the stealing,” Mahindra contended. 

“If the government sees it the way we see it, then hopefully there will be a solution. We are quite confident the government does not have a legal case (against us) and we will contest it (if there is any),” Nayyar told mediapersons in Hyderabad in September 2014.