Regulators Begin Probe of Indian Tech Giant

NEW DELHI, Jan. 8 -- A day after one of India's largest technology outsourcing firms confessed to financial fraud, the new chief of beleaguered Satyam Computers said the company faces a serious cash crunch but denied any prior knowledge of the fraud that went on for years.

In a 90-minute press conference, Ram Mynampati, the interim chief executive officer, said the company was verifying the startling revelations about financial bungling and inflation of profits made by the chairman on Wednesday. A team of officials from India's market regulator, the Securities and Exchange Board of India, also began a probe at the company headquarters in the southern city of Hyderabad.

The technology giant -- India's fourth-largest IT outsourcing firm -- is registered on the New York Stock Exchange and has centers around the world in 66 countries, including the United States, Britain, China and Malaysia. It offers engineering services, software development and back-office operations for at least one-third of Fortune 500 companies such as General Motors, General Electric, Nokia and Nestle.

"We had no prior intimation about any of this," Mynampati said at a nationally televised press conference. He said that the first time he and many of his senior colleagues found out about the doctoring of balance sheets was when the company's chairman wrote a letter on Wednesday. "What we are trying to do is respond to a crisis of unimaginable proportion. We are going through a process of ascertaining the legitimacy and accuracy of yesterday's statement."

He said December salaries for the company's 53,000 employees had been paid but that he did not know about the current month's cash availability.

"Today, I don't know, but I will know shortly," he said when asked about the company's ability to pay the January expenses. "We have taken care of the salaries for the month of December. We have some outstanding payments due to vendors. We have to pay sub-contractors, suppliers and associates. We are assessing. It is not very encouraging as far as cash on hand is concerned. We need some assistance as far as liquidity is concerned."

Mynampati said his team's immediate priorities were to regain investor confidence and ensure the sustenance of business operations by assuaging the fears of clients.

On Wednesday, Satyam's founder and chairman, B. Ramalinga Raju, wrote a letter of resignation, admitting to having fudged accounts for years and inflating profits by more than $1.5 billion, arguably the largest accounting fraud in Indian corporate history.

But there was no information about the whereabouts of Raju as Indian television channels speculated all day whether he may have left India.

"We have no knowledge of where Mr. Raju is," Mynampati said. "I am assuming he is in Hyderabad," where Satyam is headquartered and where Raju has a home.

The city's police chief said they could act only after a shareholder or regulator lodges a complaint against Raju.

"Nobody has lodged a complaint with us yet, no criminal case" said B. Prasada Rao, the police commissioner of Hyderabad. "Without a case, we cannot go looking for Ramalinga Raju."