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By | John Oates 8th January 2009 15:52

The incredible vanishing Satyam boss

Profits evaporate, chairman disappears

Satyam's founder and chairman B Ramalinga Raju has disappeared, a day after he admitted to years of false accounting at the outsourcing giant.

Raju's lawyer insisted his client remained in Hyderabad despite conflicting reports that he had fled to Dubai or Texas. He has not been seen in public since yesterday's extraordinary letter was made public and the Indian media have failed to find him. Several groups are calling for his immediate arrest.

In his letter yesterday chairman Raju admitted to years of false accounting and boosting profits by a factor of ten.

Ten senior Satyam executives gave a press conference earlier this afternoon, where they promised to stick with the company and work to get it out of its current mess.

The group said: “Satyam is facing a major crisis in which the unity and clear strategic direction of its top leadership are of paramount importance. This collective commitment will serve to significantly assuage concerns of various stakeholders in a highly fluid and challenging situation.”

Senior managers said they were urgently seeking investment because of liquidity problems - salaries for December have been paid but some vendors are still owed money. Senior staff are still in the process of verifying the claims made in Raju's letter.

Asked how he will restore shareholder confidence, acting CEO Ram Mynampeti told Business Standard: "I appeal to you to understand that the issue we are dealing with is huge. I have not dealt with anything like this in life. We will bring transparency for all stakeholders. But I reiterate I do not know what has happened."

Asked if the firm had enough money to survive until the end of January he said: "Today I do not know."

Shareholders have already started two class action suits in the US against Raju.

Questions are also being asked of auditor PwC which apparently failed to spot the $1bn hole in Satyam's accounts. The firm insisted it had carried out all work correctly and received sufficient supporting evidence.

The firm's CFO Srinivas Vladamani has also left the firm, it emerged today.

Indian regulators have promised to tighten up laws if necessary to restore confidence in India Inc - share prices fell some seven per cent yesterday as the scandal broke.

Satyam is the provider of India's single emergency number and pan-Indian ambulance service. It is also the main IT provider for the 2010 and 2014 Fifa World Cups.

The company has about 53,000 staff and counts some of the world's largest firms amongst its clients. It is in the process of contacting customers to try and reassure them.

Mynmapati said: “We share the pain and grief being felt by all associates [staff] and their families and will do our utmost to ensure that salaries can be paid. We are extremely touched by the outpouring of support from associates.” ®

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