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By | John Oates 19th January 2009 11:13

Satyam investigators start to chase missing money

Gov investigation looks at subsidiaries

The Indian government suspects Satyam's disgraced former chairman Ramalinga Raju may have diverted money into a maze of subsidiary firms.

Minister of State for Company Affairs Prem Chand Gupta told the FT that there had clearly been serious irregularities in the firm's figures: "On the face of it the Registrar of Companies feels that various figures or representations made on the balance sheet are not true and there seems to be inflated figures."

Local press reported that Gupta had told journalists that funds may have been "diverted" and said the government was investigating eight Satyam subsidiaries.

However, he added that at this stage there was no need for the Central Bureau of Investigation to get involved. The CBI typically investigates bribery and corruption claims involving politicians. Satyam already faces investigations by the police and share regulators.

Ramalinga Raju admitted falsifying Satyam's accounts over a period of years. But he claimed at the time that the fakery was to fend off takeover bids, which would have exposed the original inflation of profits and revenues. He said neither he nor any other director profited personally.

Satyam already faces investigations by the police and share regulators.

The minister said it was important to separate two issues - Satyam's day-to-day operations which should continue as normal, and the investigation and likely regulatory changes that stem from it, The Times of India reports.

Satyam's interim board of directors said Friday it would continue to meet weekly until a new CEO and CFO are found. It said conversations with key customers had been encouraging and that they had been supportive.

The board said it was in talks with banks and other institutions to sort out its liquidity, and that "all efforts are being made to ensure that the associates (employees) are paid their salaries on time". Payments to vendors were also discussed. Some reports viewed this as evidence that Satyam was discussing a possible sale of the business.

The directors appointed M/s Brahmayya & Co, Chartered Accountants, Chenna for internal auditing at the firm and Amarchand & Mangaldas & Suresh A. Shroff & Co to provide legal advice to the board.

A spokesman for the firm told AFP that the company hoped to have its accounts ready and clear of anomalies in three weeks. ®

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