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By | John Oates 26th January 2009 13:18

Satyam shortlists bosses and banks

Watches customers leave

Satyam's board of directors is expected to announce a new CEO and CFO this week, and is also close to finding short-term funding.

Last week they said the list had been narrowed down to three names. The group also expects to have funding in place by Wednesday. The board meets tomorow for final discussions but said the firm's properties are "free of any encumbrance" and that collections from customers remained strong, and there had been no impact on customer attrition.

Kiran Karnik, Satyam board member, said: "There is a pronounced shift in customer attitudes - from being alarmed in the initial days, it has changed to a sense of cautious optimism. The planned actions will have a distinct impact on the customer confidence."

Despite these claims, several firms are reportedly cutting ties with Satyam - General Electric said last week it would continue to work with the firm for the time being. Caterpillar is also rumoured to be looking at the future of its relationship with the Indian outsourcer.

The board has been contacting large customers directly in an effort to renew confidence.

They are also trying to reassure staff - "associates".

The board said: “Associates continue to show great resilience and exceptional commitment towards the company during these challenging times, in spite of the sustained media onslaught.”

In related Satyam news, two PwC staff have been detained for further questioning following searches of PwC offices last week. The auditors told the FT: "We greatly regret that two PriceWaterhouse partners have been detained today for further questioning. We do not know the basis for them being detained."

The other way out of the mire for Satyam would be if it was bought. Shares have collapsed since company founder Ramalinga Raju made his extraordinary confession.

The latest possible bidder to emerge is Indian construction giant Larsen and Toubro Ltd which has increased its stake from four per cent to 12 per cent. But the Indian government said on Friday it had not been contacted - L&T would need approval to increase its stake above 15 per cent. Rival outsourcer iGate Corporation has also expressed an interest.

Of course no bid can go ahead until Satyam sorts its books out - right now it doesn't even know how many people it really employs, never mind how much cash it has, or hasn't, got in the bank.

Ramalinga Raju is accused of adding some 13,000 staff to the books so he could justify the firm's huge sales growth and pocket their wages. ®

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Cartoon of employee asking wky boss makes hium wear suspenders (while pincer through open trapdoor remains poised above his head) illustration by Cartoon resource for Shutterstock

Frank Jennings

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