Eight-year ban on Satyam can be reviewed: WB

New Delhi Feb 15: Giving some hope to crisis-ridden Satyam the World Bank (WB) has said it could review the eight-year ban imposed on the company provided the software exporter takes corrective action.
A WB official said Satyam has to show it has again become a responsible vendor to do business with when asked whether the multilateral lending agency would relax the ban on the software exporter.
“The vendor would have to demonstrate that corrective action had been taken to address the original causes of the ineligibility,” a WB official from Washington told PTI.
The official further said action should substantiate that Satyam is again a responsible vendor with whom the bank can do business.
The bank banned Satyam Computer Services for eight years in 2008 for providing improper benefits to bank staff and for failing to maintain records relating to fees charged for sub-contractors.
Satyam has a strong case for a review of the ban since its old board and management have been changed after its disgraced founderchairman B Ramalinga Raju admitted to fudging accounts to the tune of Rs 7,800 crore.
The bank’s guidelines for vendors have provisions for relaxing or scrapping bans on entities on fulfilling certain conditions including bona fide change in ownership or management.
Following the disclosure of the fraud by Raju the government superseded the erstwhile board of Satyam replacing it with one having its nominees.
The present board headed by former Nasscom president Kiran Karnik has taken steps to revive the company including appointing a new chief executive officer.
The bank had banned Satyam in September 2008 from doing any business with it but the debarment was made public in December.
Apart from Satyam, two other Indian firms, Wipro and Megasoft were also debarred by the WB though for different reasons. PTI

Satyam in talks with LIC for funding


Scam-hit it major Satyam computer has initiated preliminary discussion with Life Insurance Corporation of india (LIC) on funding, a senior LIC official said.
“We have held informal talks but have not so far received any concrete proposal from Satyam,” the official told PTI here on condition of anonymity.
The life insurer was open to any viable proposal the official said. Satyam recently received loans of Rs 600 crore from IDBI Bank and Bank of Baroda which has rendered it financially comfortable in the short term.
Satyam is understood to have pledged some part of its land bank with the two financial institutions and is open to the idea of doing so in the future as well to raise loans.
The Hyderabad-based company has approached two more public sector banks and LIC for more funding to meet its short-term requirements such as salaries and vendor and rental payments.
It is understood that satyam still requires a similar amount in the near term.
Asked whether LIC is planning to up its holding in Satyam, the source said the company would watch the situation in satyam before taking any decision. LIC now holds a 4.24 per cent stake in Satyam.
“Satyam has an eminent board including LIC’s executive director S B Mainak that has brought back the confidence. They have good receivables and a strong client base. It appears that things are going well in Satyam,” the official said.
Asked whether LIC planned to up its stake in L&T which has reportedly evinced interest in acquiring Satyam the official declined to comment.
“We make investments which are found to be viable by our equity market team,” the official said.
LIC has around 18 per cent stake in the engineering giant. L&T has tripled its stake in satyam from four per cent to over 12 per cent in January and has now emerged as a frontrunner to acquire the beleaguered IT major. PTI