A U.S. court has dismissed civil claims filed against former independent directors of erstwhile Satyam Computer, saying they themselves were victims of over $ 1-billion accounting fraud at Indian IT firm.
Hearing the petition, the US District Court Judge Barbara Jones of New York said there were insufficient allegations against the former independent directors and members of Satyam Computer’s audit committee.
The court ruled that most allegations in the petition concerned “an intricate and well concealed fraud perpetrated by a very small group of insiders” and reinforce an inference that some former board members were themselves victims of the fraud.
India’s biggest ever accounting fraud came to the light in January 2009 when Satyam Computer’s founder and then Chairman B. Ramalinga Raju admitted to having overstated the company’s financials by more than $ 1 billion and other wrongdoings at the firm.
Since then, Satyam Computer has become Mahindra Satyam, as it was later acquired by Mahindra group in a government-monitored auction. In the meantime, the company has settled various lawsuits after agreeing to pay millions of dollars to the shareholders and others in various cases in the U.S., where Satyam shares used to be listed.
The company’s independent directors were also dragged into various lawsuits for allegedly failing to detect the fraud and, therefore, failing to safeguard the interest of shareholders.
The U.S. court has also dismissed claims filed by a former employee of the company on behalf of the staff having exercised stock options, as also the claims about jurisdictional territory against two companies promoted by Raju family.
It was a proposed acquisition of two companies -- Maytas Infrastructure Ltd and Maytas Properties -- by Satyam Computer that finally led to disclosures about massive accounting wrongdoings at the IT firm.