Though divided Satyam board approved Maytas deal in December

17 January 2009

The minutes of the meeting from the December 2008 board meeting at Satyam Computer Services Ltd has shown that though the directors of the company eventually approved two deals, in their own way they did not stall the fraud that has since led to the crisis in the company.

Reports in the media, including one by The Wall Street Journal, cited a copy of the minutes of the meeting as being evidence of the fact that at least three directors questioned the proposed $1.6-billion acquisitions, though eventually both deals were approved by the board subsequent to elaborate and extensive presentations on the merits by senior Satyam management.

What emerges from the minutes of the meeting is that the so-called "unanimous" approval of the board for the Maytas deal was not actually unanimous, either in letter or in spirit.

Reports said that a number of the five independent directors actually raised concerns over four key issues, including valuation, actual benefits to shareholders, the company moving away from its core business of IT, ad assurances about the company's board being used as a "rubber stamp".

The minutes of the meeting, which was held on 16 December and was chaired by M Rammohan Rao, also says that "without prejudice to the unanimous approval by the board members of the above resolution (acquisition of Maytas Properties), board members further reiterated that compliance shall be ensured for the comments made by all the directors as deliberated and discussed during this meeting..."

This statement from the minutes actually reveals that the board was uneasy even after passing the resolution, which made the directors ask the company to ensure compliance to their comments and ask for justifications if the actual value of the acquisition target was found to be lower than what they were informed.