Satyam fraud puts IBM off

IBM has ruled out taking over Indian IT supplier Satyam, the company at the centre of a $1bn accounting fraud.The...

IBM has ruled out taking over Indian IT supplier Satyam, the company at the centre of a $1bn accounting fraud.The bidding process for Satyamstarted this week, with a deadline for applications of interest set for today (12.03.09).

According to Indian website The Economic Times, quoting sources close to IBM,IBMshowedinterest in Satyam before the fraud but has now decided not to proceed.

An acquisition by an Indian firm is believed most likely.

Robert Morgan, consultant at Hamilton Bailey, told Computer Weekly that Western firms will be put off by the fraud and its possible repercussions.

"I cannot see an IBM or any other global supplier taking it seriously. I think they would like to buy Satyam, but the possibility of action from shareholders will stop any Western company buying it."

"The Indian companies will take it on trust because they are owned by families, rather than shareholders,"Robert Morgansaid.

HP and CSC are believed to be among the potential buyers.

Interested parties from India are said to include telecoms giant Tech Mahindra as well as engineering and construction company Larsen & Toubro.

Mark Lewis, partner and head of outsourcing at law firm Berwin Leighton Paisner, said whichever company acquires Satyam, whether Indian or not, will face the same legal threats.

Satyam's former chairman, B. Ramalinga Raju, admitted he had falsely reported the company's results in January. This left the company short of cash and its customers short of confidence.

The company will require more detailed expressions of interest and proof from bidders of available funds to the value of $290m by 20 March.

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