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Satyam Spat Spotlights Indian Governance Flaws

Global Glimpses | December 29, 2008

The quality of corporate governance at Indian public companies is under the spotlight after nearly half the board of Satyam, one of India’s largest IT groups, resigned. The directors quit after Satyam scrapped a controversial move to buy two struggling construction businesses controlled by its founder and chairman.

Satyam first angered investors in mid-December when it launched a $1.6 billion offer to buy Maytas Properties and Maytas Infra (Maytas is Satyam spelled backwards). Analysts said the bids massively overvalued the target companies, which were largely owned by B. Ramalinga Raju, Satyam’s founder and chairman, and run by his sons. One Indian broker estimated that Satyam had valued Maytas Properties at $1.3 billion, nearly six times its net worth. The deal would have netted Raju and his...

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