Satyam's buyback plan is a ploy to take away funds: Upaid

20 Dec 2008
MUMBAI
Ramalinga Raju’s problems just don’t seem to end. After the unprecedented furore over Satyam Computers’ aborted plan to buy into Maytas Infrastructure and Maytas Properties — controlled by the Raju family — for a whopping $1.6 billion, the UK-based Upaid Systems has alleged that Satyam’s buyback proposal is yet another ploy to divert resources out of the company. Upaid, a UK-based mobile services payment company with 40 employees and 1,000 patents, has already filed a motion in the Texas district court, seeking depositions of top Satyam officials in connection with the Maytas deal. Upaid and Satyam are locked in a two-pronged legal battle. One, a forgery case filed by Upaid against the Satyam management seeking damages of over $1 billion; second, a disparagement case levelled by Satyam against the little-known British company for allegedly besmirching its reputation. “The manoeuvrings by the Satyam management this week has been outrageous. I would say that any action by the Satyam management which takes cash out of the company is a cause of concern for us,” Simon Joyce, CEO and founder, Upaid, told ET. “As per Satyam policy, we will not comment since the matter is sub-judice,” said a Satyam spokesperson. The fresh set of allegations clearly weighed on investor sentiments as the stock fell 4%, giving up half the gains that it made after the share buyback proposal was announced on Thursday. Analysts feel that Upaid’s motion is clearly aimed at weakening Satyam’s case as disgorgement, now that their conduct — especially relating to the related-party transaction in the Maytas deal where bulk of Satyam’s reserves would have been transferred to promoters — has come under severe criticism from investors and industry leaders alike.
Some are also questioning why Satyam has not provided for any contingent liability, although the charges in the fraud case — in case it goes against them — could add up to a huge liability for the country’s fourth-largest IT company. The next hearing for the case is scheduled in June 2009. “I am astonished that no such provision has been made in this regard,” Mr Joyce said. Some legal experts, however, say that it’s up to the Satyam auditors — PricewaterhouseCoopers in this case — to take a call on the need for a provision for contingent liability on the forgery case, depending on when the liability could arise. The forgery case, it may be mentioned here, dates back to early 2000, when Satyam was working on a contract job for Upaid. Upaid says that it ran into problems with Qualcomm and Verizon and had to settle the case with them under grossly unfavourable terms, what it describes as forgery by Satyam officials. “We lost out on a huge opportunity, which is in excess of a billion dollars,” Mr Joyce claims. However, what’s interesting is that Satyam Computers was a shareholder in Upaid, holding around 25% some eight years ago. Although the parting was “cordial”, the two erstwhile partners are surely in for some ‘not so cordial’ times ahead.

DDA not to deduct Rs 5,000 from deposit

Sat, Dec 20 12:20 AM
The Delhi Development Authority (DDA) on Friday clarified no money would be deducted from the Rs 1.50 lakh deposited by applicants as registration money for its 2008 housing scheme."There is no provision of deduction by DDA and all efforts are being made to refund the amount by 30th December 2008," the DDA said in a release.
The release was issued on the directions of the National Consumer Disputes Redressal Commission before which an NGO had filed a complaint based on a news report that said DDA was to deduct Rs 5,000 each from the registration money.

NGO challenges DDA decision to deduct Rs 5,000 from applicants

Barely two days after the Delhi Development Authority (DDA) announced the results of latest housing scheme offering 5238 flats, an NGO on Thursday challenged its reported decision to deduct Rs 5,000 from the amount to be refunded to unsuccessful applicants. Society of Catalysts moved the National Consumer Disputes Redressal Commission, drawing its attention to a report published in an English daily, which said the DDA would refund the money of unsuccessful applicants only after deducting Rs 5,000.
The Society said, "The proposed deduction of Rs 5,000 is against original condition on which the application was invited." The total amount withheld from the 5.50 lakh applicants would be more than half of the total value of all the flats allotted, it said.
The Commission has already issued notice to the DDA on an earlier complaint filed by the same NGO, accusing it of practising "restrictive" and "unfair" trade practices by imposing certain "pre-conditions" on the applicants. The complainant NGO, headed by former Delhi Chief Secretary Omesh Saigal, had alleged that forcing the applicants to pay for the right to participate in the draw for allotment of flats amounted to "restrictive trade practices".
More than 8.64 lakh forms were sold for Rs 100 each and an additional four lakh downloaded from DDA website. A total of 5.12 lakh people submitted the forms along with a bank draft of Rs 1.5 lakh each and finally 5,238 lucky people were chosen for allotment of flats by a draw of lots on December 16.
In its complaint filed in November 2008, the NGO had alleged the applicants had to bear a cost of about Rs 333 crore as interest paid to banks. Terming it as "restrictive and unfair trade practice", Saigal had said that against the flats worth Rs 500 crore DDA has collected a whopping Rs 7,800 crore and was earning interest on applicants' money.
The NGO's plea for an order to the DDA to refund an amount of Rs 6,600 each to the applicants, which they paid for form (Rs 100) and as interest to bank on the Rs 1.5 lakh demand draft (Rs 6,500) and impose punitive damages on the DDA is already pending before the Commission.