Three more directors resign from Satyam board

Company announces resignations of Palepu and Dham, Rammohan Rao also quit

Vinod K Dham, director, and G Krishan Palepu, non-executive director, today resigned from Satyam Computer Services board of directors. In a major blow to Satyam, Mendu Rammohan Rao who chaired the December 16 board meeting in which Satyam decided to acquire stakes in Maytas Infra and Maytas Properties, also quit today evening. Mendu Rammohan Rao is the dean of the Indian School of Business.

A company spokesperson said that it had sent a notification to the stock exchanges on Monday that the three directors sent in their resignations and they ceased to be directors from December 28. Another director Mangalam Srinivasan had resigned last week.

The resignations are being attributed to the aborted deal to acquire Maytas Infra and Maytas Properties, run by the two sons of Satyam Founder and Chairman B Ramalinga Raju, for $1.6 billion. After the December 16 board meeting, Satyam announced that it will totally acquire a 100 per cent stake in aytas Properties and a 51 per cent stake in Maytas Infra.. The Hyderabad Metro Rail Project was awarded to a Maytas-led consortium on August 11 by the Andhra Pradesh government.

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After facing unprecedented ire of shareholders and financial analysts cried foul, Satyam rolled back the deal. “Questions about corporate governance had put the directors and non-executive directors in an embarrassing situation. They were unable to explain why Satyam went ahead on deciding on such a deal,” a source in the company said.

Vinod Dham, also known as the father of Pentium chip, joined Satyam board in January 2003.

He is currently the managing partner of IndoUS Capital, a venture capital firm in the US that invests in India. Palepu also joined the in January 2003, and is at present a professor of business administration at the Harvard Business School.

With their resignations, the nine-member board has been reduced to five with only two independent directors remaining — Prof V S Raju and T R Prasad. Prof S Raju is the former director of the Indian Institute of Technology, Delhi, and was a professor and dean at the Indian Institute of Technology, Madras. Currently, he is the chairman of the Naval Research Board of Defense Research and Development Organisation.

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A company spokesperson said that Satyam’s B Ramalinga Raju thanked the directors who resigned “for their valuable contributions while serving our board.” Sources said that the company’s board meeting slated to be held on January 10 will take up the issue of reconstitution of the board.