Satyam executives try to soothe investors

The suits filed by Vianale & Vianale LLP and Izard Noble LLP allege Satyam and its top executives issued false and misleading financial statements and violated federal securities laws, the statements on their Web sites said.

A leading business grouping, the Confederation of Indian Industry, has demanded that the loopholes in regulation, accounting, audit and governance that allowed such lapses be addressed with urgency.

Amar Ambani, a vice president of brokerage firm India Infoline Financial Ltd., said the manipulation of accounts at Satyam had the potential to severely dampen foreign institutional and direct investment into India.

"This raises serious doubts about the involvement of auditors and independent directors in the working of a company," Ambani said.

With the scandal raising questions about the quality of corporate governance in India, there were plenty of comparisons to the collapse of U.S. energy giant Enron Corp.

Satyam, which means "truth" in India's ancient Sanskrit language, had "inflated profits over a period of (the) last several years," Raju said in his letter, which was released to the Bombay Stock Exchange.

But one analyst said while panic would be an immediate fallout of the Satyam scandal it would not have a lasting impact on either India's outsourcing industry or the country's investment potential.

"In the U.S. you had the Enron case and that didn't shake the investor confidence in the U.S.," said Surjit Bhalla, managing director of Oxus Research and Investments in New Delhi. "The global slowdown is 10 times more important in terms of what will happen to the outsourcing industry than Satyam."

Satyam sought to downplay Indian media reports saying many employees were worried about their jobs and getting their resumes ready.

"There is no concerted move by employees to quit and find new jobs as of now," said Uttapa, the company's spokeswoman. "All Satyam offices are open and working as normal."

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