The chairman of Satyam Computer Services was arrested on Friday on charges of cheating and forgery, and the government dissolved the outsourcer's board as authorities moved to limit fallout from India's biggest corporate scandal. Chairman Ramalinga Raju, who resigned on Wednesday after revealing years of accounting fraud, was expected to appear before the market regulator on Saturday. The events have called into question the future of the outsourcing company. In a late night development, Raju and his brother B. Rama Raju, Satyam co-founder and managing director, were arrested on charges of criminal breach of trust, criminal conspiracy, cheating, falsification of record and forgery, Reuters was told by S.S.P. Yadav, police chief of the southern Andhra Pradesh state, whose capital Hyderabad is home to Satyam. Earlier in the day, Corporate Affairs Minister Prem Chand Gupta said the government would appoint 10 new members to the Satyam board, which would meet within seven days. There was no move to take over Satyam's management at this time, he said. “The government is considering appointment of suitable persons as directors of Satyam,” Gupta told a news conference in New Delhi. “We are determined to reach the truth but are equally concerned with the fate of employees and other stakeholders.” A Satyam spokeswoman said the company welcomed the government's decision, which would restore the confidence of all employees, customers and shareholders. However, she said Satyam had no comment on the arrests. In a bid to ease the worries of rattled investors, the Securities and Exchange Board of India said auditors' certification of corporate results from the December quarter would be peer reviewed. The government barred Satyam's board from holding its scheduled meeting on Saturday, which was called to consider options such as inviting a takeover or strategic investor and appointing an investment banker. Analysts said Satyam's very existence was threatened by the scandal, which stand-in Chief Executive Ram Mynampati said has pushed the company into a crisis of unimaginable proportions. Satyam shares slumped to 11.50 rupees (24 US cents), their lowest since March 1998 and a far cry from a 2008 high of 544 rupees, before ending down 40 percent at 23.85 rupees ahead of the board's dissolution. The company's market value has shriveled to $330 million, from more than $7 billion six months ago. Ramalinga Raju was regarded as a true son of Andhra Pradesh state, and called the “Narayana Murthy of Hyderabad”, in a reference to the well-regarded founder of larger rival Infosys Technologies. Now, the “pride of Andhra Pradesh has been hurt”, local newspapers rued, its reputation damaged by “India's Enron”. “Hyderabadis are taking it very personally,” said R. Prasad, a software engineer at a multinational firm in the city. “Everyone was very proud of Satyam and of Raju.” Many staff at Satyam tried to put up a brave front on Friday, hoping things would return to normal soon and their jobs secured even as the outsourcer fights for its survival. Huge banners with messages from some of Satyam's 53,000 staff and their hand imprints have been put up at the fraud-hit firm's sprawling complex in the southern city of Hyderabad. Stand-in CEO Ram Mynampati has admitted the company, which is also listed in New York, faces a crisis of unimaginable proportion following chairman and founder Ramalinga Raju's admission of years of accounting fraud. “There is still enough truth for us to be united,” one employee wrote on a banner that has “spirit of Satyam” written in bold at the top. “Good times will be back again,” read another message. “United we stand, divided we fall,” said another one.
