Hyderabad, Feb 17 (PTI) Mahindra Satyam today said it hasagreed to pay USD 125 million to settle class action suits inthe US, and will sue its disgraced founder B Ramalinga Rajuand former auditor PwC for committing a financial fraud duringthe company''s earlier avatar as Satyam Computer Services.
Mahindra Satyam Chairman Vineet Nayyer said it will paylead plaintiffs 25 per cent of any net recovery that it mayobtain from PricewaterhouseCoopers (PwC)-related entities,which helped Raju, who confessed to fudging Satyam Computeraccounts to the tune of Rs 7,200 crore.After Raju''s confession, the company''s stock nosedivedon the New York Stock Exchange, allegedly causing millions ofdollars in losses to US investors.
Since then, Satyam has been taken over by Mahindras.
Nayyer said, however, the company has not yet decided onthe timeline and damage amounts for suing PwC. He did not rulethe possibility of out-of-court settlement with PwC.
Similarly, he said the company also plans to sue Raju andassociates for the damages they caused to the company but didnot elaborate on the timing and the damages to be sought.
Nayyer said the USD 125 million will be delivered to theplaintiffs once the US Court gives final approval to thesettlement deal, which may take around four months.
"The USD 125 million will come from cash reserves whichare at Rs 2,900 crore at the last count. So we don''t see anyproblem in getting money. The amount will be put in an escrowaccount in a few days'' time," Nayyer said.
"We will have to get the Reserve Bank approval. Once theapproval from the judge comes, then this money will betransferred to plaintiffs and distributed," he added.
As per a filing to the Bombay Stock Exchange, thesettlement is exclusively for and on behalf of the company anddoes not affect the other defendants to the class actionlitigation.
According to Nayyer, the company was in negotiations withthe plaintiffs for some time and the settlement may end allpotential cases in the USA.
He said the settlement amount includes lawyer''s fees andtaxes that may arise out of the payment.
According to a senior official of Mahindra Satyam, therewere four lead plaintiffs in USA and one of them acted as themain party for the negotiations."All the complainants will have to agree to thesettlement terms and no case will be entertained hereafter,"an official said.
The Indian software outsourcer is yet to settle a fewinvestor suits such as Aberdeen Action in the US market.
Nayyer said the damages sought by it is small and hencecan be settled out of court.
Satyam share closed at Rs 63.60 on BSE, up 1.52 per centover the previous close.