ANZ Bank reviews Satyam links

ANOTHER major local bank is studying the impact of its exposure to Satyam Computer Services' $1 billion corporate scandal.

ANZ Bank has around 100 Satyam contractors who support IT projects. They're mainly based at the bank's Indian subsidiary which employs under 2000 people. 

Last week, the bank told employees that it would develop a contingency plan although its relationship with Satyam was "modest". 

"The relationship involves a number of Satyam staff who support development and testing on information technology projects. This means there is no effect at all on ANZ's day to day IT operations," David Cartwright, ANZ operations, technology and shared services group managing director, said. 

"(As) for the technology development projects that Satyam contract staff are supporting, we are currently assessing key person dependences and developing a plan for how we manage through the situation," Mr Cartwright said. 

"While there is some work to do on this, it's clear that we will be able to take the issues at Satyam in our stride and largely get on with business as usual given the depth of our own IT resources and our relationships with a range of IT vendors globally." 

Unlike other blue-chip companies such as National Australia Bank, Telstra and Qantas, ANZ doesn't have any long-term contracts with Satyam. 

Most local customers are assessing their contractual obligations with Satyam. 

A multi-million-dollar software facility being built on Deakin University's campus in Geelong is also under a cloud as the future of Satyam remains uncertain. 

Satyam's world came to a crushing halt when the company's founder and chairman B. Ramalinga Raju admitted to overinflating the value of cash and bank balances by 50.4 billion rupees ($1.44 billion). 

In scenes out of a Bollywood movie last Friday, Mr Raju, Satyam's former chairman, was arrested with B. Rama Raju, his brother and co-founder, on charges of criminal breach of trust, criminal conspiracy, cheating, falsification of records and forgery. 

Satyam chief financial officer Srinivas Vadlamani was arrested on Saturday. 

The high-profile case has forced the Indian Government to appoint three members to the board of Satyam after it dismissed the incumbent board. 

PricewaterhouseCoppers, which has been auditing Satyam's books for nearly a decade, said it adhered to “applicable auditing standards and (was) supported by appropriate audit evidence”. 

The Australian | Fran Foo | January 12, 2009