QANTAS, Telstra and National Australia Bank have been rocked by a major accounting scandal that hit their IT services supplier, Satyam Computer Services, and all have vowed to take action.
A multi-million-dollar facility being built on Deakin University's campus in Geelong is also under a cloud as the future of Satyam remains uncertain.
Australia's largest companies have been caught in the dragnet of corporate fraud at Satyam, where its founder and chairman B. Ramalinga Raju has admitted to overinflating the value of cash and bank balances by 50.4 billion rupees ($1.44 billion).
Satyam Australia is a $200 million company and provides a range of IT-related work to some of the largest corporations in the country.
Its major customers said they were reviewing the situation and some, their contracts, with Satyam locally.
Telstra is in the midst of trimming its IT suppliers from four to two. They include EDS, IBM, Infosys and Satyam.
"We expect to finalise our new arrangements early this year and, obviously, will take the current issues into account," Telstra spokesman Martin Barr said.
NAB spokeswoman Kerrina Lawrence said the bank was closely reviewing the matter, but was quick to add that Satyam has been meeting all its contractual obligations so far.
"We have a contingency plan in place," she said.
Hundreds of NAB technology functions have been sent to India as part of the bank's offshoring campaign -- the main beneficiary being Satyam.
Satyam's contract with NAB expires in 2011, but it is understood that the bank is reviewing its early termination clause.
Qantas has also ensured adequate backup is in place in case Satyam goes under.
Qantas has five years remaining on a seven year contract under which Satyam provides IT application maintenance and support.
Ovum Australia IT analyst Jens Butler believes that any contracts up for renewal with Satyam in the near-term may be at risk of being handed to another provider.
In Victoria, Deakin University acting vice-chancellor John Rosenberg is keeping his fingers crossed that the 10-hectare, eight-year project continues as planned.
The project, in co-operation with the Victorian Government and Geelong City Council, will create at least 2000 new jobs in the Geelong region. If Satyam goes into administration, it is unclear if the Victorian Government would bail out the project.
Satyam declined to comment on the local impact of the scandal but a spokesperson said "it's business as usual".
The Australian | Fran Foo | January 09, 2009
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