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Breaking News: Satyam withdraws disparagement suit against Upaid


This update wasn’t entirely unexpected, given the present circumstances: Satyam filed a motion of Non-Suit against Upaid in its business disparagement case in the Collins County court in Texas some hours ago. In simpler terms, Satyam has withdrawn its suit against Upaid, who were the principal defendants in this case.

Recall that I had reported on the disparagement suit twist a few weeks ago here, which had become public after the Maytas deal. At that point in time, Upaid had alleged that the Maytas non-deal negatively affected Satyam’s ethics and reputation, especially since it followed soon after the World Bank scandal. The defendants had also alleged that “In filing this suit for business disparagement, Satyam has put its reputation in the business community squarely at issue.”

The disparagement suit against Raghuram Govindacharyula, former Satyamite, who was also an active party in the IP infringement/fraud suit that Upaid had filed against Satyam, remains status quo.

As far as I know, there are no changes in the IP-related fraud case, which this blog has been following since January 2008, which will be heard as per schedule, on June 1, 2009, in a Texan federal court.

I am aware that this story may be drifting away from the focus of the blog, but given its tangential association with the IP-related case that has been followed here, and the dramatic revelations that have been advertised over the past few days, I felt it may be in public interest to bring this piece of news to the notice of readers.

There is not too much speculation to do in this story, I feel: Satyam’s management (old and new) has probably decided that it is not intelligent to pursue a case such as this, in view of the external circumstances, and perhaps marks the beginning of a change in managerial strategy to deal with problems that lie within the company. Admittedly, this may not be a dramatic indicator of where things are headed, but to me, it demonstrates that Satyam may be taking a realistic approach to its troubles. There are a billion different people commenting on Satyam’s future, but I shall not hesitate to add my two cents to the pile. Having tracked this story thus far, it wouldn’t be too forward of me to suggest that it is in the interest of all stakeholders of the company, the IT development and outsourcing industry and the country, that the organisation stabilise itself, at least to a functional extent. There may be too much at stake to abandon everything at this stage.

At the same time, when commentators argue that this is a one-off case, I would think twice about it – the Satyam story, including the IP-related case developments which will be reported as and when, has brought with it a dossier of corporate governance lessons to be learnt: openness and transparency in dealings being the most important of them all.

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