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Indian officials are ruling out a government bailout for one of the country's largest information technology enterprises, Satyam Computer. This comes following speculation2 Satyam was under consideration to receive a lifeline from the government after its founder3 - who admitted to conducting $1 billion-plus fraud - was arrested.
Media personnel wait outside office of Satyam Computer Services Ltd. in Hyderabad, India, 08 Jan 2009
Government officials say they will try to preserve the jobs of tens of thousands of Satyam employees, but are not looking to bail1 out the high-tech4 company.
Minister of State for Industry Ashwani Kumar says India's government is not going to directly or indirectly5 subsidize what he calls "wrongdoing and fraud in Satyam."
Earlier, some top government officials had said a massive cash bailout was under consideration.
Satyam - one of India's largest software and outsourcing entities6 - is in a deep crisis, after founder B. Ramalinga Raju revealed he had falsified company accounts to the tune7 of nearly $1.5 billion.
Despite the depth of the financial debacle, Indian minister of state for corporate8 affairs, Prem Chand Gupta, tells reporters it is premature9 to talk of a government rescue package for the troubled company and that Satyam has not requested such a bailout.
"The company may not need that. They have sufficient receivables. Their clients are all triple-A class clients. And, then, now it is for the new board [of directors] to take a view," said Gupta.
The government appointed a board of eminent10 outsiders, after ousting11 the corporation's directors.
Analysts12 say the situation at Satyam is so confusing it is difficult to know just how many employees and clients the company has, let alone ascertain13 its financial standing14.
Satyam has appointed two new auditing15 firms to examine the extent of the fraud and restate financial results for the publicly-traded company. Once that happens, Satyam may be able to approach equity16 partners or banks for a loan.
Satyam had a valuation of $7 billion, six months ago but its shares have plunged17 about 90 percent since the scandal came to light, last week.
Authorities say Satyam founder Raju has admitted falsely inflating18 profits for years. Raju, his brother and Satyam's former chief financial officer have been jailed and face criminal charges.
Satyam's clients include many of the world's largest corporations.
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