Mahindra Satyam agrees to pay $70 mn to UK firm Upaid

MUMBAI: Mahindra Satyam has agreed to pay $70 million to UK-based mobile payment services firm Upaid in an out-of-court settlement, ending uncertainty over one of its long-drawn legal liabilities.

In return, Upaid will drop all charges against Mahindra Satyam and also provide a royalty-free licence on its patents on a worldwide and perpetual basis. The amount is a tenth of what Upaid was seeking in damages from the erstwhile Satyam.

Investors cheered the move that will allow Mahindra Satyam to focus more on business and customer issues as sentiment veers towards an economic recovery.

“It (the Upaid case) could have been pretty intractable,” commented one analyst, terming it a positive development. Satyam shares closed 1.3 per cent higher at Rs 102.65 on BSE on Wednesday.



Upaid was seeking over $1 billion in damages from Mahindra Satyam alleging that erstwhile-Satyam had provided forged documents to Upaid in a patents filing that eventually resulted in the UK firm losing its patents infringement case against telecom giants Qualcomm and Verizon. The case was being heard in the US States District Court.

The case dates back to before Satyam’s promoter Ramalinga Raju confessed to falsifying accounts in January 2009 in corporate India’s biggest fraud. The two firms had worked together in 2000 when Satyam was a vendor to Upaid and provided services relating to the development of certain mobile technologies.

Mahindra Satyam will pay Upaid in two installments. The first payment of $45 million will be done within 10 days of getting regulatory approval of the settlement, and second payment of $25 million will be made within a year of the first payment. Both installments are expected to funded through its cash reserves, said an official.

Both Mahindra Satyam and Upaid were unavailable for comment. “I am not able to talk today, but you may be sure that I will be happy to talk with you at the appropriate time,” Upaid chariman and CEO Simon Joyce told ET.
The architects behind the settlement announced on Wednesday were Vineet Nayyar, who was elevated to the position of chairman from vice-chairman, and CP Gurnani, CEO of Mahindra Satyam.

However, a member of the government-run board had more accurately pegged the liability from the Upaid case to be below $100 million at the time of the bidding for the scam-tainted firm. At Mahindra Satyam’s board meeting, former Sebi chairman M Damodaran and a former top World Bank official Gautam S Kaji were also appointed as additional directors.