Scribd Logo
Upload

Welcome to Scribd!

  • 75 views

    Satyam Scandal

    Uploaded by

    Badri Narayan
    The document summarizes the Satyam Computer Services fraud scandal that occurred in 2009 in India. B. Ramalinga Raju, the founder and chairman of Satyam, resigned amid revelations that he had orchestrated a $1 billion fraud by overstating profits for several years. An investigation found that Raju had acted alone but questions remained about the involvement of others like auditors. Raju and several other Satyam executives were charged with offenses like cheating and forgery. This incident highlighted issues of corporate governance at Indian companies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd

    Satyam Scandal

    Uploaded by

    Badri Narayan
    75 views11 pages
    The document summarizes the Satyam Computer Services fraud scandal that occurred in 2009 in India. B. Ramalinga Raju, the founder and chairman of Satyam, resigned amid revelations that he had orchestrated a $1 billion fraud by overstating profits for several years. An investigation found that Raju had acted alone but questions remained about the involvement of others like auditors. Raju and several other Satyam executives were charged with offenses like cheating and forgery. This incident highlighted issues of corporate governance at Indian companies.

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document summarizes the Satyam Computer Services fraud scandal that occurred in 2009 in India. B. Ramalinga Raju, the founder and chairman of Satyam, resigned amid revelations that he had orchestrated a $1 billion fraud by overstating profits for several years. An investigation found that Raju had acted alone but questions remained about the involvement of others like auditors. Raju and several other Satyam executives were charged with offenses like cheating and forgery. This incident highlighted issues of corporate governance at Indian companies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    75 views11 pages

    Satyam Scandal

    Uploaded by

    Badri Narayan
    The document summarizes the Satyam Computer Services fraud scandal that occurred in 2009 in India. B. Ramalinga Raju, the founder and chairman of Satyam, resigned amid revelations that he had orchestrated a $1 billion fraud by overstating profits for several years. An investigation found that Raju had acted alone but questions remained about the involvement of others like auditors. Raju and several other Satyam executives were charged with offenses like cheating and forgery. This incident highlighted issues of corporate governance at Indian companies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    On January 7th

    2009 B.Ramalinga Raju , Founder and Chairman of Satyam Computer Services, resigns amid a scandal over a billion dollar fraud.

    This incident

    throws a spotlight on corporate governance in India based companies.

    THE SCAM UNFOLDS

    Founded in 1987

    Satyam had epitomized corporate India and its emergence as an powerhouse in the global I.T industry. Satyam built its business around 3 areas namely IT services, Business process outsourcing (BPO) and software products. With over 50,000 employees across the globe, Satyam became Indias fourth largest IT services company. Almost one in every 2 of the Fortune 500 was said to be a client of Satyam.

    Foundation

    In the financial

    year ending March 2008, Satyam reported an impressive 46.3% rise in revenue to $2.1 billion.

    In October 2008,

    Satyam said revenue would rise to further 20% in the 2009 financial year.

    The Bubble

    In a letter to

    Satyam Board, Raju publicly admits to having overstated Satyams profits over a period of several years to the tune of approximately US$1 billion. Raju also stated that he acted alone, but questions were immediately raised about the involvement of others, including Satyams auditors, Price Waterhouse coopers.

    With the ever

    increasing pressure to perform, Satyam was keen to catch up to its key competitors, Tata consultancy Services, Infosys Technologies and Wipro. The relentless pursuit to be No.1 led Satyam to over-inflate its profits over the years. It was in Rajus own words like riding a tiger, not knowing how to get off without being eaten.

    Why?

    In an attempt to

    cover-up Satyam U.S$ 1 billion worth of fictious assets with real assets Satyam attempted to acquire Mayas Infrastructure and Maytas properties, companies controlled by Raju family reportedly worth U.S$ 1 billion.
    However the

    acquisition was dropped when Satyam share holders protested, questioning why such acquisition was needed.

    ACQUISITION TO COVER UP

    C.B.I investigated

    Satyam on the basis of falsified accounting on a massive scale. The report involves dual accounting books, thousands of forged invoices, fake bank statements thousands of unnecessary employed and auditors who received fees several times the market rate.

    Investigation

    Charges of cheating,

    forgery and falsification of accounts have been filed against Raju, two of his brother and four of Satyam executives. Mr Rajus stake in the company plunge from 22.78 per cent to 8.63 per cent (a big portion currently under corporate bodies category) over 2001-08. Nearly 55 per cent of the money made through sale of shares was in the first quarter of fiscal 2006-07 (AprilJune).While the exact price at which these shares were sold is not known, a conservative estimate based on price trends during this period shows that the sale could be worth anywhere around Rs 2,050 crore.

    INSIDE JOB

    Satyam has now been acquired by Tech Mahindra. Satyam Computer Services used to run about 190 different IT systems for internal management, making it easier for Mr B. Ramalinga Raju and his cohorts to cook the company's books. In order to prevent a similar fraud at the now rechristened Mahindra Satyam, the company management has embarked on a process to move to an automated management information system (MIS).

    Automated MIS in Mahindra Satyam

    B.Ramalinga Raju along with other executives didnt reveal the actual position of Satyam and by doing so they made everyone to question the corporate governance in Indian based companies.

    THANK YOU

    You might also like