Satyam Fraud Scam
Ramalinga Raju 's shock resignation on 7 January 2009 in Hyderabad, India as chairman of Satyam Computer Services blew the Indian economy in general and its information technology sector in particular when he confessed fraud running into millions of dollars in a letter he wrote to the company’s board of directors (Ramachandran, 2009). This report is going to focus on, an overview of the events that happened in Satyam, its consequences on Satyam’s stakeholders, the auditors involved and their role in the scam and the current situation of those responsible for the fraud.
OVERVIEW OF EVENTS IN SATYAM FROM 1987-2009
Raju formed Satyam in 1987 in Hyderabad, India with fewer than 20 employees which then became one of India’s biggest IT services firm (Atesci, Bhagwatwar, Deo, Desouza & Baloh, 2010). It was listed on the Bombay Stock Exchange (BSE) in 1991 and after its initial public offering the company grew very quickly. It employed nearly 53,000 employees and operated in 67 countries worldwide (Winkler, 2010). In 2001 Satyam was listed at the New York Stock Exchange (NYSE) (Atesci et al. 2010). Satyam seemed to be in fine financial health reporting positive results during 2008 and claimed victory in navigating the economic crisis. In October, the first crack in the company 's character occurred, when the World Bank fired Satyam and issued an eight-year ban against the company. Satyam was accused for installing spy systems on the computers of World Bank and stealing its assets (Ramachandran, 2009). During an October conference call reporting earnings, an analyst drew awareness to large cash balances in non-interest bearing bank accounts. Investors ignored the analyst’s comment and the stock price rose with reports of positive earnings and revenue growth (Winkler, 2010). In December 2008, Satyam 's Board of Directors approved the purchase of two construction firms in which Raju’s sons held stakes (Ramachandran, 2009). Shareholders viewed the purchase as an attempt
OVERVIEW OF EVENTS IN SATYAM FROM 1987-2009
Raju formed Satyam in 1987 in Hyderabad, India with fewer than 20 employees which then became one of India’s biggest IT services firm (Atesci, Bhagwatwar, Deo, Desouza & Baloh, 2010). It was listed on the Bombay Stock Exchange (BSE) in 1991 and after its initial public offering the company grew very quickly. It employed nearly 53,000 employees and operated in 67 countries worldwide (Winkler, 2010). In 2001 Satyam was listed at the New York Stock Exchange (NYSE) (Atesci et al. 2010). Satyam seemed to be in fine financial health reporting positive results during 2008 and claimed victory in navigating the economic crisis. In October, the first crack in the company 's character occurred, when the World Bank fired Satyam and issued an eight-year ban against the company. Satyam was accused for installing spy systems on the computers of World Bank and stealing its assets (Ramachandran, 2009). During an October conference call reporting earnings, an analyst drew awareness to large cash balances in non-interest bearing bank accounts. Investors ignored the analyst’s comment and the stock price rose with reports of positive earnings and revenue growth (Winkler, 2010). In December 2008, Satyam 's Board of Directors approved the purchase of two construction firms in which Raju’s sons held stakes (Ramachandran, 2009). Shareholders viewed the purchase as an attempt
References: Court Grants Bail for Rama Raju, 3 Others Arrested In Satyam Scam. (2010, July 20). RTT News. Retrieved July 29, 2010, from http://www.rttnews.com/Content/IndianNews.aspx?Id=1363472 Five accused in Satyam scam get bail India: Satyam fraud understated by $1billion. (2009, November 25). Associated Press. Retrieved July 29, 2010 from http://www.msnbc.msn.com/id/34151757/ Keep Satyam shareholders interest in mind: Khrushid Murthy, R. (2009, January 10). Satyam fraud check switches to PWC. Asia Times. Retrieved July 29, 2010 from http://www.atimes.com/atimes/South_Asia/KA10Df02.html Pulla, P Ramachandran, S. (2009, January 9). Raju brings down Satyam, shakes India. Asia Times. Retrieved July 29, 2010, from http://www.atimes.com/atimes/South_Asia/KA09Df01.html Satyam may get Financial Support from Government Selarka, A. (2009, March 7). India’s Stinking Auditors. Retrieved July 29, 2010 from http://www.scribd.com/doc/13073888/Indias-Stinking-Auditors-Satyam-Scandal-Part-Two Yeo, V Winkler, D. (2010, February 1). India’s Satyam Accounting Scandal. UICIFD Briefing Paper No. 8. Retrieved July 29, 2010 from http://www.uiowa.edu/ifdebook/briefings/docs/satyam.shtml Tutorial Time: 1-2 Wednesday