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TABLE OF CONTENTS COVER PAGE TABLE OF CONTENTS EXECUTIVE SUMMARY 1. BACKGROUND 2. RAMALINGA RAJU AND THE SATYAM SCANDAL 2.1 FACTORS LEADING TO THE FRAUD 2.2 AFTERMATH OF THE SATYAM SCANDAL 2.3 VICTIMS OF THE SCANDAL 2.4 CORPORATE GOVERNANCE ISSUES AT SATYAM 2.5 ETHICAL DILEMMAS FACED BY RAJU 1.1 INDIA IN THE GLOBAL ECONOMY 1.2 MERGENCE OF SATYAM COMPUTER SERVICES E
3. HOSMER’S SIX STEP PROCESS 4. LESSONS LEARNED 5. RECOMMENDATIONS 8. CONCLUSION
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EXECUTIVE SUMMARY ________________________________________________________ The Satyam Computer Services’ scandal brought to light the importance of ethics and its relevance to corporate culture. The fraud committed by the founders of Satyam is a testament to the fact that “the science of conduct” is swayed in large by human greed, ambition, and hunger for power, money, fame and glory. Scandals from Enron to the recent financial crisis have time and time again proven that there is a need for good conduct based on strong ethics. In this research paper, we examine in detail the gross negligence of stakeholder concerns and over indulgence of key management on a personal and organizational level in immoral practices for personal benefit. We also assess the implications of ethics in the business environment. We then delve into the ethical dilemmas faced by the executives at Satyam, apply Hosmer’s framework to moral decision‐making, and suggest alternatives to handle such moral uncertainties. Finally, we conclude by providing recommendations for ethical code of conduct in organizations and the need to foster a culture of integrity and trust. 1. BACKGROUND ___________________________________________ In order to evaluate and understand the severity of Saytam’s fraud, it is important to understand factors that contributed to the decisions made by the company’s
Citations: ________________________________________________________ i “Ask the expert: BRICs and investor strategy.” Financial Times. 2 November 2006. http://us.ft.com/ftgateway/superpage.ft?news_id=fto110620061008293518 ii “World Economic Outlook.” International Monetary Fund. April 2010 iii Ibid. iv Marshall, Andrew. “The BRIC Nations: Growth and Risks.” Reuters. 10 June 2009 v “World Economic Outlook.” International Monetary Fund. April 2010 vi Ibid. vii “India FDI Factsheet‐ February 2010.” Indian Ministry of Commerce and Industry. 30 April 2010. http://dipp.nic.in/fdi_statistics/india_FDI_February2010.pdf viii Ibid. ix Poddar, Tushar and Eva Yi. “India’s Rising Growth Potential.” Goldman Sachs. 22 January 2007 x Capital IQ. www.capitaliq.com xi 2004 SEC Annual Filing. Satyam Computer Services, Ltd.29 June 2004 xii 2005 SEC Annual Filing. Satyam Computer Systems, Ltd. 28 April 2005 xiii 2004 SEC Annual Filing. Satyam Computer Services, Ltd.29 June 2004 xiv Ibid. xv Satyam SEC Filings, 2005‐2008 xvi Ibid. xvii Ibid. xviii Ibid. xix Ibid. xx Capital IQ. www.capitaliq.com xxi Ibid. xxii Ibid. xxiii Ibid. xxiv Ibid. xxv Ibid. xxvi “Satyam Case Study.” University of the Fraser Valley. 14 November 2009 xxvii “The Satyam Fiasco.” www.scribd.com xxviii “Satyam Scam.” www.scribd.com xxix “A Study on Satyam Fraud.” www.slideshare.net xxx “Financial Scams Storm the Market and Killed the Innocent Investors.” Investors Protection and Redressal Forum. xxxi Ashani, Peeyush. “Change in Management in an Organization with Reference: Satyam Computer Services.” www.scribd.com xxxii “Presentation on Satyam Scam.” www.scribd.com xxxiii “Commentary about Satyam Scandal.” San Diego Accountants Guide. www.sandiegoaccountantsguide.com xxxiv “Satyam – An Insight Story.” www.scribd.com xxxv “Satyam Scam: So Who is to Blam?” www.scribd.com. 14 January 2009 16 xxxvi Ibid. “The Satyam Scandal: Now What?” Rediff India Abroad. 9 January 2009 xxxviii “Indian IT Scandal Boss Arrested.” BBC News. 9 January 2009. xxxix Ibid. xl Ibid. xli Manoharan, T.N. “Financial Statement Fraud and Corporate Governance.” xlii Ibid. xliii Ibid. xliv Ibid. xlv “Corporate Ethics: The Moral Element of Business.” www.scribd.com xlvi Steen, Margaret. “India’s Changing Ethics.” www.scu.edu xlvii “A Study on Corporate Governance Issues at Satyam.” www.scribd.com xlviii Ibid. xlix Ibid. l “Corporate Ethics: The Moral Element of a Business.” www.slideshare.net li Dunfee, John. "Business Ethics." George Washington University, Washington, DC. 11 Mar. 2010. Lecture. lii Ibid xxxvii 17