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Satyam Scam

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Satyam Scam
SATYAM: BROTHERLY DEMISE THE RISE AND FALL OF RAMALINGA RAJU

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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

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