Satyam Fraud rocks the world
Photo by: Demion
When news about the fraud involving Satyam Computers broke out, it was greeted with general disbelief. It took a while for the news to sink in.
Here was a company which counted among its clients 185 companies out of the Forbes 500. In its country, it is listed among the top four companies in its industry.
It is unthinkable a company of such scale could be felled by such a frailty as fudging of accounts. Estimates of the sum involved - around $1.7 billion - gave the lightest of all the jolts given by the fraud.
Chairman of the company, Ramalinga Raju, on Wednesday confessed to his Board of Directors of grossly fudging with the company’s account books. In a five-page letter to the board, he confessed to hyper inflating figures of cash balances; adding interest incomes where none existed; downplaying liabilities; and overstating the money owed to the company.
This was done repeatedly over several years. Inevitably gaping holes began cropping up in the account books. Over time the holes widened until they reached a proportion that became unmanageable. This probably precipitated the move that is now being viewed as the first sign of trouble. Satyam announced it would purchase two firms owned by Raju’s sons.
The move was shot down by heckled investors.
Rumor has it that the move was a last-ditch effort aimed at filling up the holes in the asset-column of Satyam’s accounts using assets of the purchased companies. Unfortunately for Raju, the plan did not fall through.
Although he has claimed sole responsibility for the fraud, it is unlikely he is alone in it. It is believed he is protecting others party to the scam.
The weeks to come may have more unpleasant surprises in store. Even presently, wild speculations are rife on the role played by the auditors in the entire affair.
It is generally felt the auditors, Pricewaterhouse Coopers, have a lot to answer for. Their credibility has come to be at stake. For now, they prefer to keep mum.
Source: Times of India News Report
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January 12th, 2009 at 6:36 am
Satyam Scam by far Largest Corporate Scam in India Inc.
January 13th, 2009 at 7:54 am
hi
i wanna know how did all dis happen?
January 14th, 2009 at 4:12 pm
There are many high quality and motivated people at Satyam. The news articles should focus on their plight, not the misguided Founder of the company.
There are some 55,000 employees who are at extreme risk now. For some of us with industry domain experience there are other potential avenues. But all of us wish this was just a bad dream and it would be gone when we wake up. Like other financial disasters of the past year, the bad interest just keeps compounding.
If the company is to be saved, very rapidly either the Indian government or a turn around investor needs to come it. The new board and top management is acting to slowly.
Time is running out…
January 15th, 2009 at 8:32 am
i wanna know how did all dis happen?