Satyam's Foul Play

tiwarimanjit

HOW SATYAM FELL

JANUARY 7, 2009 | Rewind to Wednesday, when Satyam's chairman Ramalinga Raju quit after confessing to cooking his company's books for years. By the time markets closed that afternoon, Satyam had plunged 78%. This will end Satyam's saga of dodgy deals, political hobnobbing and shabby treatment of shareholders for over 10 years. Yet throughout, state politicians supported the company, state-owned finance companies turned a blind eye to its activities and a spineless board nodded off on everything. Satyam was rewarded with great valuations, a place on the Bombay Stock Exchange's Sensex A-list, and awards for entrepreneurial success, management skills and — ho-hum — corporate governance. MAYTAS DEAL | Weeks before he quit, Raju triggered investor fury by trying to use Satyam's fictitious cash to acquire two companies owned by his family. Investor anger eventually got him to back off.

WORLD BANK BAN | A few months before Maytas, the World Bank, whose IT network was managed by Satyam, banned it for eight years: the Bank found that spyware installed in its finance and HR software was transmitting every tap and click back to Satyam's operations in Chennai. Shortly before this, Upaid Systems, a US software company specializing in online payments for mobile phone companies which had outsourced work to Satyam, sued it. It alleged that Satyam's performance was shoddy, it had inserted a Raju relative on board, stolen patented ideas and sold those to two telecom companies.

IN 2000 , Satyam bought a clutch of websites called Indiaworld for $116 million. Divide the buying price by 400 and you’ll get the site’s revenues, divide it by 2,000 and you’ll get its profit at the time of acquisition. No shareholder ever saw the gains from this costly investment.

POWERFUL FRIENDS | By then Raju had a powerful friend, Andhra Pradesh CM Chandrababu Naidu. The alliance may have helped prop up Satyam’s domestic equity prices. T R Prasad, a babu who retired as Cabinet secretary, was on Satyam's board. As industry secretary in the hotch-potch government of the late 1990s, Prasad had plotted with his minister to grab control of Maruti from Suzuki. He failed. The day Satyam imploded, Maruti was one of the few stocks to close up

sudharmasrinivasan

Its a big game played by the CEO and the other parties of the organisation.. I am sure its not Mr raju the only person to be blamed for ..I guess he is used as a scam goat..lot many hands into this play.. lot many politicians in the scandal.. Did u people listen to what the cheif minister of Andhra pradesh told the reuters?
Raju was my friend!!!
So he accepts that he knows him.. Now since raju s caught he says raju waas my friend..

evilsid

Kinda worst thing in the corporate world

tulikaghosh

Satyam now represents a big story just opposite to what its name mean..

what i feel is that...this incident is a question mark to teh system as a whole..its not important what Raju had done...more important thing is that he had done all this frauds and inspite of having stringent rules and regulations..all these went unnoticed.

Its time to really reveiw the system prevalent....Moreover this is also a lesson for the investor mostly speculators in the market who goes about brand name without properly scanning teh company...henceforth investors wil think and judge well before going to invest in any share..

Cutepie

Simply shocking...
on the part of a company as big as Satyam.
I just dont believe the fact that its chairman Mr. Ramalinga Raju alone is responsible for this scandal and that none of its board members were even aware of it goin on..!!!!

ca.harsh.punjabi

Deepak i particularly dint like the blog u have posted as a CA i can understand what those reports mean coz i have prepared dozens i think u really need to Understand that while an audit is conduted the auditor does not proceed to conduct an audit with a possiblity of a fraud in mind coz if he does that the whole purpose of verifyin the Fairness and accuracy gets defeated as he will have to look into each and every transaction which is clearly not feasible and also not desirable plus "Sufficient & Appropriate Audit Evidences" do not mean that they represent the complete picture the auditor generally places 3rd party confirmations ona higher pedestal than the interna mgt representations to place reliablity and this is what has happened these very 3rd party confirmations have been forged u can read ET dated 14jan09 and may be then u can understand my point although i m not from PWC but as a CA i needed to explain all this

ca.harsh.punjabi

Deepak i particularly dint like the blog u have posted as a CA i can understand what those reports mean coz i have prepared dozens i think u really need to Understand that while an audit is conduted the auditor does not proceed to conduct an audit with a possiblity of a fraud in mind coz if he does that the whole purpose of verifyin the Fairness and accuracy gets defeated as he will have to look into each and every transaction which is clearly not feasible and also not desirable

plus "Sufficient & Appropriate Audit Evidences" do not mean that they represent the complete picture the auditor generally places 3rd party confirmations ona higher pedestal than the interna mgt representations to place reliablity and this is what has happened these very 3rd party confirmations have been forged u can read ET dated 14jan09 and may be then u can understand my point

Although i m not from PWC but as a CA i needed to explain all this

niraj.jain

Mr Ramalinga Raju is to be blamed for the fiasco mainly, though Auditors, Independent Directors and regulators can not escape from their responsibilities.

About 4-5 yrs back,Satyam was No 4 largest I T Company in India behind TCS, Infosys and WIPRO. In last 4-5 years, TCS, Infosys and WIPRO have grown exponentially but satyam could not catch up with the pace. Raju, in his zeal to retain No 4 position, resorted to fraud. This is the main reason. Secondly, lot of money has been diverted by raju to acquire land through out Andhra pradesh.This triggered cash crunch. Ultimately, the man fell victim to his own greed and in the process, he brought down entire Industry, India as a Investment destination,millions of small investors and India's image world wide.As a punishment, Raju may languish in jail for 10-12 yrs and pay a fine of Rs 25-50 crores. But will the lost image and reputation of India Inc be salvaged??? it is a long drawn battle.We all should be prepared. Worst nightmare is how many more Satyam-like frauds are covered behind the doors?