Satyam Scandal

Satyam scandal

The Satyam Computer Services scandal was publicly announced on 7 January 2009, when Chairman Ramalinga Raju confessed that Satyam's accounts had been falsified.

[pic] Details

On 7 January 2009, company Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified.
Raju confessed that Satyam's balance sheet of 30 September 2008 contained:
    • Inflated figures for cash and bank balances of Rs 5,040 crore (US$ 1.12 billion) as against Rs 5,361 crore (US$ 1.2 billion) crore reflected in the books.
    • An accrued interest of Rs. 376 crore (US$ 83.85 million) which was non-existent.
    • An understated liability of Rs. 1,230 crore (US$ 274.29 million) on account of funds was arranged by himself.
    • An overstated debtors' position of Rs. 490 crore (US$ 109.27 million) (as against Rs. 2,651 crore (US$ 591.17 million) in the books).
Raju claimed in the same letter that neither he nor the managing director had benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of the situation in which the company was placed.
He stated that
"What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore (US$ 2.51 billion) in the September quarter of 2008 and official reserves of Rs 8,392 crore (US$ 1.87 billion)). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.***”

Aftermath

Raju had appointed a task...