Satyam scandal

From Wikipedia, the free encyclopedia

[hide]This article has multiple issues. Please help improve it or discuss these issues
on the talk page. (Learn how and when to remove these template messages)
This article may require cleanup to meet Wikipedia's quality standards. (May 2011)
This article needs additional citations for verification. (October 2016)
This article needs attention from an expert on the subject. (October 2016)
The Satyam Computer Services ,scandal was a corporate scandal affecting Indiabased company Satyam Computer Services in 2009, in which chairman Raymalinga
Raju confessed that the company's accounts had been falsified.[citation needed]
Contents [hide]
1

History

Role of Auditors

Aftermath

Acquisition by Mahindra Group

See also

References

Bibliography

External links

History[edit]
On 7 January 2009, the chairman of Satyam, Ramalinga Raju, resigned, confessing
that he had manipulated the accounts by US$1.47-Billion. The global corporate
community was said to be shocked and scandalised.[clarification needed][citation
needed]
In February 2009, CBI took over the investigation and filed three partial charge
sheets (dated 7 April 2009, 24 November 2009, and 7 January 2010), over the
course of the year.[citation needed] All charges arising from the discovery phase
were later merged into a single charge sheet.[clarification needed][citation needed]

On 10 April 2015, Ramalinga Raju was convicted with 10 other members.[citation

needed]
Role of Auditors[edit]
PricewaterhouseCoopers affiliates served as independent auditors of Satyam
Computer Services when the report of scandal in the account books of Satyam
Computer Services broke. The Indian arm of PwC was fined $6 million by the SEC
(US Securities and Exchange Commission) for not following the code of conduct and
auditing standards in the performance of its duties related to the auditing of the
accounts of Satyam Computer Services.[1]
Aftermath[edit]
Raju had appointed a task force to address the Maytas situation in the last few days
before revealing the news of the accounting fraud. After the scandal broke, the
then-board members elected Ram Mynampati to be Satyam's interim CEO.
Mynampati's statement on Satyam's web site said:
"We are obviously shocked by the contents of the letter. The senior leaders of
Satyam stand united in their commitment to customers, associates, suppliers and
all shareholders. We have gathered together at Hyderabad to strategize the way
forward in light of this startling revelation."[citation needed]
On 10 January 2009, the Company Law Board decided to bar the current board of
Satyam from functioning and appoint 10 nominal directors. "The current board has
failed to do what they are supposed to do. The credibility of the IT industry should
not be allowed to suffer." said Corporate Affairs Minister Prem Chand Gupta.
Chartered accountants regulator ICAI issued show-cause notice to Satyam's auditor
PricewaterhouseCoopers (PwC) on the accounts fudging. ICAI President Ved Jain
said: "We have asked PwC to reply within 21 days."[citation needed]
Also on 10 January 2009, the same day, the Crime Investigation Department (CID)
team picked up Vadlamani Srinivas, Satyam's then-CFO, for questioning. He was
arrested later and kept in judicial custody.[2]
On 11 January 2009, the government nominated noted banker Deepak Parekh,
former NASSCOM chief Kiran Karnik, and former SEBI member C Achuthan to
Satyam's board.[citation needed]
Analysts in India have termed the Satyam scandal India's own Enron scandal.[3]
Some social commentators see it more as a part of a broader problem relating to
India's family-owned corporate environment.[4]
Immediately following the news, Merrill Lynch (now a part of Bank of America) and
State Farm Insurance terminated its engagement with the company. Also, Credit
Suisse suspended its coverage of Satyam.[citation needed]. It was also reported

that Satyam's auditing firm PricewaterhouseCoopers will be scrutinised for

complicity in this scandal. SEBI, the stock market regulator, also said that, if found
guilty, its license to work in India may be revoked.[5][6][7][8][9] Satyam was the
2008 winner of the coveted Golden Peacock Award for Corporate Governance under
Risk Management and Compliance Issues,[10] which was stripped from them in the
aftermath of the scandal.[11] The New York Stock Exchange has halted trading in
Satyam stock as of 7 January 2009.[12] India's National Stock Exchange has
announced that it will remove Satyam from its S&P CNX Nifty 50-share index on 12
January.[13] The founder of Satyam was arrested two days after he admitted to
falsifying the firm's accounts. Ramalinga Raju was charged with several offences,
including criminal conspiracy, breach of trust, and forgery.[citation needed]
Satyam's shares fell to 11.50 rupees on 10 January 2009, their lowest level since
March 1998, compared to a high of 544 rupees in 2008.[14] On the New York Stock
Exchange, Satyam shares peaked in 2008 at US$29.10. By March 2009, they were
trading around US$1.80.[citation needed]
The Indian Government has stated that it may provide temporary direct or indirect
liquidity support to the company. However, whether employment will continue at
pre-crisis levels, particularly for new recruits, is questionable .[15]
On 14 January 2009, Price Waterhouse, the Indian division of
PricewaterhouseCoopers, announced that its reliance on potentially false
information provided by the management of Satyam may have rendered its audit
reports "inaccurate and unreliable".[16]
On 22 January 2009, CID told in court that the actual number of employees is only
40,000 and not 53,000 as reported earlier and that Mr. Raju had been allegedly
withdrawing 200 million (US$3 million) every month for paying these 13,000 nonexistent employees.[17]
The Indian government designated A. S. Murthy to become the new CEO of Satyam
effective 5 February 2009. Special advisors were also appointed, Homi Khusrokhan
of Tata Chemicals and Chartered Accountant Partho Datta.[18][19]
On 4 November 2011, the Supreme Court granted bail to Ramalinga Raju, as well as
two others accused in the scandal, since the investigation agency CBI had failed to
file a charge sheet, despite having already had 33 months (from the time of Raju's
arrest) to do so.[citation needed]
On 15 September 2014, the special CBI court hearing the case asked the concerned
parties to appear before the court on 27 October 2014. Date of judgement was to
have been indicated later on that day.[citation needed]
On 9 April 2015, Raju and nine others were found guilty of collaborating to inflate
the company's revenue, falsifying accounts and income tax returns, and fabricating

invoices, among other findings, and sentenced to seven years imprisonment by

Hyderabad court. Raju and his brother were also fined by the court 55 million
rupees (US$883,960) each.[20]
Acquisition by Mahindra Group[edit]
On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was
purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its
diversification strategy. Effective July 2009, Satyam rebranded its services under the
new Mahindra management as "Mahindra Satyam". After a delay due to tax
issues[21][22] Tech Mahindra announced its merger with Mahindra Satyam on 21
March 2012, after the board of two companies gave the approval.[23][24] The
companies are merged legally on 25 June 2013.[25][26]
See also[edit]
Corruption in India
Satyam Computer Services
Tech Mahindra
References[edit]
Jump up ^ "SEC Charges India-Based Affiliates of PWC for Role in Satyam
Accounting Fraud". Securities and Exchange Commission. 5 April 2011. Retrieved
2013-04-27.
Jump up ^ "Satyam ex-CFO Vadlamani Srinivas sent to judicial custody till Jan 23".
The Economic Times. 11 January 2009. Retrieved 2015-12-19.
Jump up ^ Satyam scandal could be 'India's Enron' World business- msnbc.com
(updated 11:42 a.m. ET 7 January 2009)
Jump up ^ The Caste of a Scam: A Thousand Satyams in the Making. Kafila.
Jump up ^ Satyam scandal rattles confidence in accounting Big Four.
In.reuters.com.
Jump up ^ ICAI to seek explanation from Satyams auditor PwC. Livemint.com (7
January 2009).
Jump up ^ Satyam auditor says examining chairman's statement. Reuters.com (7
January 2009).
Jump up ^ What happens to PWC, The Auditor For Satyam?[dead link]
Jump up ^ Satyam: Auditors' body to pull up PwC ICAI to seek explanation from
Satyams auditor PwC. Rediff.com.

Jump up ^
http://www.goldenpeacockawards.com/GPA_RESULTS_ANNOUNCEMENT_2008.pdf
Jump up ^ Satyam stripped off Golden Peacock Global Awards Software-InfotechThe Economic Times (8 Jan 2009, 0118 hrs IST, PTI)
Jump up ^ NYSE halts trading in Satyam stock (Wednesday, 7 January 2009,
23:02) Sify.com
Jump up ^ Satyam Computer Services Ltd (SAY.N) Key Developments (Stocks)
Reuters.com Archived 24 February 2009 at the Wayback Machine.
Jump up ^ Indian IT scandal boss arrested 9 January 2009 Business BBC NEWS
Jump up ^ Ready to bail out Satyam, if required: Govt. Moneycontrol.com (13
January 2009).
Jump up ^ Price Waterhouse says its Satyam audits relied on company information,
could be wrong[dead link] 14 January 2009 Associated Press
Jump up ^ Satyam fudged FDs, has 40,000 employees: Public prosecutor. The Times
of India.
Jump up ^ Satyam Names Murty as CEO to Replace Arrested Founder (5 February
2009, 1813 hrs IST) Satyam Names Murty as CEO to Replace Arrested Founder
Jump up ^ A S Murty appointed as Satyam CEO (5 Feb 2009, 1816 hrs IST) A S
Murty appointed as Satyam CEO Kiran
Jump up ^ Retrieved from
http://www.financialexpress.com/article/industry/companies/satyam-computer-caseb-ramalinga-raju-9-others-found-guilty/62062/.
Jump up ^ moneycontrol.com. moneycontrol.com (15 February 2011).
Jump up ^ Mah Satyam-Tech Mah to appoint bankers to fasten merger.
Moneycontrol.com (30 August 2011).
Jump up ^ /Tech Mahindra, Satyam get nod to merge. Livemint.com (21 March
2012).
Jump up ^ High Court orders shareholders' meeting on MSat-Tech Mahindra merger.
Profit.ndtv.com (11 May 2012).
Jump up ^ Tech Mahindra completes Satyam merger, becomes 5th biggest IT firm
Economic Times. The Economic Times. (26 June 2013).
Jump up ^ Satyam is history, merger with Tech Mahindra complete | Business Line.
Business Line. (25 June 2013).

Bibliography[edit]
External links[edit]
The Great Satyam robbery
Satyam Chairman B. Ramalinga Raju's statement to the Board
PricewaterhouseCoopers offices searched in Satyam probe
[show] v t e
Great Recession
[show] v t e
Scams and confidence tricks
[show] v t e
Corporate scandals
Categories: Corporate crimeAccounting scandalsFraud in IndiaAccounting in
IndiaHistory of Andhra Pradesh (19472014)Crime in Andhra PradeshScandals in
India
Navigation menu
Not logged inTalkContributionsCreate accountLog inArticleTalkReadEditView
historySearch

Search Wikipedia
Go
Main page
Contents
Featured content
Current events
Random article
Donate to Wikipedia
Wikipedia store

Interaction
Help
About Wikipedia
Community portal
Recent changes
Contact page
Tools
What links here
Related changes
Upload file
Special pages
Permanent link
Page information
Wikidata item
Cite this page
Print/export
Create a book
Download as PDF
Printable version
Languages

Edit links
This page was last modified on 14 November 2016, at 22:06.
Text is available under the Creative Commons Attribution-ShareAlike License;
additional terms may apply. By using this site, you agree to the Terms of Use and
Privacy Policy. Wikipedia is a registered trademark of the Wikimedia Foundation,
Inc., a non-profit organization.

Privacy policyAbout WikipediaDisclaimersContact WikipediaDevelopersCookie

statementMobile viewWikimedia Foundation Powered by MediaWiki