Satyam
~Mahvish Qureshi ‘10
It is one of the biggest scandals in India’s economic market right now; it has been considered India’s Enron. Satyam’s accounts are currently being audited by firms such as Deloitte and KPMG. It is shocking to many people how long this scandal has been going on undetected, and has raised many concerns and questions as to how, Ramalinga Raju, the former boss of Satyam Computers, was able to make a billion dollars through fraud and go undetected for so long.
Satyam computers is a “global business and information technology company, delivering consulting, systems integration, and outsourcing solutions to clients in over 20 industries.” (www.satyam.com) Satyam is based in Hyderabad, India and was founded by Raju in 1987, and has been delivering information technology support to clients in over 67 countries across six continents. It was shocking to learn about the scandal within such a prestigious company. On the 7th of January 2009, Raju, the chairman of the company admitted to accounting fraud and resigned from his position. In a letter addressed to the stock exchange Raju admits to the accounting fraud of his firm that has been transpiring for the past several years. Due to the news Satyam’s shares went down by 75%. According to Raju’s letter he was trying to do what was best for Satyam by covering up company losses; however he entered into a game which he could not get out of. According to the letter 94% of the company’s cash was made up. After the release of this letter it seems as if Raju has disappeared and currently Ram Mynampati has taken over matters at Satyam computers.
What exactly was this fraud that was committed? Raju exaggerated the company’s workforce to be about 53,000 where in actuality it was about 40,000. Raju was withdrawing millions of rupees in the names of the 13,000 or so non-existent workers every month. Many are worried about how this will affect the Indian economy as this has created a dent in the image of Indian investments in other countries. The spoilt image of this major outsourcing firm is raising frustrations and accusations abroad, particularly in the United States, where a falling employment rate has encouraged anger against outsourcing, this scandal has given them even more cause to cry out against outsourcing. Many have said that this was a wake-up call for investors to check a company’s books more carefully rather than trust a suave image and charming personality as many had done with Raju. Others are still unsure as to why this happened, however currently the Indian government has appointed people to help the company as it starts up again and works to rebuild its image as the leading global business and IT company.