Satyam Scam

Presented By:-Veenu Raj

SATYAM Meaning TRUTH.Now, Satyam :-

A Rs. 7000cr LIE.

IntroductionSatyam Computers was founded in 1987It converted into Public Ltd Co. in 1992The company offers consulting and information technology services panning various sectorsSatyam's network covers 66 countries and 53000 employees across six continents. It is listed in BSE, NSE, NYSE

He is Ramalinga Raju born on September 16,

1954. A traditional agricultural family of the

KSHATRIYA (RAJU) Community of Andhra

Pradesh.

He founded Satyam Computers and was its

Chairman until January 7, 2009 when he

resigned from the Satyam board after admitting

to corporate fraud.

Ramalinga Raju

The Rise of Satyam1991 : June - First Fortune 500 Client. August - Converted into Public Ltd.

Co.

1994 : The Big Break- Allies with Dun and Bradstreet Corp.

2000 : Declared one of the 100 most pioneering technology companies by

World Economic Forum.

2002 : CNBC’s Asian Business Leader - Corporate Citizen of the Year Award

The ScamRaju and his brother, B Rama Raju, were arrested by the Andhra Pradesh police on charges of breach of trust, conspiracy, cheating, falsification of records.Raju has mislead various investors.Raju had also used dummy accounts to trade in Satyam's shares. He has violated the insider trading norm. Funds from Satyam were diverted to Maytas.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 INR 20 crore rupees every month for paying these 13,000 non-existent employees.

Raju wanted to take over his MAYTAS INFRA and MAYTAS PROPERTIES.(company of his sons). He was blamed that he was using the funds of the investors for the family business. There were allegations that funds from Satyam were diverted to Maytas, causing the Government agencies to verify the infrastructure company’s records as well.

Hidden Facts

Two auditors of Satyam Computer, appointed by PwC, were not partners of the audit firm at that timeThose auditors had no role in fraud as they were given forged documents by the companyCFO of Satyam mislead directors: Luthra & Luthra – a Delhi- based law firm – has done the due diligence for Maytas Properties

The black day7th January, 2009Accounting fraud of over 7800 crore rupeesFrom past 7 year accounting books were cooked

-Profit were inflated-Understated liability and overstated debts-Accrued interests-The gaps in the balance sheets are due to the inflated profits

ImpactKarnataka Govt. decided to review airport projects in Maytas handsSatyam lost Cisco joint ventureE&Y snapped ties with Maytas projectsNational Australia Bank, Qantas, Telstra and Caterpillar realised the harsh realities of offshore outsourcingICAI comes under pressure to come out with guidelines to make auditor rotation compulsory

Sad ResultsSatyam employees face a bleak future Satyam employees were told that there is no assurance if they will receive salaries beyond January US-based employees of SCS lose health cover, credit cardsOver 400 SCS professionals were stranded in Bloomington, Illinois, US after State Farm Companies canceled a multiyear contract200 SCS employees in Japan were told to rush back to India

Reboot Satyam Tech Mahindra wins Satyam Computers Services

Tech M Stock shot up 12%

Winning Bid: Rs. 58 per share (i.e. Rs 2,889 crore)

ConclusionMore scandals like Satyam can be avoided if

If auditing firm is honest.

SEBI plays an active role.

Periodic review of legal compliance reports by

independent directors.

THANK YOU