The Satyam Disaster

Satyam computers- India’s 4th largest IT Company has always been known for being a dedicated IT company with client lists ranging from small departmental stores in Australia to the World Bank. However, the whole world was in for a brutal shock on the 7th day of this year when its Former Chief Executive Officer(CEO) Mr.Ramalinga Raju admitted that accounts of the company were fudged to the tune of a whopping Rs.7106 crores(INR) over a period of several years.
The whole Satyam Fiasco was first noticed by the World Bank in November ’08 when they received improper responses from the management of the IT major upon asking for documentation pertaining to their business dealings with the company. The World Bank went public in criticizing the company, the response from Satyam was anything but expected: The very next day, letters signed by the former CEO were wired to the World Bank and the Media asking the World Bank to tender an apology and take back the “untrue” statements they had issued previously. This was just the beginning of the end. The next few days saw yet another interesting complication surface. It was learnt that the former CEO was on serious efforts of trying to merge two companies: Maytas(Satyam in reverse) Infra and Maytas Properties, both run by the Raju family, with Satyam in order to nullify the losses accumulated by the companies. This move was the last nail in the coffin. The board of directors were startled and turned down the acquisition in the strongest terms.
After several unsuccessful attempts to cover up the whole issue, the former CEO finally gave in on the 7th of January ’09. In a 5 page letter to the board of directors and the Securities and Exchange Board of India(SEBI), Mr.Raju admitted fraud and confessed that the Company’s balance sheet contained inflated cash and bank balances to the tune of Rs. 5040 crore which never existed. The Man went on to give a clean chit to every employee of Satyam and his family members except the Former Chief Financial Officer Srinivas Vadlamani.
The SEBI and Serious Fraud Investigation Office (SFIO) have launched independent enquiries into the scandal. Mr. Raju has surrendered to the Police on 9th January. The whole scandal leaves several questions unanswered:

• What is the fate of the 53,000 employees of Satyam who stand helpless in the current situation? (The word is that they might have to work without salary for 2 months, at least!)

• What punishment should be awarded to the architect of the whole scandal?


• Will any other company ever come forward to take over Satyam?(The real net worth of the company can never be calculated owing to the misinterpreted balance sheets.)

• The Scandal raises several questions about India’s corporate governance policy. Will the Indian IT market sustain the Scandal?


• Will the issue throw the $40 billion Indian IT industry into a Tailspin?

Problog4u wishes to stand by the employees of Satyam at this hour of crisis and hope the Indian Government ensures justice is done.