Satyam Scam & Corporate Governance

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Corporate Governance failure in Satyam makes scam possible. A bird\'s eye view

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  • true fact.thanks for your share!!
    Hope will get more slides from you. http://scambaitings.blogspot.com/
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  • The presentation is real information on SAYTAM SCAM , which makes people to aware of scam 419 . Thanks for the stories. i am maintaining a related blog called http://scam419.blogspot.com/
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  • Great Presentation. You're extremely right. But I do find it annoying that alongside your presentation are help for the victims . We've started to notice these types of scam on the site. http://www.nigerianspam.com/internet-scams-articles.html
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  • abslutely useful,great job.
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Satyam Scam & Corporate Governance

  1. 1. SATYAM SCAM & CORPORATE GOVERNANCE Anand Choudhary International Academy of Management & Entrepreneurship Copyright©: IAME - 2009 1
  2. 2. A Bird’s eye view Corporate Governance About Satyam Core of Scam Stake of Promoters Hidden Facts & Sad Results Reboot Satyam Copyright©: IAME - 2009 2
  3. 3. Corporate Governance “A system by which a company is controlled and directed” Purpose: maximise the long run interests of the various stakeholder groups and resolve the conflict in their mutual interests Good Corporate Governance:  Maximise long run corporate value  Transparent and effective  Prevent corporate crimes  Flexible and dynamic, capable of adjusting to the changing context and times Copyright©: IAME - 2009 3
  4. 4. Before 7th January: About Satyam  A leading global consulting and IT services company  Nearly 55,000 employees  Business is spread over 55 countries  Serves over 558 global companies, including over 185 Fortune 500 corporations  Satyam Infoway is the first Indian Internet company to be listed on NASDAQ Copyright©: IAME - 2009 4
  5. 5. PwC Satyam M. M. 325 Prop Infra Co Copyright©: IAME - 2009 5
  6. 6. Core of Scam • Who was behind? – Chairman Ramalinga Raju, MD B Rama Raju, CFO V Srinivas, Cost Accountant G Ramakrishna • Reason: Raju and his family held below 10% of the company’s equity • Raju allegedly used accounts opened in the names of relatives to divert money and carry out insider trading • Siphoning off funds from Satyam into Maytas Infra, Maytas Properties and various 325 firms floated by Mr. B Ramalinga Raju • Diversion of Rs 1,700 crore from an overseas bank account Copyright©: IAME - 2009 6
  7. 7. Stake of Promoters in Satyam Percent of equity 25.6 22.26 20.74 17.35 15.67 14.02 8.79 8.65 5.13 2001 2002 2003 2004 2005 2006 2007 2008 03/Jan/09 Source: The Hindu 14-Jan-2009 Copyright©: IAME - 2009 7
  8. 8. Hidden Facts • Two auditors of Satyam Computer, appointed by PwC, were not partners of the audit firm at that time • Those auditors had no role in fraud as they were given forged documents by the company • CFO of Satyam mislead directors: Luthra & Luthra – a Delhi- based law firm – has done the due diligence for Maytas Properties Copyright©: IAME - 2009 8
  9. 9. Impact  Karnataka Govt. decided to review airport projects in Maytas hands  Satyam lost Cisco joint venture  E&Y snapped ties with Maytas projects  National Australia Bank, Qantas, Telstra and Caterpillar realised the harsh realities of offshore outsourcing  ICAI comes under pressure to come out with guidelines to make auditor rotation compulsory Copyright©: IAME - 2009 9
  10. 10. Sad Results • Satyam 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 cards • Over 400 SCS professionals were stranded in Bloomington, Illinois, US after State Farm Companies canceled a multiyear contract • 200 SCS employees in Japan were told to rush back to India Copyright©: IAME - 2009 10
  11. 11. 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) Copyright©: IAME - 2009 11
  12. 12. Conclusion Irrespective of 9% stake, a man could do a scam. A complete failure of Corporate Governance. To avoid this, a company needs to strictly follow a proper system of corporate governance and rotating the auditors for every couple of years Copyright©: IAME - 2009 12
  13. 13. Copyright©: IAME - 2009 13
  14. 14. Copyright©: IAME - 2009 14
  15. 15. Thank You Copyright©: IAME - 2009 15

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