Satyam case study on Business ethics and corporate governance

1. “BUSINESS ETHICS AND
CORPORATE GOVERNANCE”
Presented by :
Anu Lakhani
Bhanu sharma
Arman singh
Bhupendar singh
Ashish Hajela

2. Satyam case study
SERVICES

3. Contents
Introduction
Corporate governance
Ethical standard
Findings

4. Introduction
Satyam incorporated in 1987 as a Private limited company providing software &
consultancy services.
Satyam was involved in other business like construction & textile.
In 1991 company went for an IPO which was oversubscribed by 17 times.
In 1999 satyam had a presence in 30 countries across the world .
In 2001 satyam was listed on National Association of securities Dealer
Automated Quotation.
Satyam revenue grew to over us $2 Billion & net income us $ 417 billion.

5. Background
Rammohan Roy resigned as the dean of ISB the resignation followed the
announcement previous day by Raju (Founder & Chairman) of India’s
fourth largest IT service company Satyam computer service limited.
Rao resigned from the board of satyam with two other independent
directors.
The resignation of these directors were the result of deal by satyam to
acquire two companies run by Raju’s son one was the properties company
and the other was infrastructure.
The company had been inflating the revenue and profit for past several
years.
The investors did not find any synergies in an IT company acquiring
companies involved in construction & infrastructure.

6. Governance
Practices

7. Practices at Satyam
According to Satyam Annual Reports, Corporate governance was given
high importance in the company.
Core Value- Associate Delight, Investor Delight, Customer Delight
& Pursuit of Excellence
Delighting Stakeholders formed the cornerstone of all activities.

8. The directors and employees of Satyam were governed by a code of
conduct. The code specified that the employees and directors needed to
carry out their duties legally, honestly and ethically; comply with all the
laws governing the operations of the company and maintain high moral,
ethical and legal standards; avoid activities that created a conflict between
their own interests and the interests of the company and make timely
accurate disclosures to regulatory authorities.
The company also had a whistleblower policy.
The code of conduct also stated that “the policies and the procedures of the
company expect that the directors and associates avoid conduct of business
of the company with their relatives or their significantly associated
companies, firms and other businesses. In case of conflicts, disclosure shall
be made to the board of directors and its approval shall be obtained before
proceeding further.”

9. Ethical
Standards

10. Ethical standards:-
• Pressure to maintain this pace of growth
• Gap became a gulf
• Not following corporate As a part of ethical standards, They had very low
ethical standards in terms of corporate governance.
• Satyam’s point of view
• Increasing competition forced big corporations to do something beyond
• their reach.
•
• Tata Consultancy Services (TCS)
• Infosys Technologies
• Wipro
• governance norms
• Tampering the financial data
• Misleading the shareholders fund
• Putting self-interest at the expense of shareholder’s interests

11. • Satyam scam is unparalleled in the corporate history of
India, and as some keen corporate observers point out, the world
itself.
• The idea of a corporation, and the values and principles that
should guide its governance have hardly been imbibed by
promoters.
• An careless administration, ill-equipped regulatory system and
terribly delayed justice delivery process only make things easier
for the corporate crooks to make a killing.
• Corporate governance framework needs to be implemented in
letter as well as spirit. The increasing rates of white collar crimes
demands stiff penalties and punishment.
• Creating an awareness of the large consequences of small lies may
help some to avoid this trap.

12. Measures by Govt.
• New Board of directors.
• MCA appointed 3 new directors.
• Creation of audit committee.
• Appointment of internal auditor and legal
advisors.
• BCG was appointed as management advisors.
• CLB increased the share capital from 1.6
billion to 2.8 billion.

13. The Aftermath
• Auditors will be held responsible.
• Tenure of auditor.
• Term of independent director.
• Accountability of independent director.

14. Thank you