Satyam Computer Services was one of India's largest IT companies, founded in 1987. In January 2009, its chairman Ramalinga Raju confessed to a $1 billion accounting fraud, in what became India's biggest corporate scandal. Raju had inflated profits and faked accounts for years to mislead shareholders and regulators. When the gap in finances became too large to cover up, Raju confessed and resigned. The fraud damaged India's reputation in global IT business and impacted the livelihoods of thousands of employees. Investigations were launched and new leadership appointed to rebuild the company.

1. BUSINESS ETHICS

2. SATYAM FIASCO
THE STORY OF BIGGEST CORPORATE FRAUD
OF INDIA

3. CONTENTS
 The rise of Satyam
 Revelation by Raju
 How did the fraud start?
 Probable reasons
 Maytas acquisition
 Why did Raju confess?
 Impact on the Nation
 investigation

4. SATYAM COMPUTER SERVICES
 Fourth largest IT outsourcing company of India.
 Employees more then 50,000 people in India.
 High global reputation.
 Offers services to more then 500 MNC’S.

5. B RAMALINGA RAJU
Founder and former chairman of one of the biggest
IT giant of our nation
“SATYAM COMPUTERS”
…………………………. Guess what !! the prime
convict in the biggest scam of the country.

6. THE RISE OF SATYAM
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7. The Rise of Satyam
 1987 :
 1991 :
 1994 :
 2000 :
 2002 :
Satyam Computers Pvt. Ltd. Born.
June - First Fortune 500 Client.
August - Converted into Public Ltd. Co.
The Big Break- Allies with Dun and Bradstreet Corp.
• Declared one of the 100 most pioneering
technology companies by World Economic Forum.
• Dataquest IT Man of the year award.
CNBC’s Asian Business Leader – Corporate Citizen of
the year Award.

8. ACHIEVEMENTS
 Fastest growing company of India listed in three
international exchanges i.e., NYSE, DOW &
EURONEXT.
 Winner of Innovation award for partner
excellence in both 2007 and 2008 for giving
significant business value.
 UK trade & investment India (UKTI) Business
award for corporate social responsibility.
 Golden peacock award for excellence in
Corporate governance.

9. THE DISASTROUS REVELATION
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10. THE DISASTROUS REVELATION
• The Black day: 7th January, 2009
• Accounting fraud of over 7800 crores rupees
From past 7 years accounting books were cooked:
1. Profits were inflated.
2. Understated liability and overstated debts.
3. Accrued interests.
4. The gaps in the balance sheets are due to the Inflated
profits.

11. CONFESSION LETTER
Raju wrote in the confession letter :
“Every attempt to fill the gap failed & quote” .
It was like riding a tiger, not knowing how to get off
without being eaten”.

12. CONFESSION LETTER
 Maytas Acquisition
Last attempt to fill the gap.
 Top officials were unaware
Only MD and CFO were others.
 No personal profits
Did not sell any shares from 8years.

13. M
MMMM
MINUTES AFTER REVELATION
MINUTES AFTER REVELATION

14. IMPACT OF SCAM
Stock Market Share-holders Indian economy
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Employees
Stake-holders

15.  SATYAM SHARES
 Biggest single day fall for a stock in stock
market.
77%
 Rs. 175 ( Jan 6th)
 STOCK MARKET
 BSE sensex fell by 749.05 i.e., 7.25%.
 NSE fell by 192.40 points i.e., 6.18%.
 COMPANIES WORTH
 11464 crore 1607 crore.
 All time low of Rs.11.50 on 9th Jan and
closed at Rs.23.75/-
 Compared to highest of Rs. 524.90/- on
May 29,2008.

18. HOW DID IT START ??

19. ILLUSIONIST
B.RAMA
RAJU
V.
SRINIVAS
T.SRINIVAS
RAMALINGA
RAJU
S.
GOPALAKRISHNA

20. THE ILLUSIONIST
 Ramalinga Raju :
 B Rama Raju :
 V Srinivas :
 S Gopalakrishnan :
 Talluri Srinivas :
Satyam former chairman
Brother of Ramalinga Raju
Former Managing Director
Ex-Chief financial officer
Price Waterhouse Auditor
Price Waterhouse Auditor

21. CFO revealed during investigation
 Started 6-7 years ago.
 10 crore was inflated to 200 crore in balance sheet.
 This marginal gap went on expanding over years.
7800 Crore fraud
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22. IMPORTANT DATES AND EVENTS
 Dec 16, 2008
 Dec 17, 2008
 Dec 18, 2008
- decision to buy stake in
MAYTAS infrastructure .
- Satyam call of the MAYTAS
deal as a result of investor
revolt.
- Satyam announces a board
meeting on 29th in wake of
investor revolt.

23. IMPORTANT DATES AND EVENTS
(Contd..)
 Dec 19, 2008
 Dec 23, 2008
 Dec 28, 2008
Post MAYTAS U-turn, Unpaid
files motion against Satyam and
promoters for $1.1 Billion
claiming fraud.
World bank confirms an 8 year
ban of Satyam for data theft
and bribery .
4 Board members resign in
wake of MAYTAS controversy
and board meeting postponed
to Jan 10th 2009.

24. IMPORTANT DATES AND EVENTS
(Contd..)
 Jan 3, 2009
 Jan 7 & 8,
2009
Promoter stake in Satyam
coming down to less than 5%.
Mr. B. R. Raju resigns and cites
financial irregularities in the
book of accounts to the tune of
$1.5 Billion.

25. SATYAM AUDITORS
Among the “BIG 4”.
Other 3 are:
PRICE
WATERHOUSE
s
COOPER
Deloitte
KPMG
Ernst &Young
Functions:
Finance & Accounting,
internal audit, tax
compliance, logistics
& human resources.
Performs non-core
functions of
Organization

26. The Auditors - PWC
 PwC was paid 3.53 crore for the year 2008
 Comparatively, same industry Infosys paid 1
crore

27. PwC - Partners in Crime ???
 Previous record -
 Satyam has also been accused of frauds in 2001 and
2003.
 No importance was given to this.
 Getting third party evidence -
 No bank confirmation on fixed deposits
 Accrued interest(fixed deposit)
 Debtors confirmation
 Factors overlooked -
 Changing of accounting years
 Huge debt despite cash surplus

28. PwC - Partners in Crime ???
What could have been sensed ?
 Excess cash:
 No distribution among share holders nor invested
to earn valuable interest
 Operating margin:
 Peer companies - 20-25%
 Satyam - 3%
 Recession:
 Huge profits compared to others always a chance
of creative accounting.

29. PROBABLE REASONS
PRESSURE TO MEET
EXPECTATION
Growing Competition
Threat of being overtaken
OVERCONFIDENCE On his ability
PERSONAL BENEFITS
Siphoning of funds
Salary of non-existent 13000
employees
“Since about seven years we wanted to show more income in the
accounts to avoid others from involving in the company affairs
and any possible hostile acquisition.

30. Company Logo

31. WHY DID RAJU
CONFESS
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32. WHY DID RAJU CONFESS
 The gap in the balance sheet reached
unmanageable proportions and could not be
filled anyhow in future.
 The whistle blower whose email to a Satyam
board member triggered a chain of events .

33. IMPACT OF SCAM ON THE NATION
 Jobs of over 50,000 technocrats were at risk.
 Country’s booming economy feared slight
collapse as country's GDP fell by estimated 0.4%.
 India’s IT sector suffered downturn as its image
was tarnished globally.
 World Bank barred Wipro, Mega soft and 3 other
IT companies after the Satyam debacle.

34. RAJU & OTHERS UNDER PROBE
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35.  CBI filed a charge sheet against nine on April
CBI investigating further
7,2009.
Apart from illusionist four others are :
- Rajus second brother S. Raju
- 2 employees from finance wing
- Vice president (finance)

36. Regulators Investigating Satyam

37. SATYAM UNDER RECONSTRUCTION

38. SATYAM UNDER RECONSTRUCTION
 Appointing new board.
 Board appointed by government :
• former Nasscom chief – Kiran Karnik,
• Chairman HDFC – Deepak Parikh
• Former SEBI member – C. Achuthan .
 Satyam shares gained over 44% day after
appointment of the new board.
 New CEO – A S Murthy
 Tech Mahindra acquired Satyam on April
13,2009.

39. THE FULL TRUTH,
IT APPEARS,
IS NOT YET OUT.

40. BREACH OF BUSINESS ETHICS
 Lack of corporate governance
 Lacks financial disclosure & transparency
 Damaged relation with stake holders including
employees , investors etc.
 Inequitable treatment of shareholders
 Zero integrity
 Wrong code of conduct
 Falsification
 Alteration
 Creative accounting
 Cooking the books
 Window dressing

41. Company Logo
T
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N
K
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42. Company Logo