The document summarizes the Satyam corporate accounting fraud scandal in India, one of the largest in history. It describes how Satyam Computer Services founder Ramalinga Raju inflated profits and falsified financial records over 8 years, misrepresenting over $1 billion in assets. In January 2009, Raju confessed to the fraud in a letter, causing Satyam's stock to plummet 77% in one day. An investigation found many issues, including tampered financials and assets, and funds siphoned to Raju's family. After effects included loss of trust in corporate governance and auditors in India. Raju and others were later sentenced to 7 years in prison for their roles in the fraud.

1. Satyam Scam
Story of the BIGGEST CORPORATE FRAUD in India..

2. Introduction
• Satyam Computer Services Limited was founded in 1987 by
Mr. B Ramalinga Raju
• The company offers consulting and information technology
services spanning various sectors.
• The company was listed with New York stock exchange,
National stock exchange, and the Mumbai stock exchange

3. Raju and Satyam
• Born on September 16,1954 in a traditional agricultural
family in Andra Pradesh
• Raju was first businessman in the field of construction
and textiles
• Founded Satyam in 1987
• Started Satyam Computers with 20 employees in 1987

4. Raju and Satyam
• Satyam was listed in India Stock Exchange in 1991
• Listed in New york Stock Exchange in 2001
• Contract for providing IT support services to The World
Bank in 2003
• 52000 employees working in Satyam in September 2008
• Had 13120 business associates serving 300 customers
world wide

5. Awards
• Ernst & Young Entrepreneur of the Year Services Award, 1999
• Dataquest IT Man of the Year Award, 2000
• Asia Business Leader Award, 2002
• Ernst & Young Entrepreneur of the Year, 2007
(revoked after the fraud was confessed)
• Golden Peacock Award for Corporate Governance, 2008
(revoked after the fraud was confessed)

6. The Revelation
• The Black Day: 7th January, 2009
• Accounting fraud of over 7800 crores
• Accounting books of past 8 years were cooked
• Raju wrote in the confession letter
“Every attempt to fill the gap failed.. It was like riding a tiger,
not knowing how to get off without being eaten..”

7. After Revelation
• Satyam shares fell by 77% to Rs.175
• Biggest single day fall for a stock in stock market
• BSE sensex fell by 7.25%
• NSE fell by 6.18%
• Company’s worth decreased from 11,464 crores to 1,607
crores

8. After Revelation
• SEBI, the stock market regulator, said that, if found guilty, its
license to work in India may be revoked
• The New York Stock Exchange has halted trading in Satyam
stock
• India’s National Stock Exchange has announced that it will
remove Satyam from its share index
• Satyam’s shares fell to 11.50 rupees on 10 January 2009, their
lowest level since March 1998, compared to a high of 544
rupees in 2008.

9. Issues
• Falsifying the financials of the company
• Profits were inflated
• Overstated current assets and understated liabilities

11. Issues
• Information regarding fixed assets tampered
• Showed fixed assets of Rs. 3318.37 crores
• Actual figure only Rs. 9.96 crores
• Salaries moved into fake employee accounts
• Pooling company’s funds to purchase land
• Used funds to purchase land in the names of 330 companies
• 327 belonged to Raju’s family

12. Issues
• Failed to provide transparent and ethical disclosure
• Board of Directors was chairman friendly and failed to
perform their duties
• Violated rules of corporate governance

13. Underlying Issues
• Lack of financial expertise of Board of Directors
• Board of Directors lacked industrial experience
• Board was unduly reliant on auditors
• Failed to distinguish the roles of management and board
• CEO and Chairman of company were brothers

14. After effects on society
• Put a Question mark to the corporate governance practices in
India
• Casted doubts about the fair and independent role of auditors
• Authenticity of Pricewaterhouse damaged
• Nation’s loss of trust and credibility in the eyes of foreign
investors
• Employees suffered from financial, social and emotional
damage
• Loss to clients, shareholders and lenders

15. Major culprits
• Ramalinga Raju : Former Chairman
• B. Rama Raju : Brother of Ramalinga Raju and
Former Managing Director
• V. Srinivas : Former Chief Financial Officer
• S. Gopalakrishnan : PriceWaterhouse auditor
• Talluri Srinivas : PriceWaterhouse auditor

16. Probable reasons
• Pressure to meet expectations
• Growing competition
• Threat of being overtaken
• Over confidence
• On their abilities
• Personal benefits
• Siphoning off funds
• Salary of non-existent 13000 employees

17. Why a confession?
• Raju was probably convinced that the gap in the balance
sheet reached unmanageable proportions and could not be
filled anyhow in the future
• A whistleblower whose email to a Satyam board member
triggered a chain of events.

18. Satyam now
• Under reconstruction
• New board appointed by government
• Former Nasscom Chief- Kiran Karnik, Chairman HDFC – Deepak
Parikh, Former SEBI member- C. Achuthan
• Satyam shares gained over 44% on the day after the
appointment of new board
• New CEO: A.S. Murthy
• Tech Mahindra acquired Satyam on April 13, 2009 with new
brand identity “Mahindra Satyam”

19. Satyam verdict
• B Ramalinga Raju and his brother Rama Raju (former M.D)
have been sentenced to seven years’ jail and fined Rs 5 crores
each
• Similar sentence on eight others including V. Srinivas (former
CFO), S. Gopalakrishnan (Pricewaterhouse Partner), Talluri
Srinivas (Pricewaterhouse Partner), B Suryanarayana Raju, G
Ramakrishna, G Venkatapathi Raju, Srisailam and VSP Gupta
(all former Satyam staff)

20. Thank you…