The Satyam scandal was India's biggest corporate fraud. Ramalinga Raju, founder and chairman of Satyam Computers, resigned in 2009 after admitting to falsifying the company's accounts. He had inflated profits and revenues. Thousands of non-existent employees and fake bank accounts were discovered. The scam impacted India's economy and reputation. Regulators took actions like appointing new boards and adopting international accounting standards in response.

1. T H E S AT YA M S C A N DA L : U N C OV E R I N G
I N D I A’ S B I G G E S T C O R P O R AT E F R A U D
SYED MOHQIQ HUSSAIN | 2101CUKMR37
PRESENTED TO: PROF. FAROOQ AHMAD
SHAH

2. C O N T E N T S
• INTRODUCTION
• FOUNDER
• THE RISE OF SATYAM
• PEOPLE BEHIND THE SCAM
• THE SCAM
• IMPACTS OF SATYAM SCAM
• REGULATORY ACTIONS TAKEN
• STEPS TAKEN AFTER SATYAM
• RESULT OF SATYAM SCANDAL
• CONCLUSION

3. I N T RO D U C T I O N
• Satyam Computers was founded in 1987.
• It converted into Public Limited Company in 1992.
• The company offered consulting and information technology
services spanning various sectors.
• Mahindra Satyam was ranked #153 by fortune India 500 in 2011.
• Satyam’s network covers 66 countries, 53,000 employees across
6 continents.
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4. F O U N D E R
• He is Ramalinga Raju born on September 16,
1954. A traditional family of KSHASTRIYA (RAJU)
community of Andra Pradesh.
• He founded Satyam Computers and was its
Chairman until January 7, 2009, when he resigned
from the Satyam Board after admitting to corporate
fraud.
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This Photo by Unknown Author is licensed under CC BY-NC-ND

5. T H E R I S E O F
S AT YA M
1987 Satyam Computers Pvt. Ltd. born
1991
June – First Fortune 500 Client
August - Converted into Public Ltd.
Co.
1994 The Big Break – Allies with Dun and
Bradstreet Corp. Declared one of the
100 most pioneering technology
companies by World Economic
Forum.
2000 Dataquest IT Man of The Year
Award.
2001 Gets listed on NYSE: Revenue
crosses $1 Billion.
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6. P E O P L E B E H I N D T H I S S C A M
Ramalinga
Raju
Satyam Former
Chairman
B Rama
Raju
Former Managing
Director
V
Srinivas
Ex. Chief Financial
Officer
S
Gopalkrishnan
Price Waterhouse
Auditor
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Srinivas
Talluri
Price Waterhouse
Auditor

7. T H E S C A M
• Raju & his brother, B Rama Raju were arrested by Andra Pradesh police on
charges of breach of trust, conspiracy, cheating & Falsification of Records.
• Raju had misled various investors.
• Raju had also used dummy accounts to trade in Satyam’s shares.
• He had violated insider trading norm.
• Funds of Satyam were diverted to Matyas.
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8. C O N T D …
• On 22nd Jan 2009, CID told in court that the actual number of employees is only
40,000 and not 53,000 reported earlier and that Mr. Raju had been allegedly
withdrawing INR 20 crore for paying these 13,000 non-existent employees.
• Raju wanted to take over his MATYAS INFRA and MATYAS PROPERTIES.
• He was blamed that he was using the funds of the investors for the family
business. There were allegations that funds from Satyam were diverted to
Matyas, causing the Govt. agencies to verify the infrastructure company’s
records.
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10. H O W W A S T H E
S C A M R E V E A L E D ?
• Stock markets around the globe collapsed during 2008 & BSE fell from 21,000
to below 8,000.
• The losses caused investor to withdraw funds from the stock market.
• Satyam continued to get positive results during 2008, even in economic crisis.
• In Oct 2008, Satyam reported net income of $132.3 million, an increase of 28%
from the same quarter of the previous year.
• Satyam asserted that despite the challenging environment it continued to find
opportunities for growth.
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11. H O W W A S T H E S C A M
R E V E A L E D ? C O N T D …
• During Oct one stock Analyst drew attention to large cash balances in non-
interest-bearing bank accounts and expressed concern about the large balances
and the accuracy of the numbers.
• In Dec 2008, the BOD approved the purchase of Matyas Properties and Matyas
Infrastructure.
• After the incident, Satyam’s share dropped nearly 10% & 4-5 independent
directors resigned.
• On Jan 7, just hours before Mr. Raju disclosed the fraud, Merrill Lynch sent a
letter to the stock exchange indicating that he was withdrawing its engagement
with Satyam.
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12. I M PAC T S O F S C A M
• Jobs of over 50,000 were at risk.
• India’s global image was suffered.
• Indian stock market fell drastically.
• Biggest single day fall of ₹175 on Jan 6th in Satyam share.
• The NYSE halted trending in Satyam stock.
• NSE announced removal of Satyam from S&P & NIFTY 50.
• GDP fell by 0.4%.
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13. R E G U L ATO RY AC T I O N
• New BOD were appointed.
• Increased financial accounting disclosure.
• Adoption of International standards.
• Creation of new corporate code of conduct by Ministry of Corporate Affairs.
• Satyam was acquired by Mahindra Group Company; the new management
rebranded it Mahindra Satyam.
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14. C O N C LU S I O N
More scandals like Satyam can be avoided if:
• Auditing firm is Honest.
• SEBI plays an important role.
• Periodic review of legal compliance reports
by independent directors.
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15. T H A N K YO U
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