Satyam Computers Chairman quits, admits fraud
The chairman of India’s Satyam Computer Services Ltd. quit on Wednesday after admitting the company’s profits had been inflated for several years, sending shares of the software services provider plunging by more than 70 percent.
The company’s balance sheet was loaded with “fictitious” assets and “non-existent cash,” Chairman B. Ramalinga Raju said in a letter to the board, which was released to the Bombay Stock Exchange.
The share value of Satyam computers was quoting about Rs. 500 approximately in May-June 2008 and today it’s valued at Rs. 38.70. A fall of more than 90% in just 6-7 months time frame.
The 4th largest Software Services provider in India employs about 53,000 workers with offices in almost every major city in India and some of the bigger cities in the world. The Chairman Mr. B. Ramalinga Raju said to the Bombay Stock Exchange that the balance sheet was loaded with “fictitious” assets and “non-existent cash. Further, he said that none of the other board members had any knowledge of the fraud. He apologized to all stakeholders in his letter and claimed that he had not benefited from the doctored results. He also said that neither he nor the MD took even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results.
B.Rama Raju, chairman’s brother and Managing Director of Satyam Computers, also quit.
It was only few weeks ago, that Satyam Computers bid for buying Maytas Properties, which is owned by Ramalinga Raju and he was forced to back out from the buy offer on the pressure from investors.
This accounting scandal raises questions about the quality of corporate governance in India. The Securities and Exchange Board of India, the market regulator, said it was investigating, as usual.
“We have to go beyond this letter and find out what actually has happened,” SEBI chief C.B. Bhave told reporters. “This is is an issue which has very serious implications. It involves the Companies Act and the violation of the listing agreement with SEBI. It also raises the issue of authenticity of accounts that have been audited and certified by the auditors.”
It’s quite interesting to note that the Chief Minister of Andhra Pradesh, Dr. Y. S. Rajashekara Reddy informed the news reporters that everything’s well with the Software giant and that the Government did not find any fault with the company.
Earlier, few years ago, it was Harshad Mehta. Is it Ramalinga Raju’s turn now? What should the Government of India do to protect the investors from these fraudsters? Express your opinion!
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Comments
It say very very sad news. One of the top 5 Companies in India. CEO himself confessing. I hope other companies are not doing the same to show profits every quarter.
Fingers crossed.
Nihar´s last blog post..Download Kaspersky Anti-Virus For Windows 7
@Lax, it’s sad for Indian corporate world.
@Nihar, yes you are correct. That’s the reason, few companies have very high ethics compliance in place. I never heard of any such thing in Satyam!
Wow, this is news to me. Whats with all the fraud in high executive company positions these days? Is it happening more, or are we just hearing about it more?
Phil´s last blog post..Razer Lachesis
I was shocked when i saw news in the morning.Its really bad that an indian MNC stud in center now.
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