Satyam scandal
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The Satyam Computer Services scandal was publicly announced on 7 January 2009, when Chairman Ramalinga Raju confessed that Satyam's accounts had been falsified.
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[edit] Aftermath
Ramalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme court on 4 November 2011 as the investigation agency CBI failed to file the chargesheet even after more than 33 months of Raju been arrested.
Raju had appointed a task force to address the Maytas situation in the last few days before revealing the news of the accounting fraud. After the scandal broke, the then-board members elected Ram Mynampati to be Satyam's interim CEO. Mynampati's statement on Satyam's website said:
"We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation."
On 10 January 2009, the Company Law Board decided to bar the current board of Satyam from functioning and appoint 10 nominal directors. "The current board has failed to do what they are supposed to do. The credibility of the IT industry should not be allowed to suffer." said Corporate Affairs Minister Prem Chand Gupta. Chartered accountants regulator ICAI issued show-cause notice to Satyam's auditor PricewaterhouseCoopers (PwC) on the accounts fudging. "We have asked PwC to reply within 21 days," ICAI President Ved Jain said.
On the same day, the Crime Investigation Department (CID) team picked up Vadlamani Srinivas, Satyam's then-CFO, for questioning. He was arrested later and kept in judicial custody.[1]
On 11 January 2009, the government nominated noted banker Deepak Parekh, former NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyam's board.
Analysts in India have termed the Satyam scandal India's own Enron scandal.[2] Some social commentators see it more as a part of a broader problem relating to India's caste-based, family-owned corporate environment.[3]
Immediately following the news, Merrill Lynch (now a part of Bank of America) and State Farm Insurance terminated its engagement with the company. Also, Credit Suisse suspended its coverage of Satyam.[citation needed]. It was also reported that Satyam's auditing firm PricewaterhouseCoopers will be scrutinized for complicity in this scandal. SEBI, the stock market regulator, also said that, if found guilty, its license to work in India may be revoked.[4][5][6][7][8] Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance Issues,[9] which was stripped from them in the aftermath of the scandal.[10] The New York Stock Exchange has halted trading in Satyam stock as of 7 January 2009.[11] India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX Nifty 50-share index on 12 January.[12] The founder of Satyam was arrested two days after he admitted to falsifying the firm's accounts. Ramalinga Raju is charged with several offences, including criminal conspiracy, breach of trust, and forgery.
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.[13] In New York Stock Exchange Satyam shares peaked in 2008 at US$ 29.10; by March 2009 they were trading around US $1.80.
The Indian Government has stated that it may provide temporary direct or indirect liquidity support to the company. However, whether employment will continue at pre-crisis levels, particularly for new recruits, is questionable .[14]
On 14 January 2009, Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam may have rendered its audit reports "inaccurate and unreliable".[15]
On 22 January 2009, CID told in court that the actual number of employees is only 40,000 and not 53,000 as reported earlier and that Mr. Raju had been allegedly withdrawing INR 20 crore rupees every month for paying these 13,000 non-existent employees.[16]
[edit] New CEO and special advisors
On 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-day-long board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors.[17][18]
[edit] Acquisition by Mahindra Group
On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy. Effective July 2009, Satyam rebranded its services under the new Mahindra management as "Mahindra Satyam" with a new corporate website www.MahindraSatyam.com.
C.P Gurnani is the current CEO.
[edit] Restatement of Results
As a result of the scandal, under the directions of the new Mahindra management team, Satyam Computer Services restated its financial results for the period 2002 to 2008. These restated results were published in September 2009.
[edit] See also
[edit] References
- ^ Satyam ex-CFO Vadlamani Srinivas sent to judicial custody till Jan 23
- ^ Satyam scandal could be 'India's Enron' - World business- msnbc.com (updated 11:42 a.m. ET Jan. 7, 2009)
- ^ [1]
- ^ Satyam scandal rattles confidence in accounting Big Four
- ^ ICAI to seek explanation from Satyam’s auditor PwC
- ^ Satyam auditor says examining chairman's statement
- ^ What happens to PWC, The Auditor For Satyam?
- ^ Satyam: Auditors' body to pull up PwC ICAI to seek explanation from Satyam’s auditor PwC
- ^ Grand Jury meeting of GOLDEN PEACOCK AWARDS 2008 - 8th September 2008, New Delhi Announcement of results
- ^ Satyam stripped off Golden Peacock Global Awards - Software-Infotech-The Economic Times (8 Jan 2009, 0118 hrs IST, PTI)
- ^ NYSE halts trading in Satyam stock - (Wednesday, 7 January 2009, 23:02) Sify.com
- ^ Satyam Computer Services Ltd (SAY.N) Key Developments (Stocks) Reuters.com
- ^ Indian IT scandal boss arrested - 9 January 2009 - Business - BBC NEWS
- ^ Ready to bail out Satyam, if required: Govt
- ^ Price Waterhouse says its Satyam audits relied on company information, could be wrong[dead link] - 14 January 2009 - Associated Press
- ^ Satyam fudged FDs, has 40,000 employees: Public prosecutor
- ^ Satyam Names Murty as CEO to Replace Arrested Founder - (05 February 2009, 1813 hrs IST) Satyam Names Murty as CEO to Replace Arrested Founder
- ^ A S Murty appointed as Satyam CEO - (05 February 2009, 1816 hrs IST) A S Murty appointed as Satyam CEO Kiran
[edit] External links
- The Great Satyam robbery
- Satyam Chairman B. Ramalinga Raju's statement to the Board
- PricewaterhouseCoopers offices searched in Satyam probe
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