Satyam Scam | Satyam Scandal (2023)
In 2009 the Satyam Scam/Satyam Scandal begins, It is believed that the Indian equivalent of the fabled Enron fraud case of 2001 took place in India. A fraud of nearly 7000 crores was committed by Satyam Computers Services, according to the chairman of the company, Byrraju Ramalinga Raju.
The Satyam Scam and Scandal exposed many loopholes in the Indian legal system and also shed light on the financial system. Satyam Computers, founded by the Raju brothers in 1987, was listed on the BSE in 1991 and its shares were oversubscribed by 17 times. As it grew, it reached milestones year after year. In 2008, the company reached 2 billion in revenue. This is the ideal success story.
The truth, as the meaning of ‘Satyam’ suggests, was that the numbers were outrageous and backed up by fake bills, receipts, and bank statements.
The Satyam Scam & Scandal in India
These fictitious receipts were also accounted for using Satyam’s own ERP system instead of commercial ERPs. Nearly 5000 crores of fake bills were issued. A Fixed Deposit (FD) is a type of deposit. The Raju brothers decided to invest the idle money in Matyas, another holding of the Raju family, in 2009, when the board of directors recommended investing the idle money in FDs. The stakeholders opposed match between Satyam and Matyas, which was a last resort.
As a result of disagreements and the pressure created by the World Bank’s investigation, and the subsequent fall of share prices, Satyam and PwC’s failures were put front and center. Three partial charges were consolidated into one charge sheet before Raju and 10 others were arrested.
Known for its fraudulent financial operations, Satyam Computer Services Limited is an Indian IT firm with worldwide operations. Mr. Ramalingam Raju, Satyam’s CEO, admitted responsibility for the company’s financial irregularities, including an exaggerated cash position of about $1.04 billion, which never existed. Awarded the Golden Peacock Award for best-governed corporation in 2007 and 2009, Satyam received the award in September 2008.
After the scandal of the “Satyam Scam”, Tech Mahindra acquired Satyam through a public auction, which led to the company’s rebranding as Mahindra Satyam. As of 2018, SEBI barred Price Waterhouse (PwC), Satyam Computers’ auditor, from conducting any audit processes for any Indian company. The share price of Satyam dropped from Rs. 554 on the BSE to Rs. 11 on the NYSE in 2008, from $29.10 on the BSE. 50 and $1.80 in respective order.
It’s no secret that Satyam Computers is India’s biggest corporate scandal in living memory. Satyam Computers was once the country’s IT crown jewel and its fourth largest company. As part of his confession, Ramalinga Raju admitted that he had been making up earnings for years before he was apprehended and confessed to a scam involving $1.47 billion (Rs. 7,800 crores). In the company’s boardroom, top management, and auditors, Raju and his brother, Mr. B. Rama Raju, were accused of concealing the lie.
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