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Satyam Scam

Satyam Scam

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05/29/2011

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Business Ethics Assignment
 
2010
S
hweta Chaurasia08pmp039791/4/2010 
SATYAM SCAM: A FAILURE OF CORPORATE GOVERNANCE
 
 
1. INTRODUCTIONS
atyam
fr 
aud
 
un
fol
ded
 
and
so w
e
e
 
the
i
nhe
ent
w
eakne
ss
e
s of Corpor 
ate
Gov
e
nance
i
n
I
nd
i
a.
 
ama
li
nga
aju,
o
nce
 
a
pos
tu
e
bo
y
of I
nd
i
s
g
rowi
ng
sof 
t
w
a
e
s
ect
or w
h
o
c
o
u
l
d
fi
nd
 
a
s
eat
  b
e
si
de
Bill Cli
nt
o
n
o
n
 
the
 
da
is
,
 
ha
s b
ec
o
me
 
a
vill
a
i
n
i
n
 
the
 
c
orpor 
ate
worl
d
for v
a
li
d
ea
so
n
s
.
 His
em
o
t
io
na
ll
y
 
cha
ged
fo
u
and
 
ha
lf p
age
l
ette
r of s
ta
t
li
ng
e
v
e
l
at
io
n
s s
h
oo
 
the
 
ent
ir 
e
 
c
orpor 
ate
worl
d
w
hen
 
he
 
adm
i
tted
of 
c
oo
i
ng
 
the
 
acc
o
unt
 
and
i
n
fl
at
i
ng
 
the
fi
gu
e
b
y
u
 p
ee
s5040
c
ror 
e.
T
h
is s
cam
is b
e
i
ng
 
equated
wi
th
E
n
ro
n
of USA b
ecau
s
e
 
he
e
 
a
lso
the
s
cam
w
a
sor 
che
s
t
ated
b
y
i
t
s A
ud
i
t
or 
,
Ar 
thu
r A
nde
rso
n,
i
n
S
atyam,
Pri
ce
W
ate
h
o
u
s
e
 
c
oop
e
.
 B
y
 
the
 
end
of 
the
20
th
 
centu
y,
S
atyam
 
c
o
m
 p
ute
rs
had
 
made
 
a
 
name
for i
t
s
e
lf o
n
 
the
 
g
lob
e
 
and
 
had
 
eme
ged
 
a
s
the
4
th
l
a
ge
s
t
sof 
t
w
a
e
i
n
 
the
 
c
o
unt
y.
T
he
 
mete
ori
c
ris
e
of 
the
 
c
o
m
 p
any
 
can
b
e
 s
u
 bs
tant
i
ated
b
y
 
the
act
 
that
i
t
w
a
s
e
s
ta
 blis
hed
i
n
1987
a
s priv
ate
 
c
o
m
 p
any
 
and
 
g
o
t
lis
ted
b
y
 BSE i
n
1991
.
I
n
2001 i
t
s s
ha
e
w
a
s lis
ted
i
n
NYSE
and
i
n
2004 i
t
 
made
i
t
s pl
ace
i
n
E
u
rop
ean
 s
t
o
ck 
 
ma
ket.
A
cc
or 
d
i
ng
 
t
o
c
o
m
 p
any¶
s s
tatement,
i
t
s
e
v
enue
 
exceed
s
t
o 2 b
n
USD i
n
2008
.
 Si
m
il
a
rl
y
aju¶
s so
s
c
o
m
 p
an
i
e
s
a
lso w
e
e
 
m
ovi
ng
wi
th
l
ea
 ps
and
bo
und.
M
ayta
s i
n
fr 
a
 
g
o
t
 
the
 
am
 bi
t
io
u
s M
et
ro pro
 ject
s
and
b
agged
 
many
 
tende
rs i
nc
l
ud
i
ng
o
ne
of 
c
o
n
s
t
uct
io
n
of T
echn
olo
gy
 P
a
k.
 
2. CORPORATE GOVERNANCE IN INDIA- REALITY AFTER SATYAM SCAM
I
nte
e
s
t
i
ng
l
y
S
atyam
 
ha
s b
agged
 
Gol
den
P
eac
o
ck 
 
a
w
a
d
for b
e
s
t
 
c
orpor 
ate
 
g
ov
e
nance
 
 b
y
Worl
d
 Co
unc
il for Corpor 
ate
Gov
e
nance
o
n
l
y
 
a
e
w
 
yea
rs
ag
o
.
T
he
s
cam
 
ha
s r 
a
is
ed
 
many
 
d
o
u
 b
t
s
a
 bo
ut
 
the
 
c
l
a
ss of 
c
orpor 
ate
 
g
ov
e
nance
i
n
I
nd
i
a.
W
h
il
e
sp
eak 
i
ng
 
at
 
a
s
em
i
na
r o
n
 
c
orpor 
ate
 
g
ov
e
nance
 or 
gan
iz
ed
b
y
CII
,
 
Mi
n
is
t
y
of Co
m
 p
any
 
a
ff 
a
irs
and
N
at
io
na
l fo
undat
io
n
of 
 
c
orpor 
ate
 
g
ov
e
nance,
 C
.
B
.
B
ha
v
e,
 
the
 
cha
ir 
man
of SEBI
 
s
a
i
d
o
n
6
th
F
e
 br 
ua
y,
2009
that
 
the
 
c
orpor 
ate
 
g
ov
e
nance
is
an
 o
ng
oi
ng
pro
ce
ss
.
T
he
e
is
a
 
et
rosp
ect
io
n
 
e
v
e
y
w
he
e
 
that
so
me
 
c
o
nc
ete
s
te
 ps
 
wi
th
e
sp
ect
 
t
o i
t
 s
h
o
u
l
d
b
e
 
d
o
ne.
 
T
he
e
 
a
e
e
w i
m
 por 
tance
 
e
l
ement
s of 
c
orpor 
ate
 
g
ov
e
nance
 
name
l
y
A
ud
i
t
i
ng,
I
nde
 p
endent
 Dir 
ect
ors
,
egu
l
at
ors
and
Fi
na
ll
y
 
the
Bo
a
d
i
nc
l
ud
i
ng
CEO i
t
s
e
lf 
.
If w
e
 
exam
i
ne
 
the
s
e
 
c
o
n
s
t
i
tuent
s o
ne
b
y
o
ne,
i
t
wo
u
l
d
b
e
 
c
y
s
ta
l
c
l
ea
that
 
a
ll
the
 
c
o
n
s
t
i
tuent
s
e
i
the
r
a
il
ed
or 
d
i
d
 
n
o
t
 
act
 
a
s w
a
s r 
equ
ir 
ed.
 T
he
rol
e
of Pri
ce
w
ate
h
o
u
s
e
Coop
e
rs (PwC)
,
 
the
A
ud
i
t
i
ng
fi
m
of S
atyam
 
ha
s b
een
 
dea
l
t.
 I
n
s
t
i
tute
of C
ha
te
ed
A
cc
o
untant
s of I
nd
i
a
(ICAI)
c
o
n
s
t
i
tuted
 
unde
r C
ha
te
r A
cc
o
untant
s A
ct,
 1949 is
the
egu
l
at
or 
y
bo
dy
of 
a
ll
the
 
acc
o
unt
i
ng
 
and
 
aud
i
t
i
ng
fir 
m
s
ac
ross
the
 
c
o
unt
ri
e
s
.
 
 
A
cc
or 
d
i
ng
 
t
o
a
e
 por 
t
 
the
e
is
acute
s
h
or 
tage
of 
qua
lifi
ed
 
cha
te
ed
 
acc
o
untant
s
and
 
aud
i
t
ors i
n
 I
nd
i
a
 
and
 
a
ro
und
 
the
worl
d
 
a
lso
.
T
he
 
num
 b
e
r of CAs p
a
ssi
ng
 
e
v
e
y
 
yea
r is
h
op
e
l
e
ssl
y
s
ma
ll
.
I
t
is
a
 ppr 
ehended
 
the
e
for 
e
 
that
 
the
 
aud
i
t
i
ng
fir 
m
s o
ut
so
u
ce
 
unqua
lifi
ed
or s
em
i-
qua
lifi
ed
 
c
o
mme
ce
 
g
aduate
s of Pos
t
 
g
aduate
s
t
o
d
o
the
 
aud
i
t
i
ng
i
n
 
the
 
c
o
m
 p
an
i
e
s
.
T
he
pr 
e
s
t
i
g
io
u
s fir 
m
s
get
 
the
 
a
ssi
gnment
b
y
vir 
tue
of 
the
ir 
name
 
and
ame
w
h
i
ch
 
they
eck 
l
e
ssl
y
s
e
ll i
n
 
the
 
ma
ket
b
y
o
ut
 so
u
c
i
ng
 
the
 
aud
i
t
ors
at
 
a
v
e
y
low r 
emune
at
io
n.
I
n
 
ca
s
e
of S
atyam,
 
the
 
man
w
h
o w
a
s s
u
 ppos
ed
 
t
o
d
o
aud
i
t
w
a
s i
nc
i
denta
ll
y
 
execut
iv
e
 
mem
 b
e
r i
n
ICAI
.
 T
he
i
nde
 p
endent
 
d
ir 
ect
ors
ha
v
e
 
a
lso f 
a
il
ed
 
t
o
d
is
cha
ge
 
the
ir 
dut
i
e
s prop
e
rl
y.
S
ect
io
n
49 of SEBIA
ct
 
and
s
ect
io
n
229 A of Co
m
 p
any
A
ct,
1956 provi
de
s for 
a
 ppoi
ntment
of I
nde
 p
endent
Dir 
ect
orsi
n
 
the
Co
m
 p
an
i
e
s for pro
tect
i
ng
 
the
ri
ght
s of p
u
 bli
c
 
at
l
a
ge
i
n
 
gene
a
l
and
s
ha
eh
ol
de
rs i
n
  p
a
t
i
cu
l
a
.
I
n
 
the
 
ca
s
e
of s
atyam
T
.
.
Pr 
a
s
ad,
 
the
et
ir 
ed
C
a
 bi
net
S
ec
eta
y
Gov
t
of I
nd
i
a
w
a
s o
ne
 of 
the
 
d
ir 
ect
ors
.
I
t
sp
eak 
s
a
lo
t
 
a
 bo
ut
 
the
pro
cedu
e
of 
a
 ppoi
ntment
of i
nde
 p
endent
 
d
ir 
ect
ors
.
 W
hat
 
i
nd
s of p
e
opl
e
 
a
e
b
e
i
ng
 
a
 ppoi
nted
i
n
 
the
 
c
o
m
 p
any?
Mor 
e
ov
e
,
 
they
 
a
e
 
a
 ppoi
nted
b
y
 
the
 Co
m
 p
an
i
e
s
them
s
e
lv
e
s
and
p
ay
 
he
ty
s
a
l
a
ri
e
s
and
p
e
s for vir 
tua
ll
y
 
d
oi
ng
 
n
o
th
i
ng.
U
nde
th
is
c
ir 
cum
s
tance
is i
t
 
th
i
nka
 bl
e
 
that
 
the
s
e
I
nde
 p
endent
 
d
ir 
ect
ors wo
u
l
d
 
da
e
 
t
o p
ee
 p i
nt
o
the
 
a
ff 
a
irsof 
the
 
c
o
m
 p
any
 
aga
i
n
s
t
 
the
wis
he
s of 
the
CEOs
?
T
he
e
 
a
e
o
n
l
y
 
t
wo possibili
t
i
e
s i
n
S
atyam
wi
th
 
e
sp
ect
 
t
o I
nde
 p
endent
 
d
ir 
ect
ors
.
Ei
the
they
 
c
o
nn
iv
e
wi
th
aju
 
and
 
kne
w
e
v
e
yth
i
ng
 
that
w
a
s
g
oi
ng
o
n,
or 
they
 
d
i
d
 
n
o
t
 
kn
ow
.
I
n
bo
th
 
the
 
ca
s
e
s
they
a
il
ed
 
m
is
e
a
 bl
y
 
t
o
d
is
cha
ge
 
the
ir 
dut
i
e
s
.
 W
hat
is
the
 
need
of s
uch
I
nde
 p
endent
Dir 
ect
ors if 
they
 
cann
o
t
 
d
o
anyth
i
ng
i
n
 
th
is
matte
?
O
ne
 
un
 p
a
l
ata
 bl
e
 
 ju
s
t
ifi
cat
io
n
is
g
iv
en
 
that
 
the
I
nde
 p
endent
Dir 
ect
ors p
a
t
i
c
ip
ate
i
n
 
the
 
meet
i
ng
 
and
 
a
e
 
n
o
t
 
c
o
nce
ned
wi
th
 
aut
o
n
o
my
of 
the
 
c
o
m
 p
any.
I
t
s
h
o
u
l
d
b
e
bo
ne
i
n
 
m
i
nd
 
the
E
n
ro
n
s
cam
w
a
s
ex
 pos
ed
b
y
S
he
rro
n
W
atk 
i
n
s
,
 
a
wo
men
i
nde
 p
endent
 
d
ir 
ect
or 
.
 T
h
ir 
d
l
y,
 
the
SEBI
and
Mi
n
is
t
y
of Co
m
 p
any
Aff 
a
irs
t
oo
ha
v
e
a
il
ed
i
n
 
the
ir 
a
ssi
gned
 
 j
obs
.
SEBIis
the
 
h
i
ghe
s
t
egu
l
at
or 
and
 
kee
 ps
eag
l
e
 
eye
o
n
 
the
 
act
ivi
t
i
e
s of 
the
 
ca
 pi
ta
l
ma
ket
s
.
W
hen
 
the
  profi
t
s of 
th
is
c
o
m
 p
any
w
e
e
eg
is
te
ri
ng
 
a
 b
n
or 
ma
l
g
row
th,
 
the
e
 b
y
 
the
pri
ce
s o
the
s
ha
e
s w
e
e
 so
a
ri
ng,
w
hat
w
e
e
 
the
s
e
 
guy
s
d
oi
ng?
T
he
e
 
ha
s b
een
 
a
lo
t
of 
hue
 
and
 
c
y
wi
th
e
sp
ect
 
t
o i
n
si
de
t
ad
i
ng;
 
a
 
h
owl SEBI f 
a
il
ed
 
t
o lis
ten
 
t
o
and
i
t
i
n
fli
cted
 
hea
vil
y
o
n
S
atyam.
aju
 
had
pl
edged
 
a
l
m
os
t
 
a
ll
h
is s
ha
e
s so
d
i
d
 
many
of 
the
pro
m
o
te
rs
.
T
he
 
ne
wl
y
 
a
 ppoi
nted
CEO M
u
thy
is
a
lsos
a
i
d
 
t
o
ha
v
e
sol
d
 
a
 bo
ut
3
.
14 l
akh
s s
ha
e
s i
nc
l
ud
i
ng
40
,
000 i
n
D
ecem
 b
e
r i
t
s
e
lf b
e
lo
ng
i
ng
 
t
o
h
i
m
 
and
 
h
is
am
il
y
 
mem
 b
e
rs
.
T
he
s
e
 
a
e
 
the
i
n
si
de
t
ad
i
ng.
Al
th
o
ugh
i
n
si
de
t
ad
i
ng
p
e
r s
e
is
n
o
t
 ill
ega
l b
ut
i
t
is
uneth
i
ca
l
,
 
m
or 
e
ov
e
r w
hen
Co
m
 p
any¶
s
h
i
gh
offi
c
i
a
l w
h
o w
e
e
o
n
s
ha
e
s
e
lli
ng
 

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