NAME OF THE TOPIC : FRAUD AND SCAM

TEAM MEMBERS NAME AND ROLL NO.

VAISHNAVI MANE (MF19158)
ADITI NARKAR (MF19133)
AISHWARYA KERKAR (MF19124)
KARAN SHETTY (MF19159)
VIGHNESH MAYEKAR (MF19127)

SUBJECT : BUSINESS ETHICS

ACADEMIC YEAR : 2020-21

FACULTY NAME : BOOMA HELPATH

 DECLARATION
We the undersigned solemnly declare that the project report is based on our
own work carried out during the course of our study. We assert the statements
made & conclusions drawn are an outcome of our research work. We further
certify that-
The work contained in the report is original & has been done by us under the
general supervision of my supervisor. We have followed the guidelines
provided by the university in writing the report. Whenever we have used
materials from other sources, we have given due credit to them in the text of the
report & giving their details in the references.
 INDEX
1 INTRODUCTION

2 RAISE OF SATYAM

3 HOW DID IT HAPPENED

4 PEOPLE BEHIND THE SCAM

5 SATYAM NOW

6 CONCLUSION

INTRODUCTION
 Ramalinga Raju born on September 16, 1954. A traditional family KSHATRIYA
community of Andhra Pradesh. He founded Satyam Computers and was its Chairman
until January 7, 2009.
Satyam computers was founded in 1987. It converted into Public Ltd Co. in 1992.
The company offers consulting and information technology services spanning various
sectors. Satyam’s network covers 66 countries 53000 employees across 6 continents
Mahindra Satyam is ranked #153 by Fortune India 500 in 2011.

When the 2008 recession hit the world, India was only going through a financial
crisis but also an ethical crisis. Imagine a hypothetical scenario in the stock market
where the very basic financials provided to you by a company are manipulated. This
was what happened with Satyam Computer Services.

The Satyam scam was finally exposed early in 2009. The Satyam Computer
Services scandal was a corporate scandal affecting India-based company Satyam
Computer Services in which chairman Byrraju Ramalinga Raju confessed that the
company's accounts had been falsified.

RAISE OF SATYAM SERVICES

 From being an IT icon to a wily manipulator and a convict, the downfall has been
swift and shocking for the founder-chairman of Satyam Computers B Ramalinga
Raju.

The life journey of 61-year-old Raju, who has been sentenced to 7-year imprisonment
in the biggest corporate fraud case, has been a roller coaster ride and what finally did
him in was greed and unrealistic ambition.

From a humble beginning in Bhimavaram, a small coastal Andhra town, Raju went
on to become the poster boy of software industry, guiding the destiny of India’s fourth
largest IT company and helping Hyderabad catapult into the international IT map.

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. 1999: It becomes the 1st Indian information and
communication technology company to be listed in New York Stock Exchange and by
this Satyam expands footprint to 30 countries. It was the first Indian company to be
listed in 3 international . 2007: becomes the 1st Asian company to be featured in the
training magazine’s list of top 125 companies for learning.

PEOPLE BEHIND THE SCAM

Ramalinga Raju : Satyam Founder & Chairman
B Rama Raju : Managing Director (Brother of Ramalinga Raju )
V Srinivas Ex-Chief Financial officer
S Gopalakrishnan : Price Waterhouse Auditor
Talluri Srinivas : Price Waterhouse Auditor Source

HOW DID IT HAPPENED

 The Satyam scandal was a Rs 7,000-crore corporate scandal in which chairman
Ramalinga Raju confessed that the company’s accounts had been falsified. On
January 7, 2009, Ramalinga Raju sent off an email to Sebi and stock exchanges,
wherein he admitted and confessed to inflating the cash and bank balances of the
company. Weeks before the scam began to unravel with his famous statement that he
was riding a tiger and did not know how to get off without being eaten. Raju had said
in an interview that Satyam, the then fourth-largest IT company, had a cash balance of
Rs 4,000 crore and could leverage it further to raise another Rs 15,000-20,000 crore.

Maytas is a reverse name of Satyam, is a company owned by “Raju’s Sons”

Maytas infra Maytas properties. Satyam planned to buy Maytas to fill the gap in the
Balance Sheet Floated two other companies for their own purpose. Without taking
permission of the shareholders. Failed to repay the loan & transfer of money Funds
from Satyam were diverted to Maytas Source.

back to 1999. Mr. Raju had begun inflating the quarterly profits in order to meet the
analyst expectations. For eg the results announced on October 17, 2009, overstated
quarterly revenues by 75% and profits by 97%. Raju had done this along with the
company’s global head for internal audit. Mr. Raju used his personal computer to
create a number of bank statements in order to inflate the balance sheet with cash that
simply did not exist. The company’s global head for internal audit created fake
customer identities and fake invoices in order to inflate the revenue. This, in turn,
would allow the company easy access to loans and the impression of its success led to
an increase in the share price.

Also, the cash that the company had raised from the markets in the US never even
made to the balance sheets. But this was not sufficient for Raju, he went onto create
records for fake employees and would withdraw salaries on their behalf.

The increased share price drove Raju to get rid of as many shares as possible and
maintain just enough to be a part of the company. This allowed Raju to make profits
from their sales at high prices. He also withdrew $3 million every month as salaries
on behalf of employees that did not exist.

The figures came into picture of Satyam scam are: Inflated ( non-existent) Cash
and Bank balance of Rs. 5,040 crores as against INR 5361 crore reflected in the
books) An accrued interest of Rs. 376 crore which is non-existent. An understated
liability of Rs. 1,230 crore. An over stated debtors position of Rs. 490 crore(as
against 2651 reflected in the books.) Actual number of employees is only 40,000 and
not 53,000 and Mr. Raju had been allegedly withdrawing INR 20 crore rupees every
month for paying these 13,000 non-existent employees.
 SATYAM NOW

After the fraud came to the light, the government had ordered an auction for sale
of the company in the interest of investors and over 50,000 employees of Satyam
Computers. It was acquired by Tech Mahindra, and was then renamed as Mahindra
Satyam, and was eventually merged into the parent company. The Satyam saga
eventually turned out to be a case of financial misstatements to the tune of
approximately Rs 12,320 crore, as per Sebi’s probe then. Citibank froze all its 30
accounts in 2009.
the investigation agency CBI failed to file the charge sheet even after more than
33 months of Raju been arrested . Appointing New Board. Board appointed by
Government . Satyam Shared gained 44% day after appointment of new BOD.
 CONCLUSION

 More scandals like Satyam can be avoided if-

 In addition to the present statutory requirement, companies should be required
to institute sufficient internal management controls.
 Management should ensure that the internal audit staffs are able to prevent and
detect financial statement fraud.
 Companies whose shares are publicly traded should be required to have audit
committees to monitor the internal control system
 SEBI plays an active role
 Periodic review of legal compliance reports by independent directors.
 BIBLIOGRAPHY

 https://www.financialexpress.com/industry/what-was-satyam-scam-which-
toppled-indias-fourth-largest-it-company-from-the-top-slots/1010389/
 https://www.academia.edu/40413293/Satyam_scam
 https://www.tribuneindia.com/news/archive/business/rise-and-fall-of-satyam-
founder-ramalinga-raju-65670