S

atyam
Computers
Anatomy of Fraud

AUTHORISED BY:
Radhika Chhabra
Pradyut Shendye
Shreyansh Bansal
Amit Rawat
Shambhavi Somvanshi
Shubham Bansal

Was once known as IT CROWN JEWEL

Background Of Satyam Computer

Submited To
Prof. Arun Sangwan
 Pradyut Shendye
History of the company
 Satyam computers started its operation in 1987, from Hyderabad with Ramalinga
Raju as founding member.
 Before starting Satyam, computers Ramalinga Raju used to own a cotton mill. He
also had his interest in real estate sector.
 Since its inception the company grew phenomenally. As a result, the company was
listed in Bombay Stock Exchange (BSE) and New York Stock Exchange (NSE).
 By the year 2003, the company’s stock price (cost of 1 share) was valued as high as
315 Rs.
 The company was growing at a very high pace.
 The company became the 4th largest IT firm in the country.

Other business interest of Ramalinga Raju

 As he was interested in Real estate because of the growing prospects of real estate in
Hyderabad, he went about purchasing land. He somehow got the route plan of the
proposed metro line and decided to exploit it. He bought lands around that area
(metro line area) as the prices of land after construction of the metro line would
shoot-up.
 He started Matyes properties (an infrastructure firm) by his family member’s name.

Activities and
decisions that
resulted in bad
press
 The growth
story of the
company did
not last for a
long time.
Ramalinga
Raju started to
manipulate the
accounts of the
company
(financial
accounts).
 According to financial statement 2008-09(Q2), the profits of the company was
actually 61 whereas it was shown as 649
 His decision to prefer his family members for important vacancies of the
management, proved to be detrimental for the company.
 The company’s auditors and chartered accountants failed to report the wrongdoings
in the company to the shareholders, partly because they were involved in the scam.
 The company called, PriceWaterhouseCoopers was managing accounts of the
company.
 He cheated the promoters and stakeholders of the company.

 He showed fake interests received by the company, increased assets of the company
and decreased liabilities of the company.
 His decision to acquire metyes properties, one of his family’s company, to cover-up
his
 dis appropriation of accounts in Satyam computers, failed miserably.
 The decision of the merger was not consulted to the shareholder’s, who felt cheated.
Due to this action, the company lost its share value (which was values as low as Rs
3). The company was on a verge closing when it got acquired by Tech Mahindra.
The members involved in the scam were put behind bars.
 The company disregarded the business ethics and the values (towards their
shareholders and stakeholders) and general public, because of which it could not
sustain.
 And, so the Tech company which was amongst the best in the country closed down
its operations.

LESS DIFFRENCE ONE DAY

RESULTED TO HUGE
DIFFRENCE.
Activities for Moral Dilemma that Demanded
Ethical Decision-Making
Shreyansh Nahata

Ethics and Ethical Decisions are important in Business

because it gives right course of Action, Attracting
Investors, Reduces Turnover Rate and Create Goodwill in
Market.
There were certain Situation for Moral Dilemma that require Ethical Decision-
Making that
 Ramalinga Raju and The Global
Head of Internal Audit should
analyze the Consequences of doing
Fraud by Showing Fake Employee’s
salary account, Fake Invoice, Bills
and doing frauds in Stock
Exchange, Regulators this require
Ethical Decision of Financial Health.
 Ramalinga Raju should not show
rapidly Increments in Profit by
showing the Amount of Assets more than its Actual Amount and the
Amount of Liabilities less than its Actual Amount this showing sudden
grossly Inflated of Operating Profits, Revenues this require Ethical
Decision related to Goodwill.

 Rama
linga
Raju
did
not
follow
the

THE SCAM
Corporate Government Norms this require Ethical Decision of Ethical
Values.
  Ramalinga Raju misleading the Shareholders Fund by Putting self-interest
at the Expenses of Shareholder’s Interest.
 Another Dilemma did by Raju is trying to Merge the Satyam Computers
with Maytas Infrastructure to show his Fake Assets to Real and make his
own Profits for his family this process also demanded Ethical Decision.
 Major Dilemma did by Satyam Computers is Reject the Contract of Maytas
Infrastructure otherwise They were safe their Company from Losses.

INVESTORS ASSUMED IT WAS ONE TRAP TO

Strategic conclude As Scam
PURCHASE MAYTRAS INSTEAD IT WAS ONE WAY
TO OVERCOME ALL THE FABRICATED BALANCE
Shubham
TO BE THE REAL ONE Bansal
BY ACQURING THE MYTRAS
The company strategy (reaction defence accommodation, or pro action) when
the violation was reported

After the disclosure, there was a heavy selling of shares, nearly 143 million shares, the
shares closed down 77.69% at Rs. 39.95 at the Bombay Stock Exchange (BSE), wiping out
Rs. 139.15 per share in a single day. The stock that hit its all-time high of Rs. 542 in 2008
crashed to an unimaginable Rs. 6.30 on the day Raju confessed on January 9, 2009

The government appointed a ‘new’ board of

directors for Satyam to try to save the
company, the goal was to sell the company
within 100 days. The new, six-member
Board had appointed a chief executive
officer and external advisors, including the
accounting firms KPMG and Deloitte to
restate the accounts of Satyam. All the
accused involved in the Satyam fraud case,
including Raju, were charged with cheating,
criminal conspiracy, forgery, breach of
trust, inflating invoices, profits, faking
accounts and violating number of income
tax laws.

Satyam's bank Citibank freezes its 30

accounts. Interim CEO Mynampat says that
the company was in serious cash crunch and may be unable to pay the salaries

On January 23,2009 CID arrested two PwC auditors as they were involved in the wrong
auditing of the firm.

In June 2009 tech Mahindra bought 51% stake in Satyam computers to form Mahindra
Satyam and save the company and offered the share at the starting price of Rs.58/- share
and later in 2012 tech Mahindra announced it merger between Mahindra Satyam

Mr. Byrraju Ramalinga Raju’s confession “It

was like riding a TIGER, not knowing how
to get off without being eaten”.
Individual and Situational Influence On
Ethical Decision Making
Amit rawat
IMPORTANCE OF ETHICS IN BUSINESS
 Ethics in business is influenced by the culture of the company
 Taking right course of action may involve rejecting short term profits
 Benefits of ethics in business-
1. Attracting customers
2. Attracting Investors
3. Reduced “Turnover rate”
4. Helps in retaining talented employees
5. Creates goodwill in the market

RAMALINGA RAJU’s point of

view
 Individual driven unethical behavior:
 Lying
 Greed
 Bribery
 Embezzlement
 System driven unethical behavior:
 As a whole

UNETHICAL BEHAVIOUR

Satyam’s point of view

 Increasing competition forced big corporations to do something beyond their reach

 Tata Consultancy Services (TCS)
 Infosys technologies
 Wipro
 Pressure to maintain this pace of growth
 Gap became a gulf

ETHICAL ISSUES INVOLVED

 Not following corporate governance norms
 Tampering the financial data
 Misleading the shareholders fund
 Putting self-interest at the expenses shareholders’ interests
Satyam Confession and Their Impact on Their
Investors
Shambhavi Somvanshi
Satyam confession and charges
On 7 January 2009, the chairman of Satyam, Byrraju Ramalinga Raju resigned,
confessing that he had manipulated the accounts of Rs 7800 crore in several forms.
The global leading company in corporate world was said to be shocked and
scandalised.He indicated that Satyam's accounts had been falsified over a number
of years.Total assets of Satyam's balance sheet tripled during 2003-07 to $2.2
billion.He confessed an accounting fraud of ₹7,800 crore and resigned from the
Satyam board on 7 January 2009.

On 10 April 2015,Ramalinga Raju was convicted with 10 other members.The

Andhra Pradesh government attached 44 properties belonging to the family
members of the promoters of Satyam Computers in the case against Raju.

Raju resigned from the Satyam board after admitting to falsifying of revenues, the
company's auditors, appears to have certified the company had $1.1 Billion in cash
when the real number was $78 million. Raju has admitted to overstating the
company's cash reserves by US$1.5 billion.

Investigation by the authorities revealed that Raju led a lavish lifestyle including
321 pairs of shoes, 310 belts, 13 cars including Mercedes and BMWs. His house
contained a telescope worth £140,000. It was also claimed that he donated huge
quantities of gold to temples in Andhra Pradesh and possessed villas and properties
in 63 countries.

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.On the New
York Stock Exchange, Satyam
shares peaked in 2008 at US$29.10.
By March 2009, they were trading
around US$1.80.

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 ₹200 million (US$3 million) every month for paying these 13,000
non-existent employees.
Recommendations For Solving Such Dilemma
Radhika Chhabra

Mr.
Byrraju

Ramalinga Raju should have applied triune approach i.e.

examine the out-turn or the consequences, examine the
operation or the course of action and then make the
suitable decision as an individual I must have done the
same.

Step1 Mr. Raju should examine the out-turn or the

consequences. He should have analyzed various answers of the
question before committing such huge fraud.
I. How the fraud will affect to the NATION?
II. Number of Jobs that will be RISK?
III. Investor and their Money will be at stake. How will you answer
them?
IV. Goodwill or reputation of INDIA globally will be affected. How
will you make the balance it?

Step2 Mr. Raju then should examine the course of action or

the out-turns. He should
have analyzed where he
went wrong.
I. Presenting fabricated
Balance Sheet
II. Depicting 6000 FAKE
employee’s salary
account.
III. Manipulated the
SHAREHOLDERS and
INVESTORS.
IV. Bills or the invoices were not correct.
Step3 Mr. Raju should have valued his morals and believe. He
should have his ethical behavior and then further made an
appropriate decision.
I. Accounts and balances should be depicted correctly.
II. Shareholder and investors should know what’s happening in the
business firm.
III. Jobs of over 53000 technocrats must not be at risk.
IV. IT Sector of India must have been not affected by his deeds.

Mr. Byrraju Ramalinga Raju had done severe damage to

the nation and to every individual linked with SATYAM
COMPUTERS.

 Jobs of over 53000 technocrats were at risk.

 Country’s booming economy fared slight risk as
country’s GDP fell by0.4%.
 Indian IT sector suffered downturn as its image was
tarnishes globally.
 The share prices of Satyam saw a sharp fall after Mr.
Raju’s confession. The prices fell down from 190 to
30 approx. in a day.
 The scam affected the image of Indian companies
among foreign investor portfolios.
 Life of employees working with Satyam was affected
ever after.

Sustainability perspective / Growth aspects after

experiencing such huge frauds following factors
should be implemented.
 Organizational Culture and Leadership Firms must explicitly
articulate values that emphasize ethical behavior. Many firms do
this now by drafting a Code of Ethics which is a formal
statement of the ethical priorities that the business adheres to and
the Code of Ethics draws heavily upon documents such as the
UN Universal Declaration of Human Rights.

Ethics Officer To make sure that a firm behaves in an ethical

manner, a number of firms now have ethical officers. These
individuals are responsible for making sure that all the employees
are trained to be ethically aware, that ethical considerations enter
the business-decision making process, and that the company’s code
of ethics is adhered to. Ethics officers may also be responsible for
auditing decision making to make sure they are consistent with this
code. They also act as internal ombudsman person with
responsibility for handling confidential inquiries from the
employees, investigating complaints, reporting findings and
making recommendations for change.

POWER

COMPETITON
MONEY

SUCCESS

PRESTIGE

WHICH UTLIMATELY LEAD MR.Raju TO THE PATH OF GREED