Scene -1 Establishment of Maytas, Beginning of financial claim
Time ± Mid 2000 Characters ± Raju, Director, CFO, Independent Director Place ± Board room at Satyam. Raju: - to everyone: Good Morning everyone Today I had called you people here to discuss something special. Before that I want to make it very sure that whatever we are going to discuss today must not go out of us. I had started Satyam as a construction company in 1987. But because of the booming IT Sector I converted it into a software company. Now, there are good opportunities in the real estate sector and therefore I would like to take advantage of it. So I called you people to give me some suggestion about the same. CFO:Sir if you will do such huge investment in your own name it will give a reason to the regulators to doubt about it. So first we should create a subsidiary company & then you can invest through it Raju: - (to director) ³That¶s a good idea. But rather one we will create two companies. One will invest in properties and other will invest in infrastructure because apart from real estate infrastructure is also booming. You order our company secretary to form two new companies Maytas Property and Maytas Infrastructure. CFO: - (to Raju) But sir there will be one problem, real estate require huge amount of fund to invest, which we would not be able to raise from public as two companies would be new ventures. Raju: - (to CFO) You are right we will have to find some way out of it. Raju: - (to everyone, after some thinking) We will do one thing, our computer business is running very well & we always have huge cash surplus in this business. So we will regularly transfer a portion of cash from software business to invest in real estate. Independent Director:Sorry sir, but how a company can do this? It is not in the interest of the shareholders of Satyam computers. Raju: - (to independent director with smile) Mr«««« I am sure that - You would not like to deteriorate our long and deep relation.


You would not be willing to leave the Satyam board. You would not prefer forego huge professional fee that you are receiving from Satyam.

Independent Director: - to Raju Ok sir, I understood everything. CFO: - (to Raju) But sir we would be able to convince our chartered accountants anyhow, what about the external auditors? They would easily discover this. Raju :- (toCFO) We would also be able to take auditors in our confidence. Because, - We have very long relations with them. - They would not prefer to forego the huge fees that we will offer them now onwards. - They would not like to lose the huge contracts that they have entered into with us. CFO :- (to Raju) But sir what about the bank certificates? An auditor needs to obtain bank certificate from banker confirming existence of actual cash balance with company. Raju :- (to CFO) It¶s very easy. We will forge the bank certificate. Director :- (to Raju) But what about entries in the financial statement? Raju:We will show fictitious cash balances in financial statements. IndependentDirector :- (to Raju) But sir what if while doing this entire thing we will get caught by regulators. Raju:- toeveryone (with smile) Why I had developed strong political relations? For such purposes only so don¶t worry about it.

Scene - 2 Inflation of profit in books of account
Time ± Mid 2003 Characters ± Raju, Director, CFO, Independent Director Place ± Board room at Satyam Director :- (to Raju) Sir because of our extra concentration on real estate our computer business has been highly affected and profit has started to decline. We are losing the confidence of domestic and foreign investors and competitors are taking benefit of it.

Raju :- (to CFO) We have to do something. Ok, inflate the profits of software business. We will have to return them anyhow. Make overvaluation of assets & undervaluation of liabilities in books of accounts.

Scene-3 Pledging of shares to raise the fund
Time: 2005 Director To Raju- ³Sir we are facing acute shortage of working capital & at present we don¶t have feasible option available to arise the fund.´ Raju- To everyone (with worry) I will have to make some arrangement ok I will pledge my shares as a collateral with lenders & will raise fund from them.´ CFO- ³But sir this will increase our liability & will affect our profit position.´ Raju- To cfo (with smile) ³Then we will not show it in books of accounts at all.´

Scene ± 4 Creation of Fictitious Salary Accounts
Time: Beginning of 2006 Raju: to CFO From last six months real estate is witnessing an unprecedented boom but because of lack of funds I am not able to grab this opportunity fully. So I still want to transfer more cash from computer to real estate. CFO: Sir we are already transferring huge amount from computer to property business. If we will further increase it, we might attract the attention of regulators. Raju: Then don¶t transfer it directly do one thing start to show notional expenses in P&L. increase the number of employees from 40,000 to 53,000 on the book not in real and show that we have paid salary of Rs 20 crore to these additional employees. Then transfer this actual cash to real estate.

Scene - 5 Acquisition of Maytas
Time 16th Dec, 2008 CFO To Raju ± Sir because of practice we have started late in 2000 with creation of MAYTAS today we have, y Inflated our bank balance by Rs.5040 crore. y Overstated our assets by Rs.490 crore. y Understated our liabilities by Rs.1230 crore. y Shown accrued interest of Rs.376 crore.

y y

Now if we will further carry on this practice it is most likely that we will come under regulatory scanner. So, now anyhow we will have to fill the gap between fictitious assets and real estate.

Raju ± We will have to think about it. Next Day Raju to CFO ± I had put lot of thinking about it and what I had decided is that we will acquire our two subsidiaries Then we will show that we have used the cash balance to acquire the two firms. While in real situation we need not to make any payment as these are our own companies. CFO ± But sir maximum likely value of MAYTAS prop & infra could be Rs.4450 crore and we want to offset the fictitious balance of Rs.5040 crore. So, there is a gap. Raju ± Then we will require value to overvalue both firms. Independent director to Raju ± ³But sir how can we do this, this is totally against the interest of satyams shareholders because there is no synergy between two businesses.´ Raju ± There are several reasons y Consequences of being caught by regulator for huge scam would be more fierce than the consequences of entering into the deal y Secondly, it would also result into derisking of software business. y Deal will give more stable return to the investors & stability to employees.

Scene 6 cancellation of deal
Time: 17th Dec, 2008 Director (to Raju)- Sir our decision of acquiring MYTAS has generated huge resistence on the part of domestic as well as foreign investors and highly affected our share prices. Raju (to Everyone) ± Do one thing announce the cancellation of the deal.

Scene 7 Announcement of Buyback
Time 18th Dec, 2008. CFO (To Raju) ± Sir inspite of cancellation we are not in position to regain the investor confidence and because of share decrease in share prices lenders have asked for margin calls on shares pledged by you and as we have failed to pay margin calls they have sold the shares. Because of this your stake has decreased and we are facing acquisition threat. Raju ± Ok then announce the buy back of shares.

CFO to Raju ± How will we buy back without any real cash balance ? Raju ± Our intention in announcing the buy back is just to get sometime to think about the future actions to be taken.

Scene 8 Confession of Scam by Raju
Time: 7th Jan, 2008 CFO (to Raju) ± Sir number of our independent directors have started to resign and I think that there are high chances that we might be caught up by regulators. Raju ± So what is your opinion? CFO ± I think that you should confess entire details in public. Because now we don¶t have any mean to escape from this. In such circumstances confession by you have some potential of reducing severity of consequences. Raju - Then I will confess everything tomorrow. CFO ± But sir maximum likely value of MAYTAS prop & infra could be Rs.4450 crore and we want to offset the fictitious balance of Rs.5040 crore. So, there is a gap. Raju ± Then we will require value to overvalue both firms.

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