Case Discussion

Accounting Scandal @Satyam

FSAR [MBA 103] /Faculty Mentor/Dr. N.S.Bohra

World 10 Worst Accounting Scandals
World 10 Worst Accounting Scandals
World 10 Worst Accounting Scandals
World 10 Worst Accounting Scandals
World 10 Worst Accounting Scandals
Great School create Great Mind done Great Mistakes

CEO Name Company Name Educated From

WASTE MANAGEMENT
Dean L. Buntrock HOLDINGS INC St. Olaf College

Jeff Skilling Enron Corporation Harvard University

Bernard John "Bernie" Ebbers WorldCom Calvin College

Leo Dennis Kozlowski Tyco International Seton Hall University

University of Alabama at
Richard Marin Scrushy HealthSouth Corporation Birmingham

Hank" Greenberg American International Group, New York Law School

Bernard Lawrence Madoff Madoff investment scandal Hofstra University

Andhra Loyola College, Ohio
Byrraju Ramalinga Raju Satyam Computer Services University
Satyam Scandal: Summary & Source
 Satyam Computers: Facts
 Formed in 1987 in Hyderabad (India) by Mr. Ramalinga Raju.
Before it Mr. Raju was a owner of Cotton Mill.
 In 1991-92 Satyam Computer was listed in BSE and 2001 in
NYSE.
 The firm began with 20 employees and grew rapidly as a ‘global’
business.
 During the Success:
1. “In 2007, Ernst & Young awarded Mr. Raju with the ‘Entrepreneur of the Year.
2. On April 14, 2008, Satyam won awards from MZ Consult’s for being a ‘leader in
India in CG and accountability.
Satyam: The Beginning
Story of Fake Data@ Satyam
Why fake Data @ Satyam
 Result of Fake Data @ Satyam

Concept of Insider Information

Mr Raju Plan of Action with Fake Data @ Satyam

Fail

New
Plan
Effects on Satyam Shares
Mr. Raju Confession to SEBI
 Effects @ Satyam Scandal
o Merrill Lynch terminated its engagement with Satyam,
Credit Suisse suspended its coverage of Satyam, and
PricewaterhouseCoopers (PwC) came under intense
scrutiny and its license to operate was revoked.
o Satyam’s shares fell to 11.50 rupees on January 10, 2009,
their lowest level since March 1998, compared to a high of
544 rupees in 2008.
o Criminal charges were brought against Mr. Raju, including:
criminal conspiracy, breach of trust, and forgery.
o Sensex index fell more than 5%. Shares in Satyam fell more
than 70%.
o on April 13,2009 Tech Mahindra bought Satyam for $1.13
per shares
 Lesson @ Satyam Scandal
Action Taken in the Area of
o Independent Directors
o Disclosure of Pledged Securities
o Creation of New Corporate Code by the Ministry of
Corporate Affairs
Lesson Learned
o Investigate All Inaccuracies
o Ruined reputations
o Corporate Governance needs to be stronger