Satyam scam

saytam scam

1. BUSINESS ETHICS

2. SATYAM FIASCO THE STORY OF BIGGEST CORPORATE FRAUD OF INDIA

3. CONTENTS The rise of Satyam Revelation by Raju How did the fraud start? Probable reasons Maytas acquisition Why did R aju confess? Impact on the Nation investigation

4. SATYAM COMPUTER SERVICES Fourth largest IT outsourcing company of India. Employees more then 50,000 people in India. High global reputation. Offers services to more then 500 MNC’S.

5. B RAMALINGA RAJU Founder and former chairman of one of the biggest IT giant of our nation “SATYAM COMPUTERS” …………………………. Guess what !! the prime convict in the biggest scam of the country.

6. Company Logo THE RISE OF SATYAM

7. The Rise of Satyam 1987 : 1991 : 1994 : 2000 : 2002 : Satyam Computers Pvt. Ltd. Born. June - First Fortune 500 Client. August - Converted into Public Ltd. Co. The Big Break- Allies with Dun and Bradstreet Corp. Declared one of the 100 most pioneering technology companies by World Economic Forum. Dataquest IT Man of the year award. CNBC’s Asian Business Leader – Corporate Citizen of the year Award.

8. ACHIEVEMENTS Fastest growing company of India listed in three international exchanges i.e ., NYSE, DOW & EURONEXT. Winner of Innovation award for partner excellence in both 2007 and 2008 for giving significant business value. UK trade & investment India (UKTI) Business award for corporate social responsibility. Golden peacock award for excellence in Corporate governance.

9. Company Logo THE DISASTROUS REVELATION

10. THE DISASTROUS REVELATION The Black day: 7th January, 2009 Accounting fraud of over 7800 crores rupees From past 7 years accounting books were cooked: Profits were inflated. Understated liability and overstated debts. Accrued interests. The gaps in the balance sheets are due to the Inflated profits.

11. CONFESSION LETTER Raju wrote in the confession letter : “Every attempt to fill the gap failed & quote” .  It was like riding a tiger, not knowing how to get off without being eaten”.

12. CONFESSION LETTER Maytas Acquisition Last attempt to fill the gap. Top officials were unaware Only MD and CFO were others. No personal profits Did not sell any shares from 8years.

13. MINUTES AFTER REVELATION M MMMM MINUTES AFTER REVELATION

14. Company Logo IMPACT OF SCAM Stock Market Share-holders Indian economy Employees Stake-holders

15. SATYAM SHARES Biggest single day fall for a stock in stock market. Rs. 175 ( Jan 6 th ) 77% STOCK MARKET BSE sensex fell by 749.05 i.e., 7.25%. NSE fell by 192.40 points i.e., 6.18%. COMPANIES WORTH 11464 crore 1607 crore. All time low of Rs.11.50 on 9 th Jan and closed at Rs.23.75/- Compared to highest of Rs. 524.90/- on May 29,2008.

16. HOW DID IT START ??

17. ILLUSIONIST B.RAMARAJU V. SRINIVAS RAMALINGA RAJU T.SRINIVAS S. GOPALAKRISHNA

18. THE ILLUSIONIST Ramalinga Raju : B Rama Raju : V Srinivas : S Gopalakrishnan : Talluri Srinivas : Satyam former chairman Brother of Ramalinga Raju Former Managing Director Ex-Chief financial officer Price Waterhouse Auditor Price Waterhouse Auditor

19. CFO revealed during investigation Started 6-7 years ago. 10 crore was inflated to 200 crore in balance sheet. This marginal gap went on expanding over years. Company Logo 7800 Crore fraud

20. IMPORTANT DATES AND EVENTS Dec 16, 2008 Dec 17, 2008 Dec 18, 2008 decision to buy stake in MAYTAS infrastructure . Satyam call of the MAYTAS deal as a result of investor revolt.  Satyam announces a board meeting on 29th in wake of investor revolt.

21. IMPORTANT DATES AND EVENTS (Contd..) Dec 19, 2008 Dec 23, 2008 Dec 28, 2008  Post MAYTAS U-turn, Unpaid files motion against Satyam and promoters for $1.1 Billion claiming fraud.  World bank confirms an 8 year ban of Satyam for data theft and bribery . 4 Board members resign in wake of MAYTAS controversy and board meeting postponed to Jan 10th 2009.

22. IMPORTANT DATES AND EVENTS (Contd..) Jan 3, 2009 Jan 7 & 8, 2009  Promoter stake in Satyam coming down to less than 5%.  Mr. B. R. Raju resigns and cites financial irregularities in the book of accounts to the tune of $1.5 Billion.

23. s PRICE WATERHOUSE COOPER SATYAM AUDITORS Among the “BIG 4”. Other 3 are: Deloitte KPMG Ernst &Young Functions: Finance & Accounting, internal audit, tax compliance, logistics & human resources. Performs non-core functions of Organization

24. The Auditors - PWC PwC was paid 3.53 crore for the year 2008 Comparatively, same industry Infosys paid 1 crore

25. PwC - Partners in Crime ??? Previous record - Satyam has also been accused of frauds in 2001 and 2003. No importance was given to this. Getting third party evidence - No bank confirmation on fixed deposits Accrued interest(fixed deposit) Debtors confirmation Factors overlooked - Changing of accounting years Huge debt despite cash surplus

26. PwC - Partners in Crime ??? What could have been sensed ? Excess cash: No distribution among share holders nor invested to earn valuable interest Operating margin: Peer companies - 20-25% Satyam - 3% Recession: Huge profits compared to others always a chance of creative accounting.

27. PROBABLE REASONS PRESSURE TO MEET EXPECTATION Growing Competition Threat of being overtaken OVERCONFIDENCE On his ability PERSONAL BENEFITS Siphoning of funds Salary of non-existent 13000 employees “Since about seven years we wanted to show more income in the accounts to avoid others from involving in the company affairs and any possible hostile acquisition.

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29. WHY DID RAJU CONFESS Company Logo

30. WHY DID RAJU CONFESS The gap in the balance sheet reached unmanageable proportions and could not be filled anyhow in future. The whistle blower whose email to a Satyam board member triggered a chain of events .

31. IMPACT OF SCAM ON THE NATION Jobs of over 50,000 technocrats were at risk. Country’s booming economy feared slight collapse as country's GDP fell by estimated 0.4%. India’s IT sector suffered downturn as its image was tarnished globally. World Bank barred Wipro, Mega soft and 3 other IT companies after the Satyam debacle.

32. Company Logo RAJU & OTHERS UNDER PROBE

33. CBI investigating further CBI filed a charge sheet against nine on April 7,2009. Apart from illusionist four others are : Rajus second brother S. Raju 2 employees from finance wing Vice president (finance)

34. Regulators Investigating Satyam

35. SATYAM UNDER RECONSTRUCTION

36. SATYAM UNDER RECONSTRUCTION Appointing new board. Board appointed by government : former Nasscom chief – Kiran Karnik, Chairman HDFC – Deepak Parikh Former SEBI member – C. Achuthan . Satyam shares gained over 44% day after appointment of the new board. New CEO – A S Murthy Tech Mahindra acquired Satyam on April 13,2009.

37. THE FULL TRUTH, IT APPEARS, IS NOT YET OUT.

38. BREACH OF BUSINESS ETHICS Lack of corporate governance Lacks financial disclosure & transparency Damaged relation with stake holders including employees , investors etc. Inequitable treatment of shareholders Zero integrity Wrong code of conduct Falsification Alteration Creative accounting Cooking the books Window dressing

39. Company Logo T HANK YOU

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