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PRESENTED BY:- PRESENTED TO:-

RITESH MAHESHWARI ………………………….

3RD SEM (B.com BANKING & FINANCE)

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SATYAM SCAMWHITE COLLAR CRIME

3INTRODUCTIONSatyam Computers was founded in 1987 by “Ramalinga Raju.”In 1991 company is listed in BOMBAY STOCK EXCHANGE.In 1992 company went for a Public Issue of Equity SharesThe company has setup facilities at Secunderabad, Hyderabad and Bangalore.The main objective of setting up a software technology park and a 100 percent export oriented unit for software development with a dedicated 64 KBPS satellite link.In 1993 company has entered into a joint venture agreement with Dun & Bradstreet Corp., U.S.A. for development of softwares.In 1996 two offices were set up, one in USA and other in Japan. And the company has added new business partners in Australia, Canada, Japan and Europe.In 1999 Satyam Computer, becomes the first Indian information and communication technology company to be listed on NASDAQ, and Satyam expands footprint to 30 countries.

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4RAMALINGA RAJU :-(Chairman)

► Early life :- Ramalinga Raju, the eldest of four children, was born on 16 September 1954 to a farming family. He earned a Bachelor of Commerce degree from Andhra Loyola College at Vijayawada and subsequently earned an MBA from Ohio University in the United States.

► Career :- In 1987, Raju incubated Satyam Computer

Services along with one of his brothers-in-law, DVS Raju at P&T colony in Secunderabad and 20 employees. In 1991, Satyam won its first fortune 500 client. Raju was talking about Satyam's ambition of operating out of 50 countries with an employee count of more than 50,000. In 1999, Raju launched Satyam Infoway (Sify) as Satyam's internet subsidiary, thereby becoming an early participant in the Indian internet service market. Sify was later sold to Raju Vegesna.

 

5AWARDS :- Young Entrepreneur of the year Services Award 1999.

IT Man of the year Award 2000

Asia Business Leader Award 2002

Golden Peacock Award for Corporate Governance 2008

(revoked after the fraud was confessed)

6The Scam :- Ramalinga Raju, the Satyam Computer Services Ltd’s founder and former chairman,

and his brother B. Rama Raju were found guilty of criminal breach of trust. The scam came to light on January 7, 2009 when Ramalinga Raju confessed that the company’s account books and profits were inflated over many years to the tune of several crores of rupee.

The police arrested him two days later on a complaint by some shareholders. The CBI, which took up investigations in February 2009, put the loss to the

shareholders at Rs.14,000 crore. The investigating agency also charged Raju with gaining Rs.2,500 crore by selling his family shares in Satyam. Raju was charged with floating several front companies to buy land with the scam money.

He was arrested by the Andhra Pradesh Police on January 9, 2009. The CBI, which later took up the investigation, filed three chargesheets against Raju

and the other accused, charging them with cheating, criminal conspiracy, forgery, falsification of accounts and breach of trust.

After the scam, Tech Mahindra took over Satyam Computers in a government sponsored auction. Mahindra Satyam later merged with Tech Mahindra.

7How Did It Happened ?

Raju and his brother, B Rama Raju, were arrested by the Andhra Pradesh police on charges of breach of trust, conspiracy, falsification of records and cheating.

Raju has mislead various investors. Raju had also used dummy accounts to trade in Satyam’s shares. He has violated the insider trading norm. Funds from satyam were diverted to Maytas. On 22 January 2009, CBI told in court that the actual number of

employees is only 40,000 & not 53,000 as reported earlier, and that Mr. Raju had been allegedly withdrawing INR 20 crore rupees every month for paying these 13,000 non-existent employees.

8SCAM RELATION WITH MAYTAS :- Maytas refers to a group of companies founded

by B. Ramalinga Raju. It includes Maytas Properties and Maytas Infra Limited. Maytas Infra was originally run by Satyam Computer Services founder B Ramalinga Raj. It came under the scanner due to its association with B. Ramalinga Raju.

In 2009, B Ramalinga Raju resigned as the Satyam CEO, admitting to an accounting scam to the tune of 7136crore rupees. Raju stated that the aborted Maytas deal was actually a last attempt to "fill the fictitious assets with real ones".

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PricewaterhouseCoopers (trading as PwC) is a multinational professional services network headquartered in London, United Kingdom. It is the largest professional services firm in the world, and is one of the Big Four auditors, along with Deloitte, EY and KPMG.

In January 2009 PwC was criticised, along with the promoters of Satyam, an Indian IT firm listed on the NASDAQ, in a $1.5 billion fraud. PwC wrote a letter to the board of directors of Satyam that its audit may be rendered "inaccurate and unreliable" due to the disclosures made by Satyam's (ex) Chairman.

Two partners of PricewaterhouseCoopers, Srinivas Talluri and Subramani Gopalakrishnan, have been charged by India's Central Bureau of Investigation in connection with the Satyam scandal. Since the scandal broke out.

10CONFESSION (By Raju):-

On 7th January, 2009 Raju confessed on poor performance and told that “ IT WAS LIKE RIDING A TIGER, NOT KNOWING HOW TO GET OFF

WITHOUT BEING EATEN”

WHY DID RAJU CONFESS ?

The gap in the balance sheet reached unmamageable proportions and could not be filled anyhow in future.

The whistle blowers whose email to a Satyam board member triggered a chain of events.

11ACTION TAKEN :- New board of director were appointed. Creation of new corporate code of conduct by Minister of Corporate

Affairs, steps taken by ICAI. Regulators Investigating are:-

12IMPACT OF THE SCAM:-

Jobs of over 50,000 technocrats were at risk. Country’s booming economy were at risks.

The GDP fell by 0.4%.

I.T. sector suffered a downturn.India’s global image were tarnishedIndian stock market fell dramatically.

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STOCK MARKET

INDIAN ECONOMY

SHARE HOLDERS

EMPLOYEES

14RENOVATION OF SATYAM:-

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% in a day, after appointment of the new board.

New CEO --- A.S MurthyTech Mahindra acquired Satyam on April 13, 2009.

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On 13th APR 2009, VIA FORMAL PUBLIC AUCTION PROCESS, 46% STAKE IN SATYAM WAS PURCHASED BY MAHINDRA.

JULY 2009, SATYAM REBRANDED ITS SERVICES AS “MAHINDRA SATYAM”.

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