comp law satyam case study

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Chetan Aneja 13 Iraj Hussain 21 : 

Chetan Aneja 13 Iraj Hussain 21

TheFraud : 

TheFraud “Fraud means and includes any of the following acts committed by a party to his contract, or with his connivance, or by his agent, with intent to deceive another party thereto of his agent or to induce him to enter into the contract.” -Mr. Manoj Sharma CRM, FDDI.

Fraud Listings : 

Fraud Listings The suggestion, as a fact of that which is not true, by one who does not believe it to be true. The active concealment of the fact by one having knowledge or belief of the fact. A promise made without any intention of performing. Any other act fitted to deceive. Any such act or omission as the law specially declares to be fraudulent. -Mr. Manoj Sharma CRM, FDDI.

The Asatyam : 

The Asatyam On 7 January 2009, company Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified. Raju confessed that Satyam's balance sheet of 30 September 2008 contained: Inflated figures for cash and bank balances of  5,040 crore (US$1.09 billion) as against  5,361 crore (US$1.16 billion) crore reflected in the books. An accrued interest of  376 crore (US$81.59 million) which was non-existent. An understated liability of  1,230 crore (US$266.91 million) on account of funds was arranged by himself. An overstated debtors' position of  490 crore (US$106.33 million) (as against  2,651 crore (US$575.27 million) in the books). 40000 employees as against 53000. www.wickipedia.org

Raju’s Satya : 

Raju’s Satya "What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of  11,276 crore (US$2.45 billion) in the September quarter of 2008 and official reserves of  8,392 crore (US$1.82 billion)). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.”

Why Did Raju DO It : 

Why Did Raju DO It It starts small. Typically, executives do not wake up one morning and say, "I feel like adding 5 billion rupees to our revenue today." They usually start by fudging the number a little--and then it grows. It is usually a response to competitive pressures. Companies have targets that they need to reach every month, quarter and year. The fiddle is easy to rationalize at first. Managers typically have confidence in their skills and believe that their company is fundamentally sound. Given that, it's easy to rationalize that while we're just a little short on the numbers now, we will make it up in the future, and nobody will know. It gets out of control. When the company is unable to make up the gap, a larger distortion is needed to cover it up. This in turn creates pressure to deliver even better results--which leads to bigger cover-ups, and so on. -Professor Sudhakar (Sid) V. Balachandran Columbia Business School,   http://www.forbes.com/2009/01/07/satyam-raju-governance-oped-cx_sb_0107balachandran.html

Why Did Raju DO It : 

Why Did Raju DO It 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. Mr. Raju had been allegedly withdrawing INR 20 crore rupees every month for paying these 13,000 non-existent employees. Save Taxes. To achieve Targets. -http://economictimes.indiatimes.com/infotech/ software/Satyam-scam-Did-Raju-launder-cash -before-lid-lifted/articleshow/5734260.cms

Slide 8: 

http://www.businessworld.in/index.php/Corporate/The-Satyam-Scandal.html

Who Suffered ?? : 

Who Suffered ?? Company Merrill Lynch now a part of Bank of America and State Farm Insurance terminated its engagement with the company. Credit Suisse suspended its coverage of Satyam. Satyam was the 2008 winner of the coveted Golden Peacock Award was stripped from them. The New York Stock Exchange has halted trading in Satyam stock as of 7 January 2009. India's National Stock Exchange has announced that it will remove Satyam from its 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. In New York Stock Exchange Satyam shares peaked in 2008 at US$ 29.10 by March 2009 they were trading around US $1.80. Satyam's auditing firm PricewaterhouseCoopers. SEBI, said if found guilty, its license to work in India may be revoked.

Who Suffered ?? : 

Who Suffered ?? Stock Market. Investors Satyam's shares plummeted on the news by 75%. dragging down India's stock main market by 7%. Government. Promoters. IT Sector. Nation Image. -http://www.businessworld.in/index.php/ Corporate/The-Satyam-Scandal.html

The Corporate Veil Of Satyam Has Been Lifted : 

The Corporate Veil Of Satyam Has Been Lifted THANK YOU

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