chairman admitted big fraud and resigned. wow.......big big blow to india and IT industry esp during this economic crisis. Can they survive?

http://www.forbes.com/markets/2009/01/07/satyam-chairman-resigns-markets-equity-cz_nk_0107markets04.html?partner=contextstory

Satyam Revelation Rocks Indian Markets
Naazneen Karmali, 01.07.09, 06:40 AM EST
Company's chair resigns, confessing to having falsified the company's accounts for several years in order to forestall a takeover.
Satyam Computer Services Ltd
01/07/2009 9:01AM ET

* $0.82
* -$8.53
* -91.23%

intraday: SAY
3 month: SAY
1 year chart: SAY

* 1 day
* 3 mo
* 1 year
* Advanced

* At A Glance
* Chart
* News
* People

BATS Real-Time Market Data by Xignite

B. Ramalinga Raju, chairman of the scandal-plagued Indian outsourcing specialist Satyam Computer Services, has resigned, confessing that he had conspired to cook the firms books for several years.

In a letter to Satyams board, which was released Wednesday morning to the stock exchanges and market regulator, the Securities and Exchange Board of India, Raju owned up to inflating the firms cash and bank balances by $1 billion and fudging the firms revenues and operating margin in the quarter that ended in September 2008. The actual operating margin was 3% ($12.5 million), on revenues of $434 million, as against the incorrectly reported operating margin of 24% ($133 million), on $554 million in revenues. Debts were overstated by $100 million, and liabilities understated by $253 million.
Article Controls

imageemail

imageprint

imagereprint

imagenewsletter

imagecomments

imageshare

imagedel.icio.us

imageDigg It!

imageyahoo

imageFacebook

imagerss
Yahoo! Buzz

Admitting that the gap in the firms balance sheet was caused by inflated profits over several years, Raju stated that he was afraid Satyams poor performance would result in a takeover, which would expose the gap. It was like riding a tiger, not knowing how to get off without being eaten, his letter read, adding that neither the board nor any of the firms executives were party to the wrongdoing. He characterized an aborted deal to buy two construction companies controlled by his relatives, which had riled investors in December, as a last-ditch attempt to substitute fictitious assets with real ones.

The confession sent the stock of Satyam Computer Services (nyse: SAY - news - people ) plunging by 138.70 rupees ($2.84), or 77.5%, to 40.25 rupees (82 cents), and pulled down the BSE Sensex 30 index by 749.05 points, or 7.25%, Wednesday. SEBI Chairman C. B. Bhave termed the development one of horrifying magnitude, reported the Press Trust of India. He went on to say that the regulator would take legal action after conferring with the government. The New York Stock Exchange-listed Satyam could face action from the U.S. Securities and Exchange Commission as well.

Revelation of the accounting fraud has produced shock waves across Indias corporate world. This is beyond the realms of my imagination. Its a real shocker, said Rakesh Jhunjhunwala, chairman of the Mumbai investment firm Rare Enterprises. (Jhunjhunwala has no exposure to Satyam.)

I just cant believe this. Its very difficult to digest, acknowledged Shailesh Haribhakti, executive chairman of audit and consulting firm BDO Haribhakti in Mumbai.

Ganesh Natarajan, chairman of the software industry association Nasscom, sought to allay fears that the Satyam fiasco would further damage Indias export-oriented software sector, which has already been dented by the financial meltdown and recession in the United States, its biggest market. This is a firm-level issue and wont affect the entire IT sector, he said. But it does mean that corporate governance standards overall need to be relooked at with a microscope.
Comment On This Story

According to Haribhakti, the biggest challenge emerging from the sorry saga is protecting the interests of Satyams minority shareholders and its 53,000 employees: The credibility of Indian business is at stake.

Jhunjhunwala felt that putting the rest of corporate India in the same league as Satyam would be unfair. Satyam should be merged with either Infosys or Wipro which are companies that can be trusted, he remarked.

A janpanes company bought India Pharmaceutical company Ranbaxy Laboratories in 2008. The Japanese company paied 500 billion yen, but now the company had to take a write-down of 354 billion yen ($3.84 billion) on a consolidated basis, just months after taking control of the Indian drug maker.

Really sorry for Japanese who used to be comsidered as business animals in E. Asia. (No offend to Japanese here)

http://online.wsj.com/article/SB123118036419854455.html?mod=googlenews_wsj

Even the world economy is hurt by the American crisis, The world-wide Pharmaceutical industry is not bad like this.

Satyam case is not only a scandal of this Indian high-tech, innovotive, knownedge-based IT company, American company PWC is also involved. PWC is Satyam's auditor.

the MD AND CEO OF THE company should be hanged by their balls ........

I think most IT companies are doing the similar things. The only problme for Satyam is that it has done too much.

For India, this company did a lot, at least it brought many money to India. But for investrors, the managements are criminals.

The boss of Satyam is brave, he tries to take all the responsibility. But I believe a lot of people are involved in the company considering the time of several years (since Y2K) and the scale of the scandal.

The lesson for any other countries is that American companies don't have any more moral standard or accountability than any other companies in any other countries. PWC and other American consultant companies should be kicked out market. They don't take their responsibility, what they can do is criminals help criminals, from Enron, American crisis to Satyam

The lesson for any other countries is that American companies don't have any more moral standard or accountability than any other companies in any other countries. PWC and other American consultant companies should be kicked out market. They don't take their responsibility, what they can do is criminals help criminals, from Enron, American crisis to Satyam

This is a half truth.

US Bank Merill Lynch is the one that uncover the fraud and forced Satyam's president to expose the truth. In just 10 days too.

Also, Satyam is audited not by PWC direct, but Price Waterhouse India, a "member firm" of PWC. Now I am not looking down Indian companies and accounting firms, but is highly likely that PW India or someone inside Board of Directors or Senior Partner is not so "impartial" as he is suppose to be. Maybe friend or taking bribes from Satyam.

But PWC did make mistakes in not conducting strict check to ensure its member firm PW India follows same rule and regulation as PWC.

http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5476010.ece

"The company's balance sheet as of March 31, 2008 was signed off by Srinivas Talluri, a partner of Price Waterhouse in Hyderabad, the southern Indian city where Satyam is based."

This Srinivas Talluri is for sure taking some kickback from all involve at Satyam....

resigning letter of SATYAM CHIEF .....


http://www.bangaloreinc.com/2009/01/07/satyam-chiefs-resignation-letter-to-board-now-online/