Satyam Scam Essay Example for Free

Satyam Scam Essay Mahindra Satyam (formerly Satyam Computer Services) is an Indian IT services company based in Hyderabad, India. It was founded in 1987 by B Ramalinga Raju. Mahindra Satyam is a part of the Mahindra Group which is one of the top 10 industrial firms based in India. The company offers consulting and information technology (IT) services spanning various sectors, and is listed on the Pink Sheets, the National Stock Exchange (India) and Bombay Stock Exchange (India). In June 2009, the company unveiled its new brand identity â€Å"Mahindra Satyam† subsequent to its takeover by the Mahindra Group’s IT arm, Tech Mahindra on April 13, 2009. Satyam, a SEI-CMM Level 5 company, offers a range of expertise in the areas of Information Technology Software Development Services, Systems Integration, ERP Solutions, Product Development, Internet access hosting services, Electronic Commerce and Consulting. Satyam has nearly 6,000 IT professionals, who operate out of its state-of-the-art software development centers located in India, the USA, Japan, Singapore and the UK. These Centers work as an extended enterprise (IT partner) for over 150 Fortune 500 and multinational clients worldwide. Satyam, a multifaceted, totally integrated IT solutions provider is engaged in application development and maintenance, systems integration, datamarts, conversion and migration, Euro currency and engineering services (CADCAMCAE). It specializes in customized IT solutions for industries in the areas of Manufacturing, Financial services, Insurance, Transportation, Telecom,  Healthcare and Power. The company also offers Network and network-enabled services in India. It provides Internet access hosting services, Intranet, e-mail, EDI, store forward, and online information services. In the year 2001, Satyam Computer Services and the US-based Idea EDGE Ventures entered into an alliance to set up a 50:50 joint venture Satyam Idea EDGE Technologies to focus on business emerging from mobile Internet convergence. In 2001, the company was awarded IMC Ram krishna Bajaj National Award Trophy in the service category .The launch of its operation in China. WHAT WENT WRONG WITH SATYAM? Till about two decades ago corporate governance was relatively an unknown subject. The subject came into prominence in the late 80’s and early 90’s when the corporate sector in many countries was surrounded with problems of questionable corporate policies or unethical practices. Junk Bondfiasco of USA and failure of Maxwell, BCCI and Polypeck in UK resulted in the beginning of codes and standards on corporate governance. The USA, UK and number of other developed countries reacted strongly to the corporate failures and codes standards on corporate governance came to the centre stage. Enron debacle in 2001 and number of other scandals involving large US companies such as the Tyco, Quest, Global Crossings, the World.Com and the exposure of auditing lacunae, which led to the collapse of the Andersen, triggered the reform process and resulted in the passing of the Public Accounting Reform and Investor Protection Act of 2002 known as Sarbanes- Oxley (SOX) Act, 2002 in USA. PROBLEMS BEGIN:- Problems in Satyam begin when on December the 16th, 2008; its chairman Mr Ramalinga Raju, in a surprise move announced a $1.6 billion bid for two Maytas companies i.e. Maytas Infrastructure Ltd and Maytas Properties Ltd saying he wanted to deploy the cash available for the benefit of investors. The two companies have been promoted and controlled by Raju’s family. The thumbs down given by investors and the market forced him to retreat within 12 hours.2 Share prices plunges by 55% on concerns about Satyam’s corporate governance3. In a surprise move, the World Bank announced on December 23,  2008 that Satyam has been barred from business with World Bank4 for eight years for providing Bank staff with â€Å"improper benefits† and charged with data theft and bribing the staff.5 Share prices fell another 14% to the lowest in over 4 years. Satyam’s promoters, two brothers B ,Ramalinga Raju and B Rama Raju were arrested by the State of Andhra Pradesh police and the Central government took control of the tainted company.8 The Raju brothers were booked for criminal breach of trust, cheating, criminal conspiracy and forgery under the Indian Penal Code. The Central Government reconstituted Satyams board that included three-members, HDFC Chairman Deepak Parekh, Ex Nasscom chairman and IT expert Kiran Karnik and former SEBI member C . The Central Government added three more directors to the reconstituted Board i.e., CII chief mentor Tarun Das, former president of the Institute for Chartered Accountants (ICAI) TN Manoharan and LICs S Balakrishnan. A week after Satyam founder B Ramalinga Raju’s scandalous confession, Satyam’s auditors Price .Waterhouse finally admitted that its audit report was wrong as it was based on wrong financial statements provided by the Satyam’s management.9 On January 22, 2009, Satyam’s CFO Srinivas Vadlamani confessed to having inflated the number of employees by 10,000. He told CID officials interrogating him that this helped in drawing around Rs 20 crore per month from the related but fictitious salary accounts. Andhra Pradesh State CB-CID raided the house of Suryanarayana Raju, the youngest sibling of Ramalinga Raju who owned 4.3 per cent in Maytas Infra, and recovered sale deeds of different land purchases and development agreements.10 Senior partners S Gopalakrishnan and Srinivas Talluri of the auditing firm PricewaterhouseCoopers (PwC) were arrested for their alleged role in the Satyam scandal. The State’s CID police booked them, on charges of fraud (Section 42 0 of the IPC) and criminal conspiracy (120B). Now, they faced many challenges and the investigation ,like SFIO INVESTIGATION, CBI INVESTIGATION, SEC INVESTIGATION. JUDGEMENT:- Satyam fraud case: Supreme Court rejects Ramalinga Rajus plea:- The Supreme Court on Tuesday rejected the plea of former Satyam chairman B. Ramalinga Raju, seeking extension of tomorrows deadline for his surrender. The apex court had earlier cancelled Rajus bail and directed him to surrender by November 10. However, Raju had moved an application seeking extension of this deadline to surrender citing poor health. The application did not mention as to how much time he needed to surrender. Raju had merely sought reasonable extension. Raju, the founder of Satyam was arrested in January 2009 for one of Indias biggest corporate scams, worth more than 7000 crore. The apex court had earlier on October 1 issued notice to Raju on a petition by the CBI seeking cancellation of his bail granted by the Andhra Pradesh High Court. Raju was granted bail by the Andhra High Court in August. The CBI believes that Raju may try to tamper with evidence against him and influence witnesses. He has been charged under various sections of the Indian Penal Code including Section 120B for criminal conspiracy, under Section 409 for breach of trust, under Section 420 for cheating, and under Section 468 and Section 471 for forgery. Andhra Pradesh Police arrested Raju and his brother Rama Raju on January 9, 2010. Nine other accused, including top company officials and auditors, were also arrested in the case. (ANI) |Supreme Court upholds Monika Bedis conviction in fake passport case| National. The Supreme Court on Tuesday upheld the conviction of gangster Abu Salems girlfriend actress Monika Bedi in the fake passport case. The apex court bench rejected Monikas appeal that she could not be convicted in India as it would amount to double jeopardy since she had been convicted by the Portugal court for the same offence. The apex court bench comprising Justices B Sudershan Reddy and S S Nijjar passed the judgement, while dismissing Monikas appeal challenging her conviction. The Supreme Court, however, gave Monika Bedi some relief by reducing her sentence to period of jail term she had already undergone, which is two-and-half years. The Hyderabad sessions court had earlier sentenced Monika Bedi to five years term, which was later reduced to three years by the Andhra Pradesh High Court. Monika Bedi was caught in Portugal for travelling on a false passport to the name of Sana Malik Kamal.