Accountancy Fraud of Satyam, India

Accountancy Fraud of Satyam, India - Fundamentals of...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Fundamentals of Financial Management - Fall 2010 Corporate Fraud Assignment By: Mohammad Akrama
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Dahlkemper School of Business Gannon University Satyam Computer Servises Ltd. is a consultancy and information technology services company based in Hyderabad, India and founded in 1987 by Mr. B.Ramalinga Raju. The company went public in 1992. The company offers has various other SBU’s such as Maytas Properties, Maytas Infrastructure, Satyam BPO, Nipuna Services, Knowledge Dynamics, Nitor Global Solutions, CA Satyam ASP and Satyam Venture Engineering Services. Satyam has a wide network spread in 67 countries across 6 continents and employes 51,000 IT professionals across 11 countries including US, UK and Austrailia. It provides support to 654 companies globally including GE, GM, Nestlé and Us government, 185 of which are fortune 500 corporations. Satyam has strategic technology and marketing alliances with over 50 companies. The first crack in the company's reputation occurred during October 2008, when the World Bank fired Satyam and issued an eight-year ban against the company. The World Bank accused Satyam of installing spy systems on its computers and stealing assets from the World Bank. In addition, during an October conference call reporting earnings, one stock analyst drew attention to large cash balances in non-interest bearing bank accounts. The analyst expressed concern about the large balances and expressed reservations about the accuracy of the numbers. Investors ignored the analyst's comment and the stock price rose with the reports of positive earnings and revenue growth. In December 2008, the company attempted to aquire two infrastructure companies founded by family members of Mr. Raju for $ 1.6 billion, despite of concerns raised by independent board directors. This over stated deal eventually led to review by Government of India, a veiled criticism by the vice President of India and Satyam’s clients re-evaluating their relationship with the company. On December 30, analysts with Forrester Research advised clients to stop doing business with Satyam because of the fear of widespread fraud. Satyam hired Merrill Lynch to advise it on ways to increase shareholder value. By January 5, 2009, rumors circulated about several potential mergers between Satyam and competitors. On January 7, just hours before Mr. Raju disclosed the fraud, Merrill Lynch sent a letter to the stock exchange indicating that it was withdrawing
Image of page 2
from its engagement with Satyam because during the course of its representation it learned of material accounting irregularities. The Board called an emergency meeting for January 10 to address the company's rapidly deteriorating reputation.
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern