Welcome to InsuranceForums.info!   

Advertisments:


Sponsor Links

Affordable Pet Insurance
Travel Insurance Comparison


What Made Ramlingam Raju To Make Confession About His Fraud In Satyam?

Insurance & Special Deals for Seniors

What Made Ramlingam Raju To Make Confession About His Fraud In Satyam?

Postby Kiernan » Sat May 27, 2017 12:19 pm

In the passage of booming business he was able to hike his Co balances, hide liability figures etc at will, to boost the business picture of Sathyam. The crash of US economy and the implications across the globe was threatening to expose the real situation and he preempted it by confession of his 'meddling' with the financial picture all along, bypassing his financial / managerial colleagues.


But he claimed in his letter of resignation of Jan 2009, addressed to Board Members and Sebi that neither he nor the board 'benefitted' by the scandal (so as to make the meddling of data appear as just a trade trick to look great in the share market and attract investments)!! But it all turned out to be big hoax and the financial motives leaked day by day.

The fact also exposed how dubious the Audit Cos were in respect of Star business houses..!! The elite Auditors of the company were tight lipped for sometime, being taken unawares by the exposure of their own 'abetments' in the falsification of the Co accounts, for so long..!! They latter tried to wriggle out with a lame excuse that would hardly convince even average citizens:

Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam may have rendered its audit reports "inaccurate and unreliable

The high level contacts maintained by the Raju, to the point of getting massive orders from AP govt., riding on a false horse, also threw light on the business-politics links in every shady activity involving massive money flow, in the country.

The Sathyam chief wrote in his Resignation letter:

"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 Rs 11,276 crore (US$ 2.51 billion) in the September quarter of 2008 and official reserves of Rs 8,392 crore (US$ 1.87 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..."

After the scandal broke, the then-board members elected Ram Mynampati to be Satyam's interim CEO. Mynampati's statement on Satyam's website said:

"We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation." Are people to understand that the Board Members were mere blind players in a scam going on in their own Co without the least suspicion?

On 10 January 2009, the Company Law Board decided to bar the current board of Satyam from functioning and appoint 10 nominal directors. The Chartered accountants regulator ICAI issued show-cause notice to Satyam's auditor PricewaterhouseCoopers (PwC) on the accounts fudging. On the same day, the Crime Investigation Department (CID) team picked up Vadlamani Srinivas, Satyam's then-CFO, for questioning and later arrested him.

The founder of Satyam was arrested two days after he admitted to falsifying the firm's accounts. Ramalinga Raju is charged with several offences, including criminal conspiracy, breach of trust, and forgery.

Immediately following the news, Merrill Lynch Now with Bank of America and State Farm Insurance,USA terminated its engagement with the company. Also, Credit Suisse suspended its coverage of Satyam. Analysts in India have termed the Satyam scandal India's own Enron scandal. Some social commentators see it more as a part of a broader problem relating to India's caste-based, family-owned corporate environment.


It was also reported that Satyam's auditing firm PricewaterhouseCoopers will be scrutinized for complicity in this scandal. SEBI, the stock market regulator, also said that, if found guilty, its license to work in India may be revoked.

Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance Issues, which was stripped from them in the aftermath of the scandal. 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 S&P CNX Nifty 50-share index on 12 January.

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 and that Mr. Raju had been allegedly withdrawing INR 20 crore rupees every month for paying these 13,000 non-existent employees.


There were more revelations about his family selling the Co shares sometime before the chief's revelation / resignation, etc as per news reports at the time. The investigations and processes of law are expected to be proceeding and it would take years to be finalised. By then, people in 1000s had lost their jobs in the Co and running around to find livelihood. The major investors had lost heavily in the share values..and the IT industry of our country lost its great image..!!

Then, that is the great modern world - where glittering prosperity with connivance of unethical Auditors, abetting Management Boards, apathetic Regulatory systems, etc with often political supports also - would play magic pranks with economy, hurting many..

You asked why he made a revelation that would not help him to escape the criminal proceedings anyway. His letter had revealed that the stage was reached where the 'magic' was about to burst and if it did, all sort of knee jerk comments by experts, hasty arrests etc would have created a mess and his own voice would have been reduced to a shrill.


By pre empting the exposure by other sources, he had made his voice heard first, striking intelligent pleadings in the process, of how he or his Board were not benefitted by the falsity played as part of a trade trick.. etc!! Of course the initial mess up was managed, but the final shame could not be wiped out..!!
Kiernan
 
Posts: 55
Joined: Mon Jan 13, 2014 10:31 pm

What Made Ramlingam Raju To Make Confession About His Fraud In Satyam?

Postby woody » Mon May 29, 2017 7:36 pm

Even subsequently, nehru-congress flesh presser rajasekara reddy is there. to dodge paying company taxes and earnings taxes, businessmen used to tutor losses or run loss-making ventures. Now, it is the opposite of it and Satyam has paid huge company taxes, because of inflated figures contained in the acconts. only because, some one occurs to be an investor in sathyam stocks,one ought to no longer grudge losses and if one is going by technique of satyam's actual earnings figures, any time formerly the agency ought to have lengthy previous leaving such a great number of persons undesirable. Satyam has stood a minimum of ten years. Even now, as international economic agency became the first one to take action adverse to satyam by technique of banning its commerce for 8 years, you'll say, sathyam refused tow the international economic agency line for some spurious purposes and oil-for-nutrition rip-off handed off less than its very nostril. If funds balances are shown more advantageous to any volume than the real one, the conventional end will be 'stealing of that a lot distinction by technique of a few one ' contained in the agency and that rober will be chanced on out easily. Even now, as nehru-congress politicians are in touch, no concrete action is taken, yet all businesses despatched each and every the position to capture a non-hiding thief. Even now, why the all-understanding chidambaram, who became until eventually presently, the finance minister , did not take action yet were given shifted himself from Finance ministry? As US is reeling less than economic breakdown, and in view that it feels it gave India the triumphing wealth, alongside with ecu companions, that is in search of funds from indian banks and establishments and thats why satyam has lengthy previous undesirable, thats why formerly billl gates retired, infosys narayana murthy stepped down and now raju likely receives stuck. some shylak is in search of the pound of flesh. guy mohan and montek are professional international economic agency brokers alongside with chidambaram and there lies the remember. Who were given 8000 crores less than danger?
woody
 
Posts: 121
Joined: Mon Feb 11, 2013 7:20 pm


Return to Seniors Insurance

 


  • Related topics
    Replies
    Views
    Last post