Satyam Fraud Case

1505 Words Apr 11th, 2011 7 Pages
Views on the Satyam fraud case:
Before writing this report, I read some articles from The Economic Times, The Times of India, The Hindu and a blog by Shweta Rajpal. In this report, I have tried to figure out what the scam is all about, how it happened, why it was done and the aftermath, exploring corporate governance issues simultaneously.
The ‘What’ of the scam:
The Satyam scam has been as the Enron scam of India. So one can only imagine the magnitude of wrongdoing and deception. The downfall of Raju began in Dec 08 when Satyam attempted to acquire two companies controlled by his sons - Maytas (the syllables of the word ‘Satyam’ used backwards) Properties and Maytas Infra - for 1.6 billion dollars in order to compensate for the holes
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Yet Raju was able to steer the fabricated accounts through his board members for Six years! At times, the company was holding excessive cash, as per the books. This should have invited questions by board members.

In particular, Independent Directors, who are appointed by shareholders at the behest of the board, are selected on the basis of their reputation, knowledge, and wisdom. They are the first defense of minority shareholders. Generally they bring specialized expertise. Independent directors have to meet standards set by stock exchanges too. The Indian Government specifically delineates the role of independent directors in safeguarding the interests of the organization and the shareholders. An independent director would normally assume that audited accounts have been rigorously examined. This is more so when an internationally credible firm- like Pricewaterhouse Coopers- has audited the numbers. But, they need to still ask the right questions and probe, afterall that is what they are there for! * The Regulators:
Many experts suggest that if there is a sudden spurt in insider trading in any company, the regulator should the sound alarm bell. In this case the SEBI failed to discharge this job and could not trace what was going on in Satyam.
The Corporate Governance issues that emerged: * Why would anyone want to divert funds into another subsidiary or a company in which the

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