While I was shocked at the goings-on at Satyam Computers as reported in the media over the past few weeks, today’s news that the founder and Chairman B. Ramalinga Raju has admitted to grossly inflating the books comes a thunderbolt. As a shareholder in Satyam Computers, I am appalled at the moral bankruptcy of this man. Moneycontrol has a copy of the letter Mr. Raju sent the members of the Board as well as SEBI, in which he has tendered his resignation.
The details are saddening. For example, the Q2 operating margin was reported at Rs. 649 crores, while the actuals were less than a tenth of this. Cash and bank balances have been grossly overstated, while loans arranged for the company have not been disclosed.
Mr. Raju’s statement in his letter that his actions were not with a view to increase his personal wealth in no way justifies his actions. As Warren Buffett once said (and as has been quoted numerous times in the even-more-debilitating Madoff affair), “Only when the tide goes out do you learn who’s been swimming naked.” I wish that the other swimmers are adequately covered.
What is inconceivable in this whole affair is Mr. Raju’s claim that he is the only person responsible for all of this, and that no one else even knew about this fudging. That can be true in a one-person business, but this is an organization that is effing 50000-strong. Do you want me to believe that the internal auditors did not know anything was amiss? Or the auditing firm that certified the company’s finances? It doesn’t take a CPA to understand that it is impossible for one man to mislead an army of qualified accountants, who are oblivious to the goings-on in the firm. They can’t be so dumb. While the case against Mr. Raju is strong, one wishes that the investigative agencies bring these auditors and auditing firm to light.
P.S.: Ironically, the name of the company, Satyam, means truth!
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Vijay,
Do you know Satyam customers in Pennsylvania?
Andy
I’m afraid not. Indian IT majors generally do not disclose their clients list, but only talk in cryptic terms such as “one of the largest rubber manufacturers in America”.
I checked Satyam’s website, but there is no such list of clients, just a list of industries they serve. Here’s a list of their offices in the US; if you’re in the Delaware Valley region of PA, Parsippany and Jersey City are the closest.
IMHO, the entire board and the PwC auditors should be put behind bars for a minimum of a year unless proven non-guilty. Satyam has happened, as with the Mumbai terror strikes, it is even more prudent for the authorities to ensure that there is nothing of this sort gets repeated. My commiserations with the investors and employees; but I do not see any kind of remedial justice served, there can only be punitive justice to those responsible or who should have been responsible
Satyam (Truth) Ltd turned out to be a pack of lies.
Subiksha (Prosperity) went bankrupt.
“Naasamaa Ne Poniya Pvt Ltd” – That’s the name to give to your new venture in India.(“You are doomed Pvt Ltd”)
Will be a thumping success!
(I hope the name is not already taken)