Indian Outsourcing Giant Satyam Hit By Huge Accounting Fraud

[OhioChick]

The chairman of Satyam Computer Limited, one of India's largest IT companies, has resigned after having revealed that he had systematically altered his company accounts for a number of years to show that Satyam had $1 billion worth of fictitious assets.

The company incurred a $253 million liability on funds arranged by Ramalingam Raju and revenues for the second quarter, ending September 2008, were down 20 percent while Satyam's operating profits were down a staggering 97 percent.

The scandal which came into light earlier today, has already been qualified as India's Enron, in reference to the US Energy Company which vastly overstated its assets back in 2001 and whose demise caused the fall of accounting firm, Arthur Andersen.

The 22 year old company has grown from its construction roots to a software and services giant with nearly 53,000 employees in 66 countries and revenues of more than $2.1 billion; ranking only behind the likes of Wipro, TCS and Infosys.

Satyam's fall was a brutal one as the company lost more than three quarters of its value in the past few hours and several of its high profile customers have already said that they will be terminating their contracts with the company.

Satyam's auditor, PriceWaterhouseCoopers is likely to be under intense scrutiny after failing to identify significant discrepancies in the company's balance sheet.

Likewise, investors and financial watchdogs are going to pay close attention to the other Indian outsourcing companies and some UK companies could even reassess their outsourcing needs as the falling pound sterling makes insourcing more attractive.

More: http://www.itproportal.com/articles/2009/01/07/indian-outsourcing-giant-satyam-hit-huge-accounting-fraud/

[ChromeFoundry]

1. Caught cooking those books, huh? n/t

[OhioChick]

2. Raju may have left for US for Upaid case

Raju may have left for US for Upaid case

January 07, 2009 21:01 IST

Amid speculation over his whereabouts, B Ramalinga Raju, who stepped down as chairman of Satyam Computer after admitting to financial irregularities, is believed to have left for the United States in connection with a court case.

Speculation mounted when a TV channel reported late on Wednesday that Raju may have gone to Dubai. "We have no idea of where Raju is," a Satyam spokesperson told PTI over phone when asked if he had left for the US in connection with a case filed by a British Telecom solution firm Upaid.

Raju was also not reachable on his mobile phone despite several attempts, but police sources said that Raju left for Texas on Wednesday morning from the Hyderabad Airport.

Earlier in the day, Andhra Pradesh Chief Minister Y V Rajasekhara Reddy had said that he would refer the Satyam matter to CB-CID for investigation.

Upaid had filed a petition in Texas seeking details of the $1.6 billion acquisition of two Maytas firms, promoted by Raju's family, before Satyam dumped the deal after attack from investors.

In its petition, Upaid had demanded presence of Raju and senior directors of Satyam for questioning by its lawyers.
http://www.rediff.com/money/2009/jan/07satyam-raju-may-have-left-for-us-for-upaid-case.htm

[OhioChick]

3. Satyam fraud cripples Sensex of winning streak

Satyam fraud cripples Sensex of winning streak

Jan 2009, 1759 hrs IST, Mohammed Sabir, ECONOMICTIMES.COM

MUMBAI: The Indian stock market was robbed of its stimulus Wednesday after one of the biggest corporate frauds came to light. In a shocking
revelation, Satyam Computer Services Ltd’s promoter and chairman, B Ramalinga Raju admitted to a fraud to the tune of Rs 7,000 crore in the company’s balance sheet.

In a letter to the board, Raju said the company’s cash and bank balance as on Sep 30, 2008, was inflated by Rs 5,040 crore as against Rs 5,361 crore reflected in the books. Further, the balance sheet carried an accrued interest of Rs 376 crore which was non existent, and an understated liability of Rs 1,230 crore on account of funds transferred by Raju. The balance sheet also carried an over stated debtors’ position of Rs 490 crore (as against Rs 2,651 crore in the books).

This triggered a massive sell-off as investors dumped shares across the board, mainly from realty and IT sectors, on fears of corporate governance issues.

The Bombay Stock Exchange’s 30-share Sensex closed at 9586.88, sharply down 749.05 points or 7.25 per cent from Tuesday’s close. The index touched an intra-day low of 9510.15 from a high of 10469.72.

National Stock Exchange’s benchmark Nifty ended at 2920.40, down 192.40 points or 6.18 per cent. The index touched an intra-day low of 2888.20 and high of 3147.20.

http://economictimes.indiatimes.com/Market_News/Satyams_fraud_saga_cripples_Sensex/articleshow/3947904.cms

[Azlady]

4. busted

[truedelphi]

5. The stock market and security exchanges in the world will never ever be reformed but

Can't we at let get free drinks and cheap foods with our transactions??

[ihavenobias]

6. To the greatest! n/t

[antigop]

7. Found this thread.. after I had posted a similar article on the SMW thread.

K&R

[Phred42]

8. Maybe we'll get lucky and this will kill outsourcing

:shrug:

[OhioChick]

9. One can hope. n/t

[DemReadingDU]

10. We need to bring manufacturing back, for basics

like clothes, shoes, tools

If there is a global depression, and trade slows to a crawl, how are Americans going to buy needed necessities?

The companies that moved the jobs offshore, they can move the jobs back onshore!

[Skittles]

11. sounds like their accounting is as ficticious as their resumes