Satyam Computers has played a good game with its shareholders

“Justice will not be served until those who are unaffected are as outraged as those who are.”

Hello everyone! First of all thank you for giving your precious time to read my blog. So today I want to share my views on the unethical practise which is being followed by Satyam Computers.

We all know about Satyam Computers & its fraudulence case. This case is termed as the most colossol fraud in corporate history of India, The Satyam Scandal.

Let me tell you the background of the company which was doing well in business before the scandal. The Satyam Computers was established in 1987. It was a major IT company which provided services across the globe in fields Healthcare, Biotech, telecommunication, Banking & Finance etc. prior to 2009, Satyam Computers was fourth largest Indian IT service provider which was generating USD 2.1 billion revenue. It had 9% of the market share.

Here’s a timeline of what went wrong at Satyam.

1987: Thirty three-year-old Raju establishes Satyam Computer with his brother and a brother-in-law in Hyderabad.

1991: The company is listed on the Bombay Stock Exchange, where its initial public offering is oversubscribed by as much as 17 times.

1993: Satyam Computer signs a deal with US-based Dun & Bradstreet to set up Dun & Bradstreet Satyam Software. Satyam holds 24% stake in the venture, while Dun & Bradstreet holds the remaining. In 1996, Satyam sells its stake to Dun & Bradstreet, ahead of a restructuring, and the new company is called Cognizant Technologies.

1999: Satyam Infoway, a subsidiary of Satyam Computer, becomes the first Indian information and communication technology company to be listed on Nasdaq, and Satyam expands footprint to 30 countries.

2006: Satyam’s revenues cross $1 billion. Raju becomes the chairman of industry body, The National Association of Software and Services Companies.

2007: Raju is named Ernst & Young Entrepreneur of the Year. The company bags contract to be the official IT services provider of the FIFA World Cups in 2010 and 2014.

2008: Satyam’s revenues cross $2 billion. In December, the company decides to buy out Maytas Infra—owned by Raju’s sons—for $1.6 billion. The deal falls through after investors and board members object, and in a span of four days, four directors of the company quit. (Maytas is Satyam spelt backwards.)

January 2009: Satyam is barred from doing business with the World Bank for eight years. The World Bank alleges that Satyam was involved in data thefts and staff bribery. Shares fall to record low in four years. Satyam employees receive a letter from Raju admitting to the fraud, following which he resigns as chairman.

Raju and his younger brother B Rama Raju are arrested by police, while the Indian government steps in and disbands Satyam board.

June 2009: Tech Mahindra, owned by the Mahindra Group, and Satyam merge to form India’s fifth largest IT exports company. The merged entity is called Mahindra Satyam.

November 2011: Raju gets bail from India’s supreme court after the CBI fails to file charge-sheet.

October 2013: India’s enforcement directorate files a charge-sheet against Raju and 212 others under money-laundering charges.

July 2014: India’s market regulator SEBI bars Raju from the capital markets for 14 years, and also seeks Rs1,849 crore as fine.

April 2015: The special CBI court holds Raju and nine other officials guilty of cheating. Among those held guilty are two former partners at PwC. “We are disappointed with this verdict given by the court of the Additional Chief Metropolitan Magistrate at Hyderabad,” accounting firm PwC said in a statement.

Raju, who also has to pay a fine of about $800,000 (Rs5 crore), has served 32 months in prison so far.

Lets come on the case, The Satyam’s chairman Ramalinga Raju’s way of conducting the business is the classical example of unethical practices in the industry. He was solely driven by the greed of money and acquiring lands. He wanted to compete with the top three IT companies of India (Infosys, TCS and WIPRO). Raju chose the easiest yet the most immoral ways to achieve his goals. He forged the accounting books for nine years, avoided taxes, and diverted the money received from shareholders, created fake clients, account salaries and invoices. Ramalinga Raju showed his company in very good financial health and attracted money from shareholders to buy lands. Ironically, he had bagged golden peacock global award in 2008 for good corporate governance. Also, world Bank in December, 2008 barred Satyam from business for eight years for providing Bank staff with “improper benefits”. Ethical standards thus in the company were poor.

The study of that which an “obligation of duty” and consequent action based on moral judgment determine whether the person, business or any actor has complied to. Ramalinga Raju actions were ethically in contrast with what is expected from the leader of any organization. He put his greed and ambitions before his duties towards his company, employers and stakeholders and did not hesitate from falsifying the accounting books for years ignoring all moral obligations towards them.

This was my opinion towards the unethical practices performed by the Satyam Computers . I believe that this information will help you further. Let me know below in the comment section about your opinion. Thank you!!