Satyam Scam

Bhavya Bhasin
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Mr. Ramalinga
Raju
Former CEO and Chairperson of
Satyam Computers
Criminal Status: Out on Bail

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 “
It was like riding a tiger, not knowing
how to get off without being eaten

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What had really
happened for
Ramalinga Raju
to be sentenced to
7 years of Jail?

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Satyam
Computers

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 Satyam’s success journey so far

Covers 66 countries and 53,000 employees 2008

1st Asian company to feature in training magazine’s
2007
top 125 companies for learning

Declared amongst top 100 most pioneering

2000
technology companies by World Economic Forum

Converted to Public Ltd and listed in NSE,

BSE, EURONEXT, DOWJONES, NYSE 1991
Founded by Ramalingam Raju with
20 employees
1987

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Major Clients of Satyam Computers

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Setting up of
the “child”
company
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Maytas was set up
as the “Khandaani
business” to be
distributed equally
between
Ramalinga Raju’s
son’s- Rama Raju
and Teja Raju
Notable clients of Maytas Infra

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Anatomy
of a fraud

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Maintaining records Raju Maintained
thorough details of the
Satyam’s accounts
and minutes of
meetings since 2002

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Fake invoices and bills

▪Secret program
was planted to
▪Fake invoices hide/show
and bills were invoices in the
created using official system
▪Details of the
accounts from platforms like
2002 till January ‘Ontime’
2009 were stored
in two separate IP
addresses.

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Web of companies

These companies had

several transactions in
the form of inter-
corporate investments,
advances and loans
within and among them

One such company,

A web of 356 with a paid up capital
investment of Rs 5 lakh, had made
companies was an investment of Rs
used to allegedly 90.25 crore and
divert funds from received unsecured
Satyam loans of Rs 600 crore.
The derailing
initiator

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Satyam derailed by
Hyderabad metro
rail!

The Hyderabad metro rail

project was the turning
point for Satyam
computers, that raised a
lot of eyebrows at Maytas

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E Sreedharan
India’s “Metro Man” and
whistleblower in the Satyam-
Maytas scam

Then status: Consultant for the

Hyderabad metro rail project

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Simply reliable, Eh???
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Sreedharan’s findings

Sreedharan wrote a letter He said it was like “Selling He mentioned that Maytas
to the planning family Silver” had hidden intentions to
commission doubting extend the rail project to
Maytas intentions for their other business of
bidding for the project land holdings and sensed
after they asked for 296 some “political
acres of land disturbances” later
 “
And the response of the government of Andhra Pradesh
(now Telangana State) is definitely on record. In November
2008, Finance Minister K Rosaiah, Municipal Administration
Minister Koneru Ranga Rao and the managing director of
Hyderabad Metro Rail Limited, N V S Reddy, stated at a
press conference that they would sue E Sreedharan unless
he took back his comments without reservation. They had
misjudged their man.

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The
Masterplan

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Bi-folded intentions in the metro
project
Plugging in the cash in
the missing cash
statements of Satyam
computers

Structuring the plan in a

way to make the metro
stations near the lands that
Ramalinga
Raju already owned to
increase the real estate
value
Satyam acquiring maytas
In 2008, Ramalinga Raju proposed to buy
stakes in Maytas infrastructure, as a fully owned
subsidiary for $1.6 billion which would again help
him in plugging the cash into the faked balance
sheets of Satyam Computers.

What raised eyebrows was that this decision was

made WITHOUT the consent of Satyam
shareholders!!
Satyam acquiring maytas

However, this plan eventually foiled because of

the strong protest of the shareholders. But it
ended up with a lot of doubts in the mind of the
shareholders.
The
unveiling of a
scam
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Much after the Merrill Lynch It walked out of
failed acquisition, realized that what the contract, and
DSP Merrill Lynch the company was would have been
was hired for saying about itself obliged to inform
advisory services and what the the stock
in seeking out numbers were exchange of the
possible partners saying were vastly reasons for this.
for Satyam different things.

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Left with no choice, Ramalinga Raju
admitted to his misdeeds in front of
the SEBI, the board of directors and
the stock market!

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The Confession

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The confession was nothing less
than a multi-megaton bomb
exploding in the face of corporate
India!!

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An investor, Leena Mangat was the first one
to file an FIR against Ramalinga Raju

This led to the matter being escalated to the

special CBI court of Hyderabad 36
The Defense

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Uma Maheshwar Rao was representing Ramalinga Raju for
the 7years long trial.

Mr. Rao made some bold actions in covering up

the Ramalinga Raju Scam by trying to prove that
the confession letter faxed to the SEBI wasn’t sent
by Ramalinga Raju since there was no verbal
authentication from his side. He also tried to
disregard the documents found in the digital
records of the company as evidences using
clauses in the Evidence Act.

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 It was however
very difficult for
him to prove Raju’s
innocence as the
balance sheet and
income statements
were massively
inflated!

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The
Judgement

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On April 15th 2015, Ramalinga Raju and other
accused were sentenced to 7 years of Jail
along with 5.5Crs of fine
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Aftermath of
the scam
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 The one firm to come under maximum scrunity was the
external financial auditor of Satyam, PwC. A major financial
scam was performed right under its nose.
SEBI had found PwC guilty in the Satyam scam and barred its
network entities from issuing audit certificates to any listed
company in India for two years. SEBI had also ordered the
disgorgement of over Rs 13 crore of wrongful gains from the
auditing firm and its two erstwhile partners who worked on
the IT company’s accounts.

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 Criminal charges were bought
against Mr. Raju including
Criminal Conspiracy, breach of
contract and forgery

A new board of directors were

appointed to find a way to
dissolve Satyam. The new board
The price of Satyam shares fell to of directors pulled in Goldman
Rs. 11.50 from its highest of Rs. Sachs for selling the company
544 which was sold to Tech Mahindra
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Want big impact?
Use big image.

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Reviewer
Comments
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 Satyam scam has been a
classic case of poor
corporate governance
practices

Non payment of taxes to The poor practices arose

the government and due to non-fulfillment of
major management the company’s obligations
credibility issues towards the stakeholders

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Where is Ramalinga
Raju and his family
now?
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 Ramalinga Raju’s daughter-in-law, Sandhya Raju
has utilized the family funds to start off a
business under the banner “CallHealth” which has
positioned itself as a supermarket of healthcare
services. A range of services are being offered
from e-consultation with a pick up and drop to
places where the patient needs to go for a
checkup.

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