satyam in sanskrit means truth. asatyam is the opposite.lies.that's what the IT firm satyam's ramalinga raju did. cook the books. he must be a superchef. about 1.4 billion US$ of inflated profits over the years in the balance sheet.and he continued to get corporate governance awards.till he cooked his own goose. the last straw was when he tried to invest about 1.3 billion$ from his nonexistent reserves into his son's companies bearing the name maytas(satyam spelt backwards). shareholders raised a hue and cry and the plan had to be shelved.and they wanted his head.so he wrote a confessional letter and put in his papers.before that many of the non-exec directors,members of the supine board,had also resigned.a tsunami has hit the the indian IT world. and its image has taken a big beating.
everyone is in damage control mode. goverment,sebi,employees. what will happen to the company is anybody's guess.the share price plumetted from about 180rs to 20 rs or so.surely will hit zero soon.the company's net worth has been completely wiped out.'class action' suits are being filed.raju could face 20 years in prison.people from his village still revere him like god though.they feel he will rise like phoenix from the ashes.
he is likely to declare himself insolvent.then no legal action can be taken against him. he will be as good as dead. a sad end to a meteoric rise.from a ohio state university educated mba to an IT czar and now living on borrowed time. i spent a few days with him when we were together in a senior management course at hyderabad about 15 years ago.i found him to be sincere,hardworking,friendly and a man with a vision. there is a saying in sanskrit."vinaasha kale,vipareetha buddhi".when you are destined to be destroyed,you will do all the wrong things. raju digressed from IT after he became successful. diverted the company's funds into real estate. he is supposed to be owning about 6000 acres of land. greed knows no limits.
what will happen to satyam whose value is zero now? maybe it will be cut into pieces and the profitable businesses taken out and sold.the stigma is so much that infosys has openly said that it will not touch satyam with a barge pole. maybe a daring PE firm would venture into it. a sad moment for india which prides on its IT achievements. this is the 'mother of scams'.
9 comments:
nice post. another sad moment for india indeed. i don't know how many more such shocks the system can take before the sheen wears of "shining" india.
the name satyam itself was a harbinger of scandal. no honest person goes around declaring how honest he is. and what irony that it was maytas that "reversed" the fortunes of the company!
Still reeling from the shock, and wondering what kind of audits did PwC do? A company can cook up numbers....they almost always do, but where were the people who should have prevented such a scenario from happening.
R.Raju did do something wrong and I hope he faces the music, but wonder how many more such "truths" are going to come out in the wake of this company going down.
the sad part here is that of the employees...investors will get their money or they dont care much now....anyways they are either 2.7% or the largest being 7 odd %..but what will happen to those employees who haveinvested 100% of their lives in this comany and now living in the dark not knowing whether they wll get their salary or not..and if they will be axed or not...people rely on thei monthly salaries to pay out their EMIs..take care of their ailingparents...children education..gosh! now infy coming out in the open and talking absly unprofessionaly and saying tainted company and no hiring and such..is like pulling the dead body out and stabbing it mindlessly...
i really pity them coz i am one of the affected as my spouse works there..and it is not an easy thing...to live with....
hi lulu
many thanks.i am also a satyam shareholder.for about 12 years now.never imagined satyam would come to this pass.as someone said,"asatyam,shivam(the destroyer),scandalam!
hi AVV
indeed.the auditors,an american company,need to be hauled over the fire.in the case of global trust bank,gelli,the ceo,also did a big scam.PWC were the auditors.i wonder how they get away.gelli was also from hyderabad.
many skeletons will tumble out of the cupboard for sure.such a massive scam could not have ben done without the connivance of other senior executives.this is our 'enron'.
hi IBH
in a case like this,i think everyone is a loser.my heart goes out to the loyal employees.what were the independent directors doing? they say they trusted the auditors.that is no convincing answer.i have shares in satyam and i have also lost a packet.the employees' union smelt a rat quite some time back and had written about the wrongdoings of raju to all and sundry.but no one bothered.at least the enlightened employees could have rung the alarm bell.employees activism and acting like unofficial ombudsmen would be required to nip such frauds in the bud.
gs, the Satyam scandal is shocking indeed! Thank you for sharing your personal insights on the man. Lots of people that know/knew him personally say it is almost impossible to imagine him doing such a thing. I guess he was a bit of a Jekyll and a Hyde, but mostly Hyde.
hi lr
i suppose it is a combination of factors that hastened his downfall.once you start tampering with the accounts books,you are inviting trouble.success and imagined invincibility spurred him to venture into real estate in a big way.then blind love for children has brought him to this state. like you say h has now taken over j.it is pathetic to read about his condition in prison if that is true.anyway taking cue from usa,govt has stepped in to save 55,000 employess and the IT image.
Hi GS!
Like the case of all the ailing financial institutions in the US, the Satyam debacle shares the depressing truth that the overseers and auditors were seduced by the wealth and power and turned into partners and abettors. Makes me wonder cynically if there is any system of check and balance that could work when you're dealing with heady amounts of money and influence. Or will innate greed always win out when the upside is so amazing...When I read the letter from Mr.Raju apparently professing contrition it was hard to feel any sympathy. But then perhaps, one may have to walk in those multi-multi-million dollar shoes...
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