Satyam Case Study Essay Example for Free

Satyam Case Study EssayThe Satyam Computer Services scandal was a corporate scandal that occurred in India in 2009 where chairman Ramalinga Raju confessed that the companys postings had been falsified. The Global corporate community was shocked and scandalised when the chairman of Satyam, Ramalinga Raju resigned on 7 January 2009 and confessed that he had manipulated the accounts by US$1.47-Billion. Contents hide1 Role of Auditors2 Aftermath3 New CEO and special advisors4 Acquisition by Mahindra Group5 suck up also6 References7 External linksRole of Auditorsedit source editbetaPricewaterhouseCoopers was the statutory auditor of Satyam Computer Services when the report of scandal in the account books of Satyam Computer Services was broke out. The Indian arm of PwC was fined $6 million by US Securities and Exchange Commission for not following the code of parcel out and auditing standards while pursuing its duties while auditing the accounts of Satyam Computer Services.1 After mathedit source editbetaRamalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme court on 4 November 2011 as the investigation agency CBI failed to file the chargesheet even by and by more than 33 months Raju being arrested. Raju had appointed a task force to address the Maytas occurrence in the last few days before revealing the peeleds of the accounting fraud. After the scandal broke, the then-board members elected Ram Mynampati to be Satyams interim CEO. Mynampatis financial statement on Satyams website say We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We gather in gathered together at Hyderabad to strategize the way forward in light of this startling revelation. On 10 January 2009, the Company Law Board decided to mensuration the current board of Satyam from functioning and appoint 10 nominal directors. Th e current board has failed to do what they are supposed to do. The credibility of the IT industry should not be allowed to suffer. said Corporate Affairs Minister Prem Chand Gupta. Chartered accountants regulator ICAI issued show-cause notice to Satyams auditor PricewaterhouseCoopers (PwC) on the accounts fudging. We have asked PwC to reply within 21 days, ICAI President Ved Jain said. On the same day, the Crime Investigation Department (CID) team picked up Vadlamani Srinivas, Satyams then-CFO, for questioning. He was arrested later and kept in judicial custody.2 On 11 January 2009, the brass nominated noted banker Deepak Parekh, former NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyams board. Analysts in India have termed the Satyam scandal Indias own Enron scandal.3 Some social commentators see it more as a part of a broader problem relating to Indias caste-based, family-owned corporate environment.4 Immediately following the news, Merrill Lynch (now a part o f Bank of America) and State Farm amends terminated its engagement with the company. Also, Credit Suisse suspended its coverage of Satyam.citation needed. It was also reported that Satyams auditing firm PricewaterhouseCoopers will be scrutinised for complicity in this scandal. SEBI, the stock market regulator, also said that, if found guilty, its license to work in India may be revoked.56789 Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance to a lower place endangerment Management and Compliance Issues,10 which was stripped from them in the aftermath of the scandal.11 The New York transmit Exchange has halted trading in Satyam stock as of 7 January 2009.12 Indias National song Exchange has announced that it will remove Satyam from its SP CNX Nifty 50-share index on 12 January.13 The founder of Satyam was arrested two days after he admitted to falsifying the firms accounts. Ramalinga Raju is supercharged with several offences, including cri minal conspiracy, breach of trust, and forgery. Satyams shares fell to 11.50 rupees on 10 January 2009, their lowest level since March 1998, compared to a high of 544 rupees in 2008.14 In New York Stock Exchange Satyam shares peaked in 2008 at US$29.10 by March 2009 they were trading around US$1.80. The Indian Government has stated that it may lead temporary direct or indirect liquidity support to the company. However, whether employment will continue at pre-crisis levels, particularly for new recruits, is questionable .15 On 14 January 2009, Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam may have rendered its audit reports wrong and unreliable.16 On 22 January 2009, CID told in court that the actual number of employees is only 40,000 and not 53,000 as reported earlier and that Mr. Raju had been allegedly withdrawing 200 million (US$3 million) every month for paying these 13,000 non-existent employees.17 New CEO and special advisorsedit source editbetaOn 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-day-long board confluence also appointed Homi Khusrokhan (formerly with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors.1819 Acquisition by Mahindra Groupedit source editbetaOn 13 April 2009, via a formal worldly concern auction process, a 46% stake in Satyam was purchased by Mahindra Mahindra owned company Tech Mahindra, as part of its diversification strategy. Effective July 2009, Satyam rebranded its services under the new Mahindra management as Mahindra Satyam. After a delay due to tax issues2021 Tech Mahindra announced its merger with Mahindra Satya m on 21 March 2012, after the board of two companies gave the approval.2223 The companies are merged legally on 25 June 2013.2425 See alsoedit source editbeta