The Satyam Computer Services scandal was a corporate scandal affecting India-based company Satyam Computer Services in 2009, in which chairman Ramalinga Raju confessed that the company’s accounts had been falsified
About the Chairman
Ramalinga Raju (born 16 September 1954) was the former chairman of Satyam Computer Services from 1987 and till 7 January 2009, stepping down admitting to embezzlement of financial figures of the company to the tune of Rs 71.36 billion (approximately US$1.5 billion), including Rs 50.40 billion (approximately US$1 billion) of non-existent cash and bank balances
On 7 January 2009, the chairman of Satyam, Ramalinga Raju, resigned, confessing that he had manipulated the accounts by US$1.47-Billion. The global corporate community was said to be shocked and scandalised
In February 2009, CBI took over the investigation and filed three partial charge sheets (dated 7 April 2009, 24 November 2009, and 7 January 2010), over the course of the year. All charges arising from the discovery phase were later merged into a single charge sheet.
On 10 April 2015, Ramalinga Raju was convicted with 10 other members.
Role of Auditors
PricewaterhouseCoopers affiliates served as independent auditors of Satyam Computer Services when the report of scandal in the account books of Satyam Computer Services broke. The Indian arm of PwC was fined $6 million by the SEC (US Securities and Exchange Commission) for not following the code of conduct and auditing standards in the performance of its duties related to the auditing of the accounts of Satyam Computer Services.
In November 2010, Raju surrendered after the Supreme Court in August cancelled the bail granted to him by a lower court in Hyderabad, where Satyam is based.
The Supreme Court on 4 November 2011 granted bail to Raju since the Central Bureau of Investigation (CBI) failed to file charges on time. According to Indian law, a charge-sheet against an accused must be filed within 90 days of arrest.
On 28 October 2013, the Enforcement directorate filed a charge sheet against Raju and 212 others. The filed report states that “it transpires that the accused resorted to inter-connected transactions, so as to ensure that crime proceeds were distanced from its initial beneficiaries, and laundered the said proceeds under the cover of the corporate veil, with an ulterior motive to project the properties so acquired as untainted ones”.
On 9 April 2015, Ramalinga Raju and his brothers were sentenced to 7 years in jail, fined Rs. 5.5 crore.
Acquisition by Mahindra Group
On 13 April 2009, via a formal public 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 issues. Tech Mahindra announced its merger with Mahindra Satyam on 21 March 2012, after the board of two companies gave the approval. The companies are merged legally on 25 June 2013