Making sense of Satyam

The Satyam scandal keeps on twisting and turning, with the Indian government now all but outright accusing the chairman of having stolen the mystery $1 billion, rather than merely having invented it

Tags: FraudIndiaSatyam Computer Services
  • E-Mail
Making sense of Satyam (Getty Images)
By  Mark Sutton Published  January 19, 2009

The Satyam scandal keeps on twisting and turning, with the Indian government now all but outright accusing the chairman of having stolen the mystery $1 billion, rather than merely having invented it.

The problem with the Satyam situation so far is that obviously its very a complicated financial mess to sort out, but lack of facts doesn't necessarily stop the press from snatching at the vaguest of rumours.

In fact, to go ahead and throw some stones, an international media without direct access to information, coupled with local media that often seems to have an axe to grind with Satyam, has resulted in unsubstantiated rumours getting thrown up in one place, and then rapidly becoming accepted as fact by some of the most reputable news organizations in the world.

So far, there have been reports of a suicide attempt by the ex-CFO, staff being fired on the spot in the US and Europe, directors fleeing India to avoid police, forged bank documents and directors manipulating share prices and short selling to cover the inevitable fall in value of company shares. Many of the allegations have been denied by Satyam, others won't be known until trustworthy and competent auditors have gone through the accounts.

There's also ongoing speculation as to whether the government will step in and bail out the company. So far, it has said it won't, but the authorities are following the situation closely, and unless Satyam can find a source of cash soon, the government may well have to intervene to keep the company as an ongoing business and not damage the reputation of the rest of the outsourcing sector.

Satyam now says that it will take three months for it make sense of its accounts and to be able to get a proper handle on its financial situation. Even that sounds optimistic given that investigators say there seems to be a network of 300 companies linked to Satyam that may have been used to hide assets. And, whether the investigator's suggestions of fraud have any basis in fact or not, the claims by Raju that he didn't benefit personally seems to be ever more unlikely.

Surely even the most hapless CEO would have found some way to line his own pockets in seven years of cooking the books?

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code