SATYAM LIE, BIGGEST CORPORATE FRAUD IN INDIA

Corporate chieftain B. Ramalinga raju stunned investors, clients and regulators with the revelation that he had padded profits and cooked up bank balance at Satyam Computer Services for years -a and then promptly resigned from his position as chairman. In his own words: "It was like riding a tiger, not knowing how to get of without being eaten".

What did Ramalinga Raju do?

• Cooked the books of the company; inflated revenues and profits for several years.
• Inflated cash and bank balances by Rs. 5040 crore.
• Claimed interest of Rs. 376 crore on a non-existent investment.
• Raised Rs.1230 crore(mostly by pledging his shares to lenders) and understanding the liability of the company to that extent.
• Overstated how much clients owed Satyam by Rs.490 crore.
• The fraudulent entries add up to 7136 crore.

Why did he confess?

• He had created fake accounts and assests. The gap between the fake accounts and the real one was expanding too quickly.
• As his stake fell in the company, he realised the company was going to beome a takeover target.This would create problems: when a buyer went through his books he would find the fake assests.

How did he get away for so long?

• Auditors Pricewaterhouse Coopers did not scrutinise the accounts vigorously.
• Independent directors on the board didn't grill the management.
• Institutional shareholders didn't complain as long as the market was booming and the returns were good.
• Claims to haave kept his own executives in the dark.

How did the scam unravel?

• Fictitious ccounting meant that there was a big holes in the balancesheet.
• The company had fake assests on its books; Rju wanted to replace this with real assests. he got the board to clear the buyout of wo entities - Raju-owned Maytas Infrastructure and Maytas Properties - for $1.6 billion.
• Satyam shareholders revolted, thinking that raju was looking to bail out debt-laden Maytas entities. Nobody sensed it was the other way round.
• Four directors quit suitors circled the company.
• Raju realised that he couldn't keep up the sham if potential buyers scrutinised his books.

If there is any truth in those revealed figures, Satyam would have reported a quarterly loss of Rs. 74 crore - probably the first by an Infotech major in India.