Satyam Computer Services Accounting Fraud
January 15th, 2009 at 5:55 pm - by admin
In what is being called the Indian Enron, Satyam Computer Services, one of India’s largest consulting and IT services companies, admitted yesterday that their profit statements and fiscal accounts had been inflated.
Satyam chairman, Ramalinga Raju, resigned from the company Wednesday immediately after admitting he had engaged in fraudulent accounting practices and inflated the company’s revenue statements for the past “several years” by adjusting the statements to include what the company’s spokeswoman called “fictitious assets and non-existent cash.”
India’s Sensex stock index plummeted nearly 10 per cent after this news, with Satyam’s stock losing nearly 80 per cent of its value.
India’s corporate affairs minister, Prem Chand Gupta, told Reuters Wednesday that they are “concerned about what has happened in Satyam, and the government will take all necessary action to ensure these types of scandals do not take place again. Whatever steps could be taken will be taken.”
The company traded American Depositary Receipts on the New York Stock Exchange (trading as SAY), losing just under 90 per cent of their value in the last month. The Exchange frozen trading of the receipts pending investigation.
Sataym is currently being observed by American investors and their lawyers in hopes of recovering some fraudulent losses via a class action lawsuit.
