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  1. #1
    Join Date
    Jul 2003
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    Kapiti in New Zealand
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    Default Shock over 'India's Enron'

    Hello all,

    Just read about this in News.com.au

    THE head of Indian outsourcing company Satyam Computer Services quit overnight, after disclosing that profits had been falsely inflated for years and sending its shares plunging nearly 80 per cent.

    India's biggest corporate scandal in memory threatens future foreign investment flows into Asia's third-largest economy and casts a cloud over growth in its once-booming outsourcing sector.

    News of the massive fraud sent Indian equity markets into a tailspin, with Bombay's market falling 7.3 per cent.

    Ramalinga Raju, founder and chairman of Satyam, the fourth-largest software services exporter in India, said that Satyam's profits had been massively inflated over recent years.

    Mr Raju, who founded Satyam as a family business with his brother and brother-in-law more than two decades ago, said about $US1 billion ($1.4 billion) or 94 percent of the cash on the company's books was fictitious.

    He added that no other board member was aware of the financial irregularities at the Satyam, which in Sanskrit means "truth."

    News of the massive fraud casts doubt on Satyam's plans to spend $75 million on a base at Deakin University, which was expected to create 2000 jobs over the next 8 years, reports the "Riding a Tiger"

    "It was like riding a tiger, not knowing how to get off without being eaten," Mr Raju said, adding he was prepared to face up to the legal consequences.

    Satyam rose to prominence in the late 1990s when Raju was among the first to spot outsourcing opportunities in the Y2K rollover problem.

    "I think there is no future for this stock. This case for India is similar to what happened to Enron in the US," said Jigar Shah, senior vice-president at Kim Eng Securities.

    "It will not stop at Satyam. Many more companies will come into scrutiny like that. There is a strong possibility investments in India will be affected."

    The scandal set off a wave of condemnation from Indian market regulators and government officials. The company's auditor, PricewaterhouseCoopers, did not comment.

    "It's going to impact the Indian outsourcing industry. Customers are going to be concerned about offshoring firms in India," said Sudin Apte, country head of Forrester in the western city of Pune.

    RK Gupta, managing director at Taurus Asset Management in New Delhi said:"If a company's chairman himself says they built fictitious assets, who do you believe here?

    "This has put a question mark on the entire corporate governance system in India," said Mr Gupta.

    Source...

    Cheers

    Marc
    Free business resources - www.BusinessBlogsHub.com

  2. #2
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    Jul 2003
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    Default Rush to contain Satyam fallout

    And more...

    INDIAN authorities investigating the $1.8 billion Satyam fraud yesterday ordered all audit documents seized as Australian corporates scrambled to sort out how they will be hit by the scandal.
    Investigators from the Indian Institute of Chartered Accountants demanded documents held by the Hyderabad office of the global accounting giant PricewaterhouseCoopers.

    The Indian Government also launched an investigation into eight other companies linked to Satyam's missing CEO and chairman, B Ramalinga Raju.

    Last night the company was on the brink of collapse, with insufficient cash to meet this month's payroll.

    Satyam outsources IT services to a host of big Australian companies, including Telstra, Optus, Qantas, Coles, National Australia Bank, Suncorp and Medibank.

    It is also contracted to global giants Nestle, Caterpillar, Nissan and Citigroup.

    The Hyderabad-based business lost 94 per cent of its cash reserves as a result of a fraud admitted to by Mr Raju in a five-page confession to Satyam's board of directors earlier this week.

    Satyam employs 53,000 workers worldwide, including 1700 in Australia.

    Read more...

    Cheers

    Marc
    Free business resources - www.BusinessBlogsHub.com

  3. #3
    Join Date
    Sep 2007
    Location
    Auckland
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    8,354

    Default

    This sort of bad/fraud news just keeps coming and coming.

    How could there be no cash with PWC doing the auditing? Just like Enron and Arthur Andersons. Amazing really.

    How can any shareholder anywhere be sure the company they have invested in is being run in non fraudulent let alone competent manner?

    Give me bricks and mortar man!

    David

  4. #4
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    Jul 2003
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    Kapiti in New Zealand
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    Default New board for fraud-hit Satyam

    The latest...

    INDIAN authorities have installed three prominent business leaders to run scandal-hit software giant Satyam Computers in an effort to salvage the country's international business image.

    The government appointees replaced the company's own interim board of directors who took charge after Satyam founder and chairman B Ramalinga Raju admitted last week that his company's accounts and assets had been falsified.

    The new board will "provide necessary vision and accountable leadership in this hour of crisis to restore credibility, customer confidence and employee morale'', company affairs minister PC Gupta said.

    Raju was arrested late on Friday and is now in jail pending trial after his dramatic confession that profits at the outsourcing giant had been falsely inflated by more than $US1 billion ($1.4 billion).

    Gupta described Satyam as "a company of national and international fame'' as he announced the first three new board members.

    "It has many professionals on its roll who are amongst the best and the brightest in the world,'' he said.

    "It is therefore important to ensure continuity of the company.''

    Satyam, which has clients in 65 countries and 53,000 staff, has been on the investment list for several top Indian and global mutual funds but its future existence now looks bleak.

    Satyam's market capitalisation - the number of shares multiplied by the market value of the share -- fell from over $US3 billion ($4.21 billion) last month to about $US330 million ($462.7 million) on Friday, two days after the scandal broke.

    Source...

    Cheers

    Marc
    Free business resources - www.BusinessBlogsHub.com

  5. #5
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    Jul 2003
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    Kapiti in New Zealand
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    Default Billion-dollar fraud frighteningly simple

    Latest news..

    Wondering where all those Arthur Andersen accountants went? It may have been India.

    It's tempting to make that mental leap because of Satyam Computer Services' book-cooking scandal. Ramalinga Raju is no longer the entrepreneur who built India's fourth-biggest software maker.

    He's now allegedly the nation's answer to Jeffrey Skilling, the former Enron chief executive officer serving a 24-year prison term. Satyam's crisis may be more jaw-dropping than Enron's in 2001.

    It's not just the magnitude of the scam - 53,000 employees may lose jobs compared with 5000 at Enron - but the simplicity.

    Enron's fraud was conducted in a labyrinth of off-balance-sheet deals and other accounting gimmicks. Accounting firm Arthur Andersen approved the company's financial creativity and collapsed in 2002. Enron didn't make it easy for the auditor.

    Satyam's con was impossibly transparent: The Hyderabad-based company said it had US$1 billion in the bank that it didn't.

    Raju said he inflated earnings and assets. Assuming he's telling the truth, you would think auditor PricewaterhouseCoopers or board members could have cleared up a mess, years in the making, with a phone call, a fax machine or even a postage stamp.

    Read more...

    Cheers

    Marc
    Free business resources - www.BusinessBlogsHub.com

  6. #6
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    Jul 2003
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    Kapiti in New Zealand
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    4,032

    Default PWC staff arrested over Satyam scandal

    INDIAN police have arrested two senior officials of global accounting firm PricewaterhouseCoopers over fraud-hit Satyam Computer Services.
    The Press Trust of India and and other Indian media said the two officials were taken into custody in connection with the billion-dollar fraud at India's fourth-largest outsourcing firm based in the southern city of Hyderabad.

    The arrests came after B. Ramalinga Raju, founder of Satyam, was arrested earlier this month, days after owning up to the scandal that has shaken corporate India.

    Pricewaterhouse audited Satyam's finances and is now being probed by India's accounting board for its failure to detect the fraud.

    The Press Trust of India (PTI) and other media identified the two arrested Pricewaterhouse officials as the company's Chief Relationship Partner in India, S. Gopalakrishnan, and Engagement Leader Srinivas Taluri.

    A Pricewaterhouse spokesman called the arrests "unfortunate and said it had not seen "any evidence of any wrongdoing'' by the men, according to PTI.

    "The firm and its related team have fully cooperated with the investigating agencies to provide all the documents called for. Under the circumstances, detention is unfortunate,'' the spokesman said.

    The accounting house had been "shocked by the massive fraud at Satyam and by the elaborate efforts undertaken to conceal the fraud from the board of directors, shareholders and the auditors,'' the spokesman said.

    Meanwhile, Mr Raju remained in custody as investigations continued into his declaration that one billion dollars in cash on the company's books did not exist.

    Earlier, India's biggest engineering company Larsen and Toubro almost tripled its stake in Satyam Computer Services to 12 percent, edging closer to a possible takeover bid.

    The company now is Satyam's largest single shareholder.

    If Larsen hikes its stake further, India's takeover rules oblige it to make a full-scale offer for the company.

    Source...

    Cheers

    Marc
    Free business resources - www.BusinessBlogsHub.com


 

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