[JonatonM]

did you read this NYT blog about more info coming out of the Satyam fraud?

In India, Clues Unfold to a Fraud’s Framework - DealBook Blog - NYTimes.com

a snippet:

How did B. Ramalinga Raju, the chairman of one of India’s largest information technology companies, carry out the biggest financial fraud in this country’s history? Apparently it does take a village.

And although the billion-dollar fraud at Satyam has been called India’s Enron, an examination of the company’s accounting suggests the scandal may more closely resemble the fraud cases at HealthSouth and Peregrine Software, The New York Times Jeremy Kahn reports.

A little over two weeks ago, Mr. Raju confessed to padding the company’s balance sheet by $1 billion in cash. But investigators now suspect he was less forthcoming than it first appeared.

The Times, citing a person involved in the case, reported that investigators think at least some of Satyam’s cash reserves were genuine but were siphoned off to a web of companies controlled by Mr. Raju and his family.

[HRCPda7R]

I just LOVE this.

LOVE it LOVE it LOVE it.

It's like India's version of Enron.


By the way, I've met Satyam people before. The company sucks ass. Their "tech experts" are dumb as hell.

Free Video - Business and personal finance news from CNNMoney.com


Best of all...

Satyam means TRUTH in Sanskrit.

[toksenveste]

India needed to diversify out of corruption

[Nubtoubrem]

Oh, India has successfully brewed its own fraud and corruption for quite a long time. But then again, what country doesn't have a home grown industry of corruption and fraud.

[JonatonM]

Enjoying a dollop of schadenfreude, EC?! :P

Do you think a lot of that business will make its way back to the U.S.?

I can't say much about Satyam people but I have known a few people who work/worked for Infosys, and they're all pretty sharp and know what they're doing.

Satyam wouldn't have had one-third of Fortune 500 clients by hiring "dumb" people.

Seems like you're on one of your hyperbole feasts...

[HRCPda7R]

Satyam's "real" margin is 3%... so much for that "cost savings" they were supposedly offering their clients.

And now those 150 some odd Fortune 500 clients are going to suffer a disruption in services, possibly within days, if not weeks.


WiPro has been stating the same kind of margins (above 15%)... so one has to wonder which Indian companies are really stating the truth about their accounts and whose books are made up completely full of lies.


Oh and forget suing Satyam... I'm sure Indian recovery laws are pretty-much nonexistent so Satyam's foreign shareholders will not only recover diddly-squat... but they'll have little recourse in India's legal system. Once the shareholder's plight is fully known as the damage unfolds, it actually could hurt India's economy [this might also be a benefit to the Indian people... the government might make sweeping reforms not b/c of Indians, but because foreigners get spooked and flee the country].


So much for PriceWaterhouseCoopers auditing Satyam's books.

Enjoying a dollop of schadenfreude, EC?! :P

Do you think a lot of that business will make its way back to the U.S.?

I can't say much about Satyam people but I have known a few people who work/worked for Infosys, and they're all pretty sharp and know what they're doing.

Satyam wouldn't have had one-third of Fortune 500 clients by hiring "dumb" people.

Seems like you're on one of your hyperbole feasts...

[JonatonM]

Actually, if you notice the share movements, the other major Indian outsources gained today, even on the American exchanges. Did Enron's debacle mean every other energy firm was out to play "house of cards"? No.

You'd be surprised about the Indian legal system. It may be slow, but Indian share markets and law offer a fair playing ground to outsiders and Indians alike, which is not something, say, China can offer.

I'd be highly surprised if this sort of thing surfaced over at TCS or Infosys, the two really best such companies.

BTW, did you actually read Satyam CEO's letter to the board? It lays out in detail the situation and circumstances at that company. A very specific issue affecting that firm from many years ago.


But you're right, PwC screwed up big time.

Are you going to have a double-take on ALL other companies' book that PwC audits?!

[HRCPda7R]

Actually, if you notice the share movements, the other major Indian outsources gained today, even on the American exchanges. Did Enron's debacle mean every other energy firm was out to play "house of cards"? No.

You'd be surprised about the Indian legal system. It may be slow, but Indian share markets and law offer a fair playing ground to outsiders and Indians alike, which is not something, say, China can offer.

I'd be highly surprised if this sort of thing surfaced over at TCS or Infosys, the two really best such companies.

BTW, did you actually read Satyam CEO's letter to the board? It lays out in detail the situation and circumstances at that company. A very specific issue affecting that firm from many years ago.


But you're right, PwC screwed up big time.

Are you going to have a double-take on ALL other companies' book that PwC audits?!

Well that's where the comparison with Enron falls short.

With Enron, all the execs were denying everything they did was wrong to the bitter end. With this the CEO basically threw in the towel and admitted that the company does clear a profit, but it's a mediocre one and it's not a whiz-bang-wow a company as one would think... so most of the investors thinking they were going to ride this stock to the moon bailed out.


TCS is not going to have something like this happen to it---it's basically a state sanctioned conglomerate megamonolopy, so its other units can easily cover for losses with accounting tricks.

WiPro is the company I think is most like Satyam. I'm not sure about Infosys, but WiPro is definiately not the great super-profit center everyone believes it to be.

[JonatonM]

looks like PwC may get sued by stockholders to recoup some of the losses...

Auditor could be a target in $1 billion fraud in India - International Herald Tribune


The founder of the outsourcing giant Satyam may have admitted to the largest corporate fraud in Indian history when he made up $1 billion out of thin air, but Satyam's auditor, PricewaterhouseCoopers, could pay the price.

Investors are expected to go to court to recoup some of the billions of dollars in equity destroyed as problems at the company came to light. And, in fact, two U.S. law firms announced Thursday that they intended to file class-actions suits against Satyam.

But most investors are not expected to go after the cash-strapped company. Instead, they will aim at Satyam's deep-pocketed auditor.

"Price Waterhouse has signed the balance sheets, and so they are responsible if there has been a falsification," said Ravi Nath, an attorney with the New Delhi law firm of Rajinder Narain. The firm has already been contacted by several Satyam investors who wish to sue the company's auditor, Nath said.

Auditors are certainly dependent on information they get from a company's management, Nath said, but "they do have to verify that information."



read the full article at the link...

In cases of fraud here in the U.S., and there are hundreds of securities class-action lawsuits filed every year, the stockholders barely get pennies on the dollar. If at all, the law firms pocket a lot of the money that is recovered from the (usually) kaput company.

As usually happens, the small time individual investor in Satyam stock (SAY) will likely get nothing, either here in the U.S. or in India. Basically, claim it as trading loss come tax time, and move on.

I got burnt with an ethanol company stock two years ago myself...and that company's out of Iowa, far from India!

[HRCPda7R]

I've read all the articles. I'm following the Hindustanian Times coverage.


A sweeping tide rises all ships. Obviously when the tide runs out, you get to see who'se rudderless.

If there's any more companies like this out there, they won't have long before they'll come out of the closet. This will be a very interesting couple of quarters.