A. Introduction
a. Satyam, Sanskrit for truth, was an Indian company involved in one of the most infamous scandals in Indian corporate history.
b. This scandal occurred January 7, 2009, when B. Ramlinga Raju, chairman of Satyam, composed a letter directed towards the company board in which he took responsibility for the fraud of 50 billion rupees.
c. Satyam won several awards for corporate governance by the World Council for Corporate Governance.
B. History of Satyam
a. Satyam was once known as India’s fourth-largest software development and IT consulting company.
b. The company was founded by two brothers, B. Rama Raju and B. Ramalinga Raju, and the company became successful with the …show more content…
According to Financial Times, [2] “an audit committee is a selected number of members of a company’s Board of Directors whose responsibilities include helping auditors remain independent of management”.
b. Regulatory changes should be conducted once the evidence of promoter shares and fluctuation of those shares begin to occur.
c. Once the evidence is increased, signs should appear and this shall cause for a greater amount of monitoring if the shares began to move from being diversified.
VI. Legal and Ethical Implications
A. Legal
a. Looking at the case from a legal viewpoint, B. Ramlinga Raju was guilty of manipulating the company profits and participated in financial fraud.
b. The financial fraud went undetected due to the assistance of the external audit firm, PwC.
c. PwC received large payments to verify false financial documents and ignore all the balance sheet irregularities
d. These actions is what called the Raju brothers to be arrested and imprisoned and for PwC to “replace all senior management responsible for audit matters”.
B. Ethical
a. B. Ramlinga Raju did not consider the possibility of the losses as a whole that could arise from his actions and …show more content…
As a member of the board of directors I would have ensured that the company had several checkpoints in place to ensure the company had ethical financial dealings.
2. This would include having quarterly meetings that would consist of going over the company financial reports and balance sheet with the bank and the audit committee as well to see if everything is aligned.
3. Finally, I would have also indicated a new type of meeting with the shareholders and employees to demonstrate how the company is doing financially so that they may be educated on their stake in the company.
VIII. Epilogue
A. Strategic Milestones
a. Through the use of constant meetings with clients and employees confidence, moral, and trust have begun to be resorted.
b. The firm became Mahindra Satyam and later on merged with Tech Mahindra, and has become disassociated from the original founder.
B. Financial Milestones
a. Since the merger, the firm has had a steady increase in new clients.
b. Tech Mahindra contributes about 61% of its revenue to the merger of the Satyam firm [1].
C. Lessons Learned
a. One of the lessons I learned that corporate governance mechanisms are not a simple thing to implement and if not done correctly many departments in a company can