Satam Computer Corporation Case Solution

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On January 7, 2009, Mr. Raju confessed in a letter to the Satyam Computers Limited Board of Directors “he had been manipulating the company’s accounting numbers for years”. Mr. Raju claimed that he overstated assets on Satyam’s balance sheet by $1.47 billion. Nearly $1.04 billion in bank loans and cash that the company claimed to own was non-existent. Satyam also underreported liabilities on its balance sheet. Satyam overstated income nearly every quarter over the course of several years in order to meet analyst expectations. For example, the results announced on October 17, 2009 overstated quarterly revenues by 75 percent and profits by 97 percent. Mr. Raju and the company’s global head of internal audit used a number of different techniques…show more content…
The global head of internal audit also fake board resolutions and illegally obtained loans for the company” . It also appeared that the cash that the company raised through American Depository Receipts in the United States never mentioned in the balance sheets. Greed for money, power, competition, success and prestige compelled Mr. Raju to “ride the tiger”, which led to violation of all ethical duties and responsibilities imposed on them as fiduciaries—the duty of care, the duty of negligence, the duty of loyalty, the duty of disclosure towards the stakeholders. “The Satyam scandal is a classic case of negligence of ethical duties, total collapse of ethical standards, and a lack of corporate social responsibility. It is human greed and desire that led to fraud. This type of behavior can be traced to: greed overshadowing the responsibility to meet ethical duties; severe competition and the need to impress stakeholders especially investors, analysts, shareholders, and the stock market; low ethical and moral standards by top management; and, greater emphasis on short‐term performance and
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