Satyam Scam: India's Biggest Accounting Fraud
Ramalinga Raju, you must have heard this name. Once this name was echoed in India's IT sector, but now this person is anonymous. After the Satyam scam came to light in 2009, Ramalinga Raju suddenly came into the limelight and became infamous. In fact, Satyam Computers was one of the renowned IT companies like Infosys, Wipro, and TCS at that time, and Ramalinga Raju founded this company.
In the year 2009, he confessed to accounting fraud on a large scale in the company, and after this, a big scam was revealed in this giant of the IT sector.
What was the Satyam Computers scam?
The Satyam Computers scam, which came to light in 2009, is considered to be the biggest accounting fraud in India's corporate history, and it was a major scam in the IT sector. Shockingly, the scam was carried out by the company's founder, B. Ramalinga Raju. Ramalinga Raju himself confessed that he had manipulated the company's accounts over the years.
The Satyam Computers scam amounted to around Rs 7,000-7,800 crore (about USD 1.5 billion). The beginning of this big fraud in the company started in 2002, and this series of fraud continued for seven years.
They manipulated accounts to give the impression of success without real growth and cash flow. Later, when the truth came out, it was considered one of the biggest financial scams in the history of Indian business.
The fraud began on a small scale. But as the valuation of the company began to rise, Ramalinga Raju was forced to continue lying. To meet market expectations, they had to show false profits every quarter.
Fake bank balances were created for this. The auditor's statements were manipulated. But, over time, the gap between the company's real income and the accounts shown exceeded a thousand crores. The main reason for this was that Ramalinga Raju and his family were involved in the real estate business.
He had invested a large amount of money in real estate in Hyderabad. However when the global financial crisis hit in 2008, land prices crashed.
Since it was no longer possible for him to lie about the company's accounts, he decided to admit it even before the truth came out. Accordingly, he wrote a letter saying, "I have been defrauding the company's accounts for many years. Following this, Satyam's share price fell by 80% in a single day.
Many investors lost billions. Subsequently, the Government of India immediately ordered the dissolution of the company's board of directors.
After this, SEBI (Securities and Exchange Board of India) started an investigation. The CBI arrested Ramalinga Raju and his close friends. The incident shook the Indian business world.
