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Satyam Computer Services’ fraud was one of the biggest in Indian history
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By Hugh Fort in Crime and Fraud, posted April 11, 2023
Massive corporate scandals are not just confined to the US, as a company in India showed in 2009.
Satyam Computer Services was one of the largest IT outsourcing companies in India before it became embroiled in one of the country's biggest corporate scandals.
In January 2009, B. Ramalinga Raju, the founder and CEO of Satyam Computer Services, admitted to a massive accounting fraud in a letter to the company's board of directors.
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He confessed to inflating the company's revenue and profits for several years, leading to an overstatement of more than $1 billion on the company's balance sheet.
This fraud was the largest in India's corporate history at the time.
The news of the scandal rocked the Indian business community, and the company's stock price plummeted.
The Indian government stepped in and appointed a new board of directors to manage the affairs of the company.
The new board quickly set to work to restore Satyam's reputation and put the company back on track.
What punishments were handed out?
The fallout from the scandal was far-reaching.
Several executives were arrested and charged with various offenses, including forgery, cheating, and criminal conspiracy.
Raju and several other executives were eventually convicted and sentenced to prison.
The scandal also led to a wider crackdown on corporate governance in India, with the government introducing new regulations to prevent similar incidents from occurring in the future.
The Satyam scandal also had implications beyond India.
For example, the World Bank, for example, barred Satyam from dealing with them because of allegations of corrupt practices.
The scandal damaged the reputation of the entire Indian outsourcing industry, which had been enjoying tremendous growth in the years leading up to the fraud.
Were people sent to prison?
Yes, briefly.
As a result of the fraud, Raju and several other executives were charged with various offenses, including forgery, cheating, and criminal conspiracy.
On April 9, 2015, Raju and his brothers were sentenced to seven years in jail and fined 5.5 crore (10 million) rupees, around $68 million in today's money.
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However, Raju and all others who were found guilty were granted bail by a special court in Hyderabad just one month after being convicted.
Part of the reason for this was India's Central Bureau of Investigation (CBI) failing to file charges on time.
Raju had spent two years in prison ahead of the trial, and the court suspended the rest of his sentence due to his age and health,
He had various rules to adhere to like reporting to the court regularly and asking for permission before leaving the city.
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