dcsimg

Satyam Cofounder Admits Fraud, Resigns

SHARE

Just in case anyone is living under the misconception that the U.S. has a monopoly on corporate fraud, The New York Times reported Wednesday that the chairman of India's fourth-largest outsourcing provider admitted to falsifying the company's books.

 

Ramalinga Raju resigned after announcing he had been inflating the earnings and assets of Satyam Computer Services for several years. According to the story, "50.4 billion rupees, or $1.04 billion, of the 53.6 billion rupees in cash and bank loans the company listed as assets for its second quarter, which ended in September, are non-existent."

 

Raju said what started as a "marginal gap" between actual operating profits and what was on the company's books snowballed out of control as the company grew. "It was like riding a tiger, not knowing how to get off without being eaten," he said in a statement distributed by the Bombay Stock Exchange. He also told investors that neither he nor his co-founders had pocketed any of the money. He expressed "deep regret" and apologized to investors and employees.

 

Observers have already compared the situation to the Enron fiasco, and analysts say Satyam is likely to lose many of its customers to Wipro, TCS or other competitors.

NewsletterITBUSINESSEDGE DAILY NEWSLETTER

SUBSCRIBE TO OUR DAILY EDGE NEWSLETTERS