The infamous Satyam Accounting Scam

By CA Prashant Kumar Dutt

Brief Snippets on the Satyam Scam

September 30, 2008 – The Balance Sheet of Satyam as at September 30, 2008 carried:
  • Inflated (non-existent) cash and bank balances of ₹ 5,040 crore (as against ₹ 5,361 crore reflected in the books);
  • An accrued interest of ₹ 376 crore, which is non-existent;
  • An understated liability of ₹ 1,230 crore;
  • An overstated debtors’ position of ₹ 490 crore (as against ₹ 2,651 reflected in the books);
  • 2003-2008: False clients, projects and invoices created to boost companies profile,
    damages calculated at ₹ 7900 cr
Satyam scam probe:
  • Concurrent probe by CBI, ED, SEBI
  • 53,000 employees, millions of investors impacted
  • Accused charged with cheating, forgery, faking accounts and IT violations
Raju’s Defence:
  • Letter allegedly sent by him to board was a hoax
  • 3000 documents, 223 witnesses examined
  • Verdict postponed twice
IPC Sections Applied:-
  • Section 201 (causing disappearance of evidence of offence) of IPC
  • Sections 467, 468, 471 and 477A, of IPC relating to forgery of security, forgery for purpose of cheating and falsification of accounts
  • Section 409 of IPC relating to criminal breach of trust.
Satyam timelines:
  • January 7, 2009: Ramalinga Raju resigns, discloses a Rs 7000-crore accounting fraud in balance sheets about cash which never existed in the company.
  • January 8, 2009: Satyam’s bank Citibank freezes its 30 accounts. Interim CEO Ram Mynampati says company in severe cash crunch and may not be able to pay salaries. Satyam’s auditor PwC faces ire.
  • January 9, 2009: Ramalinga Raju and his younger brother B Rama Raju arrested by Police. Central Govt disbands Satyam board, to appoint its own 10 directors.
  • January 9, 2009: Satyam removed from Sensex, Nifty; NSE excludes F&O contracts on expiry of Jan contract.
  • January 10, 2009: Satyam former CFO Srinivas Vadlamani arrested.
  • January 11, 2009: Government appoints Deepak Parekh, Kiran Karnik and C Achuthan to Satyam board.
  • February 2009: CBI takes over investigation, goes on to file 3 chargesheets.
  • March 6, 2009: Gets SEBI nod for bidding process to select investor.
  • April 22, 2009: Tech Mahindra makes open offer to Satyam shareholders at ₹ 58/share, offer to close Jun 9.
  • June 22, 2009: Mahindra unveils new brand identity for Satyam, Mahindra Satyam.
  • 2010: Raju retracts confession statement, says charges levelled by CBI are false
  • November 2, 2011: Supreme Court grants bail to Raju since CBI failed to file chargesheet on time.
  • October 28, 2013: Enforcement Directorate filed a chargesheet against Raju and 212 others. The filed report states that “it transpires that the accused resorted to inter-connected transactions, so as to ensure that crime proceeds were distanced from its initial beneficiaries, and laundered the said proceeds under the cover of the corporate veil, with an ulterior motive to project the properties so acquired as untainted ones.
  • December 8, 2014: Ramalinga Raju and 3 others given 6 months jail term by SFIO
  • December 23, 2014: Judge adjourns verdict citing voluminous documents
  • March 9, 2015: Special court adjourns verdict till April 9
Satyam Scam Verdict
April 9, 2015: All 10 accused found guilty including Founder Ramalinga Raju gets 7 years in jail and slapped ₹ 5 crore fine.

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