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Indian Technology/IT News
<b>IBM, Accenture May Win New Clients as Satyam Crisis Rocks India</b>
<!--QuoteBegin-Mudy+Jan 12 2009, 09:18 PM-->QUOTE(Mudy @ Jan 12 2009, 09:18 PM)<!--QuoteEBegin-->Bodhi,
Let me tell you how these companies were operating, Indian companies were bribing hiring managers. Majority of cases  it was direct cash. Some cases in form of down payment of car or house. If Indian is a hiring manager then he was paid in India, if he perfers to do so. In some places if requirement was for five people, 10 people were stuffed in just to increase head count and more money to get commission.

<b>This was a big racket started by Indians. </b>

I am very happy this got exposed. Finally, we may see balanced job and pricing market in US and worldwide.


I object to your very offensive statements.
this also shows your inability to see the scandal's attributes through what it really is. It is not about overbilling customer or underdeploying the skills, or inappropriae practices in sales cycle, or anything to do in fact with operations. It is simply to do with syphoning off of the reserves to fund the personal real estate of Raju through blessings of kangress. True, bribe was and is often used to get contracts in America, but that is the american way. Remember Enron and Dabhol Power Project in Maharashtra? Remember Citicorp in Japan? Remember Oracle bribing the state govt officials of CA?
<!--QuoteBegin-Bodhi+Jan 13 2009, 09:52 AM-->QUOTE(Bodhi @ Jan 13 2009, 09:52 AM)<!--QuoteEBegin-->this also shows your inability to see the scandal's attributes through what it really is.  It is not about overbilling customer or underdeploying the skills, or inappropriae practices in sales cycle, or anything to do in fact with operations.  It is simply to do with syphoning off of the reserves to fund the personal real estate of Raju through blessings of kangress.  True, bribe was and is often used to get contracts in America, but that is the american way.  Remember Enron and Dabhol Power Project in Maharashtra?  Remember Citicorp in Japan?  Remember Oracle bribing the state govt officials of CA?

Raju disclosure came as he was over a prep ice and had no options so he took ownership. But what remains to be seen is that a vast majority of the section in the industry have replicated this trend from last one decade which are not listed and those who are listed may have window dressed it so cleverly that the RBI cannot object as it is routed via the Wholly owned subsidiary routing or the double taxation avoidance routing.

Almost all of these factors actually were riding the wave of the IT BOOM and made their way out using the 10 years tax holiday given to the IT sector

Score of funds have been stashed away at Camen Islands, Maurituis,Dubai,Singapore and HK.All these are money being siphoned off from a company that makes private placement as LTD company and then you realize that the funds were actually deposited in multiple accounts in the same bank with the same name by in a proprietorship account. On some pretext or the other its withdrawn or moved into accounts elsewhere.One fine day its reflecting on the books of account as profits earned from subsidiaries.in other words recycled profits. Projecting high growth rate.

Majority of the funds from this activity have gone into overseas account/political party funds or into real estate. This is actually one of the cause of the real estate rocketing into the sky in cities like Bangalore, Mumbai suburbs, Noida, Pune, Hyderabad and Chennai.

The city of Bangalore is now unredeemable with the kind of unrealistic price prevailing and consumated by the over indulgence of corporates

In 2006-7 the UK government closed down 768 Indian companies (LLPs) that were incorporated on the UK soil from Indian business entities only to facilitate overseas funds that would be shown at home as proceeds of bills abroad and escape Indian tax laws.They neither followed the UK laws nor the Indian laws and were a pain to the monitoring agency.

In India we have virtually a toothless monitoring policy and the CBI walks in only at the 11th hour when the situation cannot be salvaged.Namely because this doesnt happen overnight but slowly over many years and its very difficult to track the foot print

The DSQ software episode and so many other including the Sunrise Infotech Ltd case apart from Lesser known IT companies going Kaput suddenly . But the money was never recovered back to the investors

The Vini Vinc case is another scam for Rs 600 crores where the money was siphoned off and no one knew till the Chairman of the company disappeared with the public money.

Satyam scam is mind boggling and we hope that this will rectify the market mechanism back to a realistic .The eco system of investment was really damage in recent times where even an ordinary lay investor expected 4X to 6X returns on the investment . Non IT sector has been taking all the beating as normal economic dynamics of say 15% to 30% returns which otherwise would have been a great deal, were shown the thumbs down.

All this really calls for a serious realignment how we work in corporate governance so that we don’t go the US way completely. We have to raise the bar of self governance and ombudsman within the organisation and not allow any more fiefdoms to emenate

As a faculty I hate to mention an Indian Enron in case studies for future MBA aspirants as it opens a pandora box and invites lots of ridicule
Problem started when British company filed legal case against Satyam in Texas, later Irish investors raised couple of issue including land deal and few appointments, then WB came out and later Board director’s involvement in fishy board meeting. No check and balance.

These Indian companies’ owners were looking for self not for country or staff. This whole scam will have long term effect.
Statement is offensive but it is a reality now, this is a big issue here now, “credibility of Indian IT Companies”. After Mumbai, Indian Government inaction and regular terrorist attack in India had eroded confidence in label “India Inc”. It hurts but it’s true.
It’s better to fix it now and move on, if we fail to recognize problem, we will never fix. These scams directly affect thousands of employees and their family and indirectly hundred thousand. This is equivalent to financial terrorism. Lot of guys who are on bench are having sleepless night.
Outsourcing by Indian companies was misuse and abused, whether it was H1, B1, L1 visa. If you can recall in 1995 Sintel was blacklisted because they were providing poor salary and breaking every single salary rules. Innocent Indian IT guys were paraded with handcuff without their fault but mismanagement of these companies. Mastech was another, now they had renamed themselves as iGate. They were listed in NY and went under because they were breaking law and now they are happily operating from India with same people.

Satyam Matyas deal was later scam, Raju was able to get away with his previous act, and he was manipulating books. Auditors were involved, it means they were bribed. Ofcourse Congress party was directly involved. I don't understand why Indian government is bailing them out. They should set them as example.

Enron destroyed so many lives and couple of executives committed suicide. Enron auditor Anderson Company went under but now they are back with different name Accenture and around 30 other smaller companies completely vanished.

Satyam guys are not committing suicide; it means they are not scared. No guilt, and know very well they can get away.

Watch NDTV, I suspect they are also cooking books.
<!--QuoteBegin-Mudy+Jan 13 2009, 11:51 AM-->QUOTE(Mudy @ Jan 13 2009, 11:51 AM)<!--QuoteEBegin-->Bodhi,

It’s better to fix it now and move on, if we fail to recognize problem, we will never fix. These scams directly affect thousands of employees and their family and indirectly hundred thousand. This is equivalent to financial terrorism.

Satyam guys are not committing suicide; it means they are not scared. No guilt, and know very well they can get away.

The fate of the 4th largest IT venture in India is in a state of insecurity but not uncertain. The Govt of India cannot and will not allow it to collapse and most probably take over it and manage it to set a precendent like the US govt to support its eco system of enterprise and industry being conducive to investment.

Failing which the dent on the India is shinning and the Indian miracle of IT will take a very bad beating in which the investment community globally will be very apprehensive since the political environment combined with the recession has severely strained the system across the geographical territory.

Satyam Stake holders have lost Rs 9300 crores in one week since the disclosure. If we permit any more down fall then it may prove costly for the entire Indian industry and severly hit the indian IT sector and BPO segment creating shrinking of remuneration for employees in those industries and create a glut of work force taking away the dynamics of the Indian miracle in silicon valley.

Satyam Employees if not restrained from quiting the company then there will be a situation where the rest of the industry will also fear a phobia of pink slip and desperate workforce ready to take any job for surviving and forever destroying the economics of the IT industry.

This can kill the development and growth we have had so far in IT and it will be not too far when China completely supersedes India in its advantage as an IT Super power. They are atleast 10 years behind us in the sytems and process that we have gradually developed.

Therefore to prevent poaching and unhealthy Industry situation the govt must take serious action in partnership with the IT majors like Wipro,TCS and Infosys. Satyam must survive and retain its staff and competency. Otherwise it will be a bigger blow to the image of Indian economy reeling under already the mumbai attack and recession.

And the most important thing is to curb the trend NOW as this is nothing less than financial terror . With 53,000 employees on the block and another few hundred thousand people who are dependent on this IT phenomenon

A bad precedence set means many more will follow and its another way to stop India progressing and take the steam out of India just what the mumbai attackers had planned.They killed people directly but this phenomenon will kill Indian in thousands slowly with joblessness and financial distress
Brain Mapping of Raju and family, that should be starter.
Indian Gonvernment should stay away from Satyam. failed CMC Ltd is a good example.
They should punish Satyam scamers and make sure proper regulation and monitoring system is in place.
Let some other company buy Satyam, change name and do business.
<b>World Bank gives much of Satyam projects to TCS</b> <!--emo&Big Grin--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->These Indian companies<!--QuoteEnd--><!--QuoteEEnd-->

Mudy Ji,

As far as bailing out satyam goes, the whole thing clearly shows that kangress is involved. Why bail out a fraud company? Did they bail out the delhi shop keepers last year, when kangress government lost the sealing case in supreme court and thousands of shop keepers lost their livelihoods in a single day?

What obligation does Indian taxpayer has to bail them out? What for? It must be remembered that Satyam has already been enjoying tax holidays due to software export zone acts of GoI and software technology park provisions of several states govts incl. AP, TN, OR and UP. By cooking up its fake income from exports, thereby claiming tax refunds, Satyam have cheated the taxpayers too. It is abominable that now kangress wants to bail out this company at the same tax payers money!

But that aside, lumping with this crookery of Satyam, the Indian Industry itself, something that you once again want to repeat by using terms such as "These Indian companies", is not only unhealthy but also untrue. Satyam does not represent India.

Then to make it look like India Corp itself is corrupt, you started mentioning the H1B, wage disparity, unfair labour practice, and so on -- typical material from the democratic party's anti-outsourcing lobby pamphlets -- and took obscure names like iGate/Mastech/Sintel etc -- something in which I can go into great detail with you but is irrelevant at this time. My single suggestion to you: kindly desist from using terms like "India", "Indian" etc., in this context when you comment on the subject. That semantics is not justifiable.
<!--QuoteBegin-Bodhi+Jan 13 2009, 01:20 PM-->QUOTE(Bodhi @ Jan 13 2009, 01:20 PM)<!--QuoteEBegin--><!--QuoteBegin--><div class='quotetop'>QUOTE<!--QuoteEBegin-->These Indian companies<!--QuoteEnd--><!--QuoteEEnd-->

Mudy Ji,

As far as bailing out satyam goes, the whole thing clearly shows that kangress is involved. Why bail out a fraud company? Did they bail out the delhi shop keepers last year, when kangress government lost the sealing case in supreme court and thousands of shop keepers lost their livelihoods in a single day?

What obligation does Indian taxpayer has to bail them out? What for? It must be remembered that Satyam has already been enjoying tax holidays due to software export zone acts of GoI and software technology park provisions of several states govts incl. AP, TN, OR and UP. By cooking up its fake income from exports, thereby claiming tax refunds, Satyam have cheated the taxpayers too. It is abominable that now kangress wants to bail out this company at the same tax payers money!

But that aside, lumping with this crookery of Satyam, the Indian Industry itself, something that you once again want to repeat by using terms such as "These Indian companies", is not only unhealthy but also untrue. Satyam does not represent India.


Dear Bodhi,

Reading your comment I couldnt help but respond although it is not directed to me.

While I fully respect and appreciate your thought on your opinion I wish to bring to your notice that Satyam case is having a far serious impact on the market than what is visible.

1) OBAMA is anti - outsourcing and wants to restore jobs to Americans and he has come on stage when IT industry is reeling under recession .This will be a shot in the arm for all anti-outsouring elements in the US to bring in regulations and legislations that will shrink the market for India.USA remains still the largest Business partner to INDIA in IT with 36% of the total exports business share.The flexibility of the US market in terms of business transaction is very comfortable for India both culturally as well as in economic terms as against Europe and Japan

2)Going by the previous post recession data in 2003-4 Lot of compliance and regulations were brought across to vendors to qualify for contracts. While the Pvt markets were suffering, the US govt was busy offloading the govt contracts to US SMEs to support them and prevent them from closing them down.This made the market too tight for Indian Software units and we had reports of nearly 268 companies either closing down or sold off.

3) If Satyam is allowed to collapse then the insecurity amongst the overseas investor will be high.Wasnt this the same reason in DHABHOL project where the performance guarantee was required and the Maharastra government wanted the Central government to stand as a counter guarantee in terms of insolvancy or non payment . Why do we have that sense of irrevocable faith in LIC (life insurance corporation) and not in ICICI or any other .Because we are sure that even if there is market meltdown we are secured.If the overseas investor hesitate to invest then it will have a severe strain on the forex reserve and also on the fiscal management. When you attract investment overseas you have to give that confidence and assurances to investment community.It will take enormous efforts to win back the market sentiments in our favour.We cannot forget the 1991 forex crisis and how we escaped being a Bankrupt country.

4)Another aspect is the IT industry itself will have a saturation of talent force as 53,000 employee force is to high a stake. With these workforce let loose in the market the way recruitment process is undertaken will change forever as abundant supply of talent exceeding demand means the valuation is falling.We are already seeing many family suicide pacts in metros due to the Stock market collapse creating financial distress.Imagine what can happen if these Satyam employees are not accomodate back elsewhere?? isnt it evident that recruitment across the industry halted 4 months back for want of projects and thousands are already on bench with all the IT companies put together.
What you say makes sense that Satyam is not representing INDIA INC</b>

Satyam represented India till just 5 months ago by bagging the best corporate governance awards continuesly for last 3 years.Thw world knew of India vis a vis a Satyam that was 5 months ago as factor of "Pride". We suddenly cannot disassociate the connection as it has been disgraced

But isnt it also a fact that the top 20 IT companies of India also do not represent India in whole. They are the leaders .Fine !!!

They set the bar high .Fine !!!

But why do we neglect that the SMEs in India all put together generate more revenues to the forex reserves vis Exports than the top 20.

Post Satyam collapse it will be very difficult for SMEs to meet the high compliance costs in terms of CMMi, Project management and other quality process which the top 20 or even the top 100 can spend on but the lower industry segments are unable to to do so as it doesnt make any sense in spending on all those factors when their contract value will be far lower than the cost .A CMMi implementation costs Rs 2-5 crore.A six sigma compliance cost Rs 50 lakhs to 1.5 crore while a BS certification costs around Rs 1 crore.Sometimes the regulations require to have all three of them.

In most of the contracts the forerunner clause is that a company must have a turnover of minimum $ 200,000.00 to qualify INR 1 crore. If this bar is raised and more compliances like audited balance sheet for last 4-5 years is asked then it will be very difficult for SMEs to virtually bag business .It may also become mandatory for Indian business to have a local presence in the origin of the business country to have greater legal implications to qualify that means then they have to be rated in by the DUNS & BRADSTREET to qualify which is the local norm in US.

So it is these SMEs companies that will take a direct hit and I am sure all related industry which thrive on these segments like the Cateering, Cottage industry,hospitality and transport will take a big hit as well in Metros.Retailing industry has already shown significant slump indicating consumers sentiments Other depending industries are the temp staffing and second tier IT companies who outsource their skills on select aspects of projects based on their expertise.

The breakeven for these industries are fairly long and they will not be able to take so much pressure especially when the external business environment is also reeling under recession.It will force many out of the race or into financial traps or mini Satyams phenomenon

As per some study Japan took 18 years to recover from recession and What US is currently facing is far overpowering compared to all previous 4 recessions undergone so far since 1945 and they havent hit the bottom yet .Possibilities are that this will take more than 36 months to even 5 years to START recovering.

Our economy has already slowed down and so has China . It will take a lot of time for market to correct itself and get back on the rail once more .

In the meantime what will be the cascading effect of the SATYAM factor on all of the economy is to be examined carefully while there is still time to control damage.

<b>Ultimately its the tax payer on the road who gets effected and not the babus in the Govt or the top 100 companies based on which the world see India.</b>

In North India every person from South is called or related to as a Madrasi ( Madras - chennai) irrespective to which state he/she belongs to in south.

Similarly when you pitch for business in the overseas market People will at least for some months ahead confront any Indian entrepreneur with Satyam irrespective to the market realities.Unwillingly each one of us have to explain the incident.

Again the overseas investors and Business community will look at the Indian government with double standards . Having no severe punishment mechanism in place and show us as a lenient and a corrupt country when it comes to financial frauds.The OECD country members anyway dont recognise our contractual agreements with arbitration clauses .<b>This is the image that the business houses and entrepreneurs have been fighting as an uphill task with to establish business in the NAFTA and the OECD countries for many years now.Not many are aware of this as we only see the India is shining factor </b>
This seems to be the right thread for this, so moving it here.

About this:
<!--QuoteBegin-Bodhi+Jan 11 2009, 08:46 PM-->QUOTE(Bodhi @ Jan 11 2009, 08:46 PM)<!--QuoteEBegin-->Sandhya Jain wrote to the above mentioned list, with a copy to vassel...

<!--QuoteBegin--><div class='quotetop'>QUOTE<!--QuoteEBegin-->[...]
On another list, friends revealed that <b>one Harvard Don is somehow connected to the Satyam Scam in India. PriceWaterhouseCooper</b> is already exposed.
Warm regards
Sandhya <!--QuoteEnd--><!--QuoteEEnd-->[right][snapback]92961[/snapback][/right]<!--QuoteEnd--></div><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Did the Christist's sink Satyam?</b>

the good professor R Vaidyanathan has already written about the politicians angle in the Satyam blow-up*

per the Economic Times report Samuel & Sons and Satyam could have colluded in a heap big racket in real estate - that caused Satyam to go down when the real estate market collapsed. I guess it was not enough to loot the Tirumala Tirupathi Devasthanam eh - Old Sam was working extra hard to screw everyone over

* disclosure: I had disagreed with prof's conclusion, but I am prepared to eat humble pie - it would not be the first time the prof proved me wrong!
Posted by Ghost Writer at 1/11/2009 10:51:00 PM 0 comment<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-dhu+Jan 13 2009, 12:57 AM-->QUOTE(dhu @ Jan 13 2009, 12:57 AM)<!--QuoteEBegin--><!--QuoteBegin-Husky+Jan 12 2009, 04:47 PM--><div class='quotetop'>QUOTE(Husky @ Jan 12 2009, 04:47 PM)<!--QuoteEBegin-->
<b>Did the Christist's sink Satyam?</b>

Stranger things have happened. Maybe they tired of seeing light after light of western industry getting extinguished and decided to do an equal equal.
And cross-posting this as well:
<!--QuoteBegin-Viren+Jan 13 2009, 01:45 AM-->QUOTE(Viren @ Jan 13 2009, 01:45 AM)<!--QuoteEBegin-->Harvard professor Palepu may have to quit DRL board
<!--QuoteBegin--><div class='quotetop'>QUOTE<!--QuoteEBegin-->MUMBAI: Harvard Professor Krishna G Palepu, the former non-executive director of Satyam Computer Services, may have to step down from yet
Satyam office

Following India’s biggest accounting scandal, Dr Reddy’s Laboratories has informally asked Mr Palepu to resign from its board where he is an independent director.

A source in Dr Reddy’s Lab told ET that the company’s senior management has sent feelers to Mr Palepu to quit.
The company’s board is meeting on January 20 to consider the December quarter results. Mr Palepu’s role is expected to be discussed at the meeting. <b>Mr Palepu was a non-executive director on Satyam’s board, which cleared the books cooked under B Ramalinga Raju’s leadership.</b> “We have not heard from Mr Palepu so far,” a source at Dr Reddy’s said. <!--QuoteEnd--><!--QuoteEEnd-->

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Incidentally, Mr Palepu was also on the board of Global Trust Bank (GTB) which collapsed in 2002 following an accounting scam. <!--QuoteEnd--><!--QuoteEEnd-->

Remember the genius who lost 70%+ of his proposed blocks to edits in CA went on to claim 'victory'? Prof Palepu probably was keeping up with Witzel's or Harvard tradition to not rely on those silly things like Maths or Ethics.
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Satyam does not represent India.<!--QuoteEnd--><!--QuoteEEnd-->
It does, if you check any channel here or cooler talk, all is around this scam.
Satyam had atleast 12000 employees in US. They had big presence, it is affecting image.
Its better that we stcik to facts when we discuss Satyam and its impact on India Inc.

Personal biases and animosities dont have place for it. I think the Sataym and the WB hit on Wipro and two others are part of a campaign to taint Indian outsourcing and should be recognized as such. And what can and should be done to restore market confidence in Indian outsourcing companies is important to discuss.

Thansk, ramana
WB is doing same with other companies from other nations. Even they had banned US companies and local vendors.
Indian Companies should cleanup mess now.
Greed, mismanagement and unrealistic competition is main problem.

Check this , this is a problem
<b>I didn't pay much attention to balance sheet: Satyam CFO</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Tainted IT company Satyam's former chief financial officer Vadlamani Srinivas is believed to have told the Crime Investigation Department that he used to sign on the dotted lines in the company's balance sheet.

"<b>I do not pay much attention towards the details of the balance sheet. The original balance sheet used to be kept before first quarterly board meeting that would be attended by nine directors at the Satyam Info City</b>.

"At the end of the 4-5 hour meeting, the balance sheet will come to me in the normal course. I will sign it and hand it over to the secretarial department," Srinivas reportedly told the CID officials during his questioning.

He said: <b>"I used to take comfort and certify the accounts based on the audit findings presented by the company's statutory auditors PricewaterhouseCoopers</b>."

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Indian Rupee Declines on Speculation Importers Buying Dollars  
By Anil Varma and Anoop Agrawal
Jan. 13 (Bloomberg) -- India’s rupee declined a second day on speculation some importers bought dollars, betting the local currency will weaken.

The rupee closed at a one-month low as the nation’s benchmark stock index slid a fourth day, adding to concern global funds will dump local equities. Sales of local shares by overseas investors exceeded purchases this year, according to data provided by the Securities and Exchange Board of India.
The local currency fell 0.6 percent to 49.12 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That is the lowest since Dec. 8. Sengupta didn’t give a forecast.

<b>Overseas investors have sold a net $64.8 million of local stocks this year through Jan. 9. They sold more than $13 billion in 2008, a record</b>.

The rupee strengthened earlier after Infosys Technologies Ltd., the nation’s second-largest computer services provider, said profit in the quarter ended Dec. 31 climbed 33 percent, beating estimates.

<b>The earnings report spurred optimism capital flows from abroad will increase after a corporate fraud at another software maker had dented investor confidence. Satyam Computer Services Ltd. Chairman Ramalinga Raju was arrested last week on charges including forgery, breach of trust and criminal conspiracy</b>.

<b>Non-deliverable forward contracts showed traders increased bets for further weakness in the rupee. Offshore contracts indicate the rupee may trade at 49.33 to the dollar in a month, compared with expectations for 49.20 yesterday.</b>
<b>Cooked Book Disclosures </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->It was September 2008 and I was charting my path to be an entrepreneur. A mail to Ramalinga Raju seeking his time was responded to immediately—he would rather meet me in Delhi at leisure and would keep me informed about his schedule. It so happened that the day never came. And post the botched acquisition of Maytas, I didn’t feel like meeting him. A person who has been an idol has let down most who idolised him.

You call it greed, stupidity, ‘riding a tiger’, trying to control a company from falling into outsiders’ hands—but none is a good enough reason for the biggest fraud that corporate India has ever seen. As corporate leaders search for words to express their outrage, as India Inc and Nasscom mount an offensive to dissociate from the Satyam Saga, as shareholders sulk and cry, as employees search and pray, the most obvious of questions has still not been answered. Is it so easy to show Rs 5,000 crore of non-existent bank balances in balance sheets?

Most importantly, there are two more questions that need answers: Why did the disclosure come at this stage? Who benefits from them? To find an answer, we should tackle the second question first.

Consider a situation where the aborted Maytas acquisition costing Satyam Rs 8,000 crore had happened. That would have meant the non-existent Rs 5,040 crore cash and bank balances, Rs 376 crore accrued interest and Rs 490 crore overstated debtors would have funded the transaction. That is Rs 5,906 crore being squared up. The balance Rs 2,100 crore would have paid up the 17 per cent public and institutional shareholders of Maytas Infra as well as the Rs 1,230 crore that the Raju family lent to Satyam. The Raju family would then release the pledged shares with the institutions and everything would be buried, forever. However, that was not to be.<b> The valuation of Maytas was inflated—investors howled and scowled, and the Rajus retreated. </b>

The current disclosure by Raju has nothing to do with guilt, a burdened heart or any such emotional surge. A person who has lied through his teeth for seven years does not really inspire belief today. These disclosures have a direct and material benefit to the family, including his sons who control Maytas and Rama Raju, Satyam’s MD, among others. Maytas Infra and Maytas Properties, which have physical assets, would now continue to be owned by the family. It would be left to Satyam to fill the gaping holes. By admitting to fraud, Raju has left Satyam shareholders and all of us to deal with the problems created by him while bestowing the two Maytas companies to his family.

There are many other questions that need answers:

Should we believe that the bank balances never existed? Is it possible that money that was really there may have been swindled away in the past couple of years to fund the creation of Maytas Infra and Maytas Properties?

Independent director M. Rammohan Rao, the dean of isb, chairs Satyam’s audit committee. How can he feign ignorance and get "stunned by the disclosures"?

<b>What is the consultancy/professional fee of almost Rs 3 crore that was paid to independent director Krishna Palepu over the last three years? What is the exact relationship between Palepu and the Rajus? </b>

Raju knew about the impending disclosures. The trustees of the pledged shares sold them on a written request from the ‘borrowers’ and lenders. Isn’t that insider trading?

<b>Maytas Infra shareholding suggests that the promoters own only 36 per cent in the company. However, the list of public shareholding in that company includes B. Rama Raju, B. Jhansi Rani, B. Suryanarayana Raju and Radha Raju Byrraju.Would the correct promoter group shareholding in Maytas Infra be actually 56 per cent?</b>

<b>Who owns Elem Investments, Fincity Investments and Highgrace Investments, that together control almost 27 per cent of Maytas Infra? </b>

Who valued the Maytas Properties’ land bank? All the Big 4 accountancy firms have denied valuing the land bank.

With the benefit of hindsight, isn’t it true that the botched acquisition attempt of Maytas Infra would have benefited Satyam shareholders? Did the Satyam board then know about the real state of affairs at the company? Did they sanction the acquisition of Maytas to square up accounts and clean up the cooked books?
Most of us can only speculate. The only people who know the answers are the company’s board of directors and Mr Raju. And both have been compromised.<!--QuoteEnd--><!--QuoteEEnd-->
<b>PM reviews Satyam case with ministers</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->External Affairs Minister Pranab Mukherjee, Home Minister P Chidambaram, Commerce and Industry Minister Kamal Nath, Corporate Affairs Minster P C Gupta and Deputy Chairman of Planning Commission <b>Montek Singh Ahluwalia </b>attended the meeting.
The government has already ordered an inquiry into the Satyam case by the Serious Fraud Investigation Office (SFIO), an organisation that probes economic offenses of grave nature<!--QuoteEnd--><!--QuoteEEnd-->
This investigation will be like any CBI investigation. Basically, give protection to Raju and family.
<b>Truth about India’s corporate success</b>

Subramanian Swamy
First Published : 13 Jan 2009 12:32:00 AM IST
Last Updated : 13 Jan 2009 07:23:22 AM IST

The truth about the Satyam accounting fraud will spill out in instalments. Besides the accounting fraud, we are confronted with an accountability crisis: who were responsible and why it took so long to find out.

In 2001 I was invited to a lunch meeting with the Board of the New York Stock Exchange (NYSE) to speak about the Indian economy. I spoke about the disclosure standards in India for business corporates, and pointed that most Indian companies would fail to be listed in the NYSE if the US Securities and Exchange Commission’s norms on disclosure were applied. All one has to do is to see the Crisil compilation on company accounts to infer the array of corporates committing daylight accounting fraud.

I cited the example of one of India’s multi-product corporate giants that would not be able even to disclose who owned how much of its shares in their companies.

I pointed its sharp business practices to jack up its stock price by first collecting money from the BSE by new IPOs, then lending that money at zero interest rate as inter-corporate loans to shell companies which were all completely owned by the promoter. In turn these companies went back to the BSE with the loaned funds to buy the stocks of the lending company thereby driving up its share price, which shares in turn were mortgaged by the giant corporate for more loans! I had approached the Delhi High Court, which sent my complaint to the ministry of company affairs for action (which is still awaited). There was considerable mirth on hearing this. Board members asked me for a copy of my court petition, which I sent to them. Only later I understood why they were amused and so curious to know about the corporate giant.

Two months later this giant corporate failed to get listed in the NYSE, and had to withdraw its application to be listed, and not since has its application to be listed ever entertained again, while twelve other Indian companies including Satyam have got listed. At that stage I had not studied Satyam’s affairs, but the then secretary for economic affairs, E A S Sarma, had written to the ministry of company affairs and the SEBI in 2001 about Satyam’s fraud, and the inquiry ordered into his complaint is still in progress.

The only official action taken on it, however, was to ease Sarma out of the ministry. He chose premature retirement to a transfer to the ministry of coal.

The moral of this narration is that Satyam is neither the first nor the last to ripoff of the Indian public. It represents not only the ruination of the retail share buying middle class (2.07 lakh investors holding 5.27 crore Satyam shares in just two trading sessions saw the price per share fall from Rs 179.10 to Rs 23.85) but also of the poorer classes who faithfully deposit their savings in public sector banks and who in turn lend to Satyam (the company market cap fell from Rs 15,262 crore to just Rs 1,607 crore). No doubt these banks are re-capitalised by the government but that is by a higher fiscal deficit and hence inflation. The question is why such sophisticated plunder of the nation takes place with very little punishment.

Part of the answer to how such frauds happen lies in Ramalinga Raju’s letter of January 7, 2009, to the Satyam board of directors. This letter was triggered by the indictment by the World Bank. It was thus only a matter of time before Satyam’s accounting can of worms would spill out. So Raju decided to cut his losses and confess. He states that during the last two years, Rs 1,230 crore “was arranged (not reflected in the books of Satyam) to keep the operations going… by giving all kinds of assurances.” How arranged, on what assurances, and to whom? Only the board may know at present.

The true answer to these questions will unearth what is going on in corporates that, with a few exceptions, are growing by leaps and bounds in profits.

The truth is that India’s corporate world’s success stories are founded on undisclosed funding through black money held by corrupt politicians and notorious criminals. In 1991, the respected Swiss magazine Schweitzer Illustrate published the by-product revelations of the Marcos investigation in which Rajiv Gandhi was disclosed to have thousands of crores of money in illegal Swiss bank deposits. He is no more, but in February 1991 in a candid conversation he confided with genuine regret why and how this came about, and what he would do once he became PM again. But he was assassinated and that booty has gone to his named beneficiary.

Indians have about $ 1.5 trillion in banks in Switzerland, Liechtenstein, the Isle of Man, the Cayman Islands, Macao, etc. All this money can be brought back legally within two months, but who will cast the first stone? Earlier this money used to lie in bank vaults, but now thanks to Participatory Notes (PNs) and the Mauritius route, this money is returning to India and in the BSE to earn windfall profits. This money enables politicians and businesspersons to carry cash around the world for pleasure, and sometimes caught with it. For example, on September 27, 2001, Rahul Gandhi and his girlfriend were arrested by the FBI at Boston’s Logan Airport with $ 1,60,000 in cash, without declaring it to the US Customs. US law requires cash at hand of more than $10,000 to be declared.

But he was let off after nine hours in FBI custody at the intervention of the then BJP-led government, which played guardian to Sonia Gandhi and her family throughout its tenure.

With a thousand crore rupees as legal tender, much as Rs 10 is for the middle class, politicians and criminals have entered to finance the Indian corporate world. Any enemy of India can ruin the nation by leveraging the financial web that fuels our greed for more profits and search for shortcuts to satisfy that greed.

Satyam’s real truth is just that, and not the criminality and betrayal of trust.

Such a depressing event can happen again if there is compliance, capitulation and conspiracy of silence to fraud.

How was it possible for accountants to not know what was going on? What about the business magazines and financial newspapers which kept quiet on Sarma’s complaint and Metro Rail chief E Sreedharan’s outrage at the Maytas fraud? They all chose to look the other way. Who did the 185 Fortune-500 companies, which were Satyam’s clients, rely on for clearance? Why did the 24/7 TV news channels refuse to see this nexus? Was it their greed or cowardice, since corporates are not soft targets?

It is worth remembering as to who saved Raul Gandhi when he was arrested at Boston’s Logan Airport. It was unfortunately our beloved P.M. at that time. It was done inspite of the fact that Raul travelled on an Italian passport.

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