Satyam fraud was work of art

[Yusuf]

NEW DELHI: Had it not been for a fraud, the way things were manipulated for over seven years in IT major Satyam Computer could be a "work of art", former SEBI Chairman M Damodaran said.

"If it were not for a dishonest purpose, the planning and execution to the minutest detail was a work of art," he said at a gathering of CEOs hosted by CEO Clubs, a business network organisation.

Damodaran, who is on the board of software firm Tech Mahindra, which made the successful bid for Satyam, said the fraud at Satyam was "unique" and he believes it is an isolated case, not reflective of the state of affairs of India Inc.

Expressing hesitation to reply to a query on the major takeaways for market regulator after the Satyam fiasco, he said he retired as the chief of the Securities and Exchange Board of India over a year now.

Damodaran, ING Group's Chief Representative and Adviser in India, however, said the idea should be to catch some of the big frauds and punishment should be swift and fast to act as a deterrent for others.

He cited the example of Harshad Mehta and Nick Leeson. While the courts sat on the case till Mehta himself died, Leeson was arrested, served the punishment, released, wrote a book and started afresh, he said.

 

[Rage]

It's the end of the road for 10,000 Satyam staff

It's end of the road for 10,000 Satyam staff

13 Jun 2009, 1414 hrs IST, Trushna Udgirkar & Sai Deepika Amirapu, ET Bureau

HYDERABAD: It was a pink Friday at Satyam Computer Services, as over 10,000 employees of the beleaguered IT firm were preparing for an unhappy holiday. Over one fourth of Satyam’s workforce was a part of the virtual pool, an exercise implemented by its new owner Tech Mahindra to downsize the excess staff.

The Pune-based IT firm had announced a plan to send the excess staff on a sabbatical to address higher staff costs, which account for more than half of the company’s expenses currently. The pool constitutes of about 14,000 associates, who were on bench for the last three months.

The usual din at the Satyam headquarters was replaced by an unusual silence as anxious employees paced in and out of the campus.

ET spoke to associates from various bands categorised under the virtual pool. In a mail to the employees, the Satyam management asked to them to pursue other interests for the stipulated timeframe. These employees will now have to come to the company with a prior appointment even on a day-to-day basis.

All the associates are classified under bands with the ascending levels being S, T, B and I. "The management is not clear on the criteria for the classification. I was on the bench for the first time since I joined the company three years ago. We are left with no choice, as the job markets continue to remain cold. Not only this, we will not be able to bargain better salaries despite our experience," said an employee from the T band.

Most of the virtual pool employees are under the S and T band. "It’s just a sugar-coated way of asking us to leave the company. We are now worried about our personal financial obligations. With the reduced salary, we will not be able to meet any of them," said another employee, who was with the company for six years.

However, when contacted the company spokesperson said the virtual pool programme gives employees an opportunity to come back depending on the business demand. They will continue to be a part of Satyam and have to resource for their skill enhancement programmes from home, he said. Under the virtual pool, an associate can draw about 40% of his current salary, including medical insurance and provident fund for a period of four to six months.

"In spite of drawing a merit rating in the performance assessment, the virtual pool initiative was imposed on me. It comes as a shock," said a Satyam employee.

Not just them, but associates, who have not yet been given the lighter shade of pink slip, are jittery about their future. "Many employees are currently dismayed as the future is uncertain. I can also be on the hit list in the next couple of months," said a senior executive.

Few employees also retaliated that a much stronger move in line with the public sector units would have saved the employees. "A public sector unit will never pass on the losses to the staff. Though it’s hard to expect the IT sector to work in these lines, a staff union in place would have helped us," said an agitated employee.

For most Satyamites, the virtual pool programme means the end of an ambitious and illustrious career at the firm that was India’s fourth largest IT exporter.


19 comments on this story. Read them and post your own.


It's end of the road for 10,000 Satyam staff - India Business - Business - The Times of India

 

[Rage]

A few weeks ago, I came across the following claim made by Satyam's new owner Tech Mahindra (by a 51% majority stake) about the extent of the 'surplus' headcount at Satyam and indicating at plans for possible retrenchment in the organization to match the prevailing economic environment:

x-x-x-x-x-x-x


Satyam has 10,000 surplus staff: Tech Mahindra

23 May 2009, 0504 hrs IST, ET Bureau


NEW DELHI: About 10,000 employees, a quarter of Satyam Computer Services’ total headcount, are surplus, and the company was looking for “the least painful way” to deal with the situation, the CEO of its new owner, Tech Mahindra, said on Friday.

Among the options the new Satyam management is toying with include across-the-board salary cuts, virtual benching of employees, and sending some of them on a sabbatical or to work with NGOs, as it looks to cut costs and regain its reputation in the global markets.

“We are trying to find the easiest and least painful way,” Tech Mahindra MD and CEO Vineet Nayyar said after a company board meeting.

Satyam, one of the pioneers of technology outsourcing, shocked corporate India in January when its founder B Ramalinga Raju confessed that he had been tampering with the company’s accounts for years. The government then ordered a high-level probe, sacked the company board, and appointed a crack team of independent directors.

Tech Mahindra, the IT arm of the $6.7-billion Mahindra Group, bought Satyam at an open auction by agreeing to pay Rs 2,889 crore for a 51% stake. The acquisition has been approved by India’s Company Law Board and Germany’s anti-trust body. On the issue of the $1-billion fraud and forgery lawsuit filed against Satyam by the UK-based Upaid, Mr Nayyar said the firm would prefer an out-of-court settlement as opposed to a long-term litigation.

“It is in their (Upaid’s) interest and our interest, but there has to be a meeting of minds,” he added.

The Satyam board meeting, which Mr Nayyar attended as a special invitee, was held here to review the firm’s progress and to get an update on the restatement of accounts by its new auditors KPMG and Deloitte.

The two auditing firms are restating Satyam’s accounts for the past six years. “They (the auditors) will have to go back as far as possible as there are issues relating to earlier times. We hope that in the next 2-3 quarters, we will get something done,” said Kiran Karnik, chairman of the Satyam board.

Satyam is expected to see a dip in its revenues as the work being done for clients, which have cancelled their contracts, is phased out, he said.

Mr Nayyar added that Satyam, which had lost a few clients in the wake of Mr Raju’s admission, has not lost any client in the past one month.

Tech Mahindra representatives, including CEO Mr Nayyar, global operations head CP Gurnani, strategic initiatives president Sanjay Kalra and M&M’s IT sector president Ulhas N Yargop, will join the Satyam board from June 1.

 

[Rage]

And in the latest breaking news:

Satyam to put 7535 Employees on Bench from June 19

 

[thakur_ritesh]

i have always wondered why so much halla around what happened to satyam. this is something that happens all the time the only problem here was that this was a public limited company and there was a threat of hostile takeover, other than that what is so new, may be one thing and that raju came all clean and he found the problem so huge to tackle that after having tried that last ditch effort by way of a failed acquisition of maytas infrastructure he really did not have any other options. over reporting and under reporting of figures happens all the times and happens in the best of names in the market, have people forgotten what happened during the air sahara take over, had vijay mallya not been smart enough he would have been screwed royal time. figures are over or under reported depending on the situation the company is in and how it all helps them in achieving what they have set themselves for. this is just one of many things that happen behind the closed doors, and better left at that, especially looking at the reactions that were there to this episode and how badly the share valve of the company and the market were battered.

as far as 10,000 people are concerned, well nothing much can be done, it is just that they were in the right company but during wrong times. this had to happen as the new management will try to lean down on the staff since a lot of business was only on the papers but then so were some 53,000 employees when in reality they just had some 40,000 employees and then the company is loosing on the business they had in the past and there are some slim hopes of new business coming their way for another year or so. we have to appreciate the fact that a lot of recruitments are done in keeping with the potential business that a company will get since there can be no knee jerk recruitments because before these people are allowed to start off a lot of training has to be given. this is how the markets function and as far as i am concerned someone who has seen a lot of this, i think it is fine, no big deal as this is precisely what is the definition of market forces working its way out.

 

[Pintu]

Ex Satyam CFO, Price Waterhouse auditors guilty: ICAI- Software-Infotech-The Economic Times

Ex Satyam CFO, Price Waterhouse auditors guilty: ICAI
29 Sep 2009, 0014 hrs IST, MV Ramsurya, ET Bureau

MUMBAI: A high-powered panel of the Institute of Chartered Accountants of India (ICAI) — the nodal body in India for auditors — has prima facie found two former auditors of Satyam Computer and members of the software company’s internal audit cell guilty of professional misconduct and failure in carrying out their duties.

The institute’s five-member disciplinary committee agreed with the findings of the director discipline, ICAI, which found these people guilty. The findings were placed before the institute’s disciplinary committee on September 23.

The committee also found Price Waterhouse-Kolkata and Price Waterhouse-New Delhi prima facie guilty of professional misconduct. PW was the audit firm for Satyam. The institute will issue notices to all the respondents on Tuesday and seek written replies within 30 days, ICAI president Uttam Agarwal told ET.

Mr Agarwal is also a member of the disciplinary committee. The prima facie guilty are: S Gopalakrishnan, Srinivas Talluri (former auditors of Satyam), head of audit team P Sivapasad, audit team member Ch Ravindranath, Satyam internal audit cell (head) VS Prabhakara Rao and Satyam chief financial officer V Srinivasu. Efforts to get a formal response from PW proved futile.

However, according to PW officials, the institute has so far not asked for any documents from the audit firm, in matters related to the case, and has also not spent time speaking to the two partners of PW to investigate their alleged role in the fraud. “The two partners have been behind bars ever since the Satyam chairman and CFO were arrested on January 9,” said one official with direct knowledge of the development.

ICAI has been carrying out an independent investigation into the role of the auditors in the over Rs 7,000-crore fraud at Satyam, then India’s third-largest software.

The fraud came to light after an admission by former chairman B Ramalinga Raju who in a statement sent to the stock exchanges and markets regulator Sebi, said he had falsified the accounts of Satyam. Mr Raju, the two auditors from PW and the CFO are currently under judicial custody.

A parallel investigation is also being carried out by the Serious Fraud Investigation Office. The disciplinary committee of ICAI will proceed against the respondents, as per the procedure laid down in Chapter V of Rule 18 of the Chartered Accountants (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rule, 2007.

The Satyam fraud, which highlighted failure of corporate governance norms and also of auditing standards, has been taken seriously by the government, which had recommended strict action against those found guilty. Although ICAI is only responsible for chartered accountants, the institute has also sought a wider role in a bid to take action against the accounting firm.