.

What is scam?

(1)A confidence trick or confidence

game (also known as a bunko, con,
flim flam, gaffle, grift, scam,
scheme, or swindle) is an attempt
to defraud a person or group by
gaining their confidence.
Confidence trick

History of
scam

The first known usage of the term

"confidence man" in English was in 1849;
it was used by American press during the
United States trial of William Thompson.

WORLDS MOST POPULAR SCAM

COMPANY

PERSON

COUNTRY

AMOUNT

NAME OF
SCAM

YEARS

SATYAM

B.RAMALING
A RAJU

INDIA

7.136
CARORE

FUNDIG
ACCO.

2009

ENRON

JEFARY
SKCILING

USA

2,866
CARORE

ACCO.
FROADS

2001

Xerox

PAOUL A.
ELAYAR

USA

29,100
CARORE

ACCO.
FROADS

2002

GRO MORE
RESEARCH &
ASSES MGMT

HARSHAD
MEHATA

INDIA

4.300
CARORE

BANK
SECURITY
MISS USE

1992

N.H.
SECURITY

KETAN
PAREKH

INDIA

1000
CARORE

K-10

2001-02

WORLDCOM

SCOT
SULIWAN

USA

43,650
CASRORE

ACCO.
FROADS

2002

BERINGS
BANK

NIKLISON

BRITON

6,790
CARORE

FUTURE
TREDING

1995

GLOBAL
TRUST BANK

RAMESH
GILY

INDIA

812 CARORE

BANKING
FROADS

2004

 The Top Ten Most Outrageous Stock

Market Scams of all Time

Bank of Credit and Commerce

International (BCCI)

Enron Corporation

WorldCom

Tyco International

Waste Management

Health South Corporation

American International Group

Satyam Computer

India's biggest scam

The biggest corporate scam in India has come
from one of the most respected businessmen.
Satyam founder Byrraju Ramalinga Raju resigned
as its chairman after admitting to cooking up the
account books.

Born
:Place
:Residence :Nationality :Occupation :Net worth :Spouse
:-

September 16, 1954

Bhimavaram, (A. P.), India
Hyderabad
Indian
Former Chairman,
M.D. of Satyam Computers
US $495 million
Nandini

Early life, Education Background and

Family
Raju was born to Byrraju Satyanarayana Raju
and Appalanarasimha at Garagaparru village.
He did his B.Com at Andhra Loyola College at
Vijayawada prior to receiving an MBA degree
from Ohio University.
He has attended the Owner/President course at
Harvard.
He has two brothers and a sister. Raju is
married to Mrs. Nandini. They have two sons,
Teja Raju and Rama Raju.

Career
Raju founded Satyam in 1987 after venturing
earlier into other businesses such as
construction and textiles.
He started an IT company with just 20
employees that obtained the contracts for IT
projects.
Satyam rapidly developed and became a
multinational company with thousands of
employees spread over 67 countries.
Raju showed a strong social orientation through
Byrraju Foundation (EMRI).

 Ernst & Young Entrepreneur of

the Year Services Award 1999.

 Dataquest IT Man of the Year Award

2000.

 E&Y Entrepreneur of the Year 2007

( Revoked after the scam )

Satyam scandal or Accounting

scandal of 2009
The
Satyam
Computer
Services
scandal was publicly announced on 7
January
2009,
when
Chairman
Ramalinga Raju resigned after notifying
its board members and SEBI that he
had falsified Satyam's accounts.

The Root Cause

His efforts to fill the "fictitious assets with
real ones" through Maytas acquisition
failed, after which he decided to confess
the crime.

Total Lost in Market Capitalisation

India's fourth largest IT company lost a
staggering Rs 10,000 crore (Rs 100
billion) in market capitalisation as investors
reacted sharply and dumped shares,
pushing down the scrip by 78 per cent to
on the Bombay Stock Exchange.

Where is Raju?
With having done fraud involving about Rs
8,000 crore (Rs 80 billion), Ramalinga
Raju is currently lodged in Hyderabad's
Chanchalguda jail as Prisoner No. 213 on
various criminal charges including fraud,
forgery, cheating, embezzelment and
insider trading to name just a few.

Why Raju Confessed?

Raju described how an initial cover-up for
a poor quarterly performance escalated:
"It was like riding a tiger, not knowing how
to get off without being eaten."

Lets
Understand
What happened
Exactly?

Failed in Maytas acquisition

attempt
In 2008, the company attempted to acquire
two infrastructure companies founded by
family members of company founder
Ramalinga Raju (Maytas Infrastructure and
Maytas Properties ) - for $1.6 billion, despite
concerns raised by independent board
directors.
Both companies are owned by Raju's sons.

Do you know?
Where MAYTAS came from?

Loss in Reputation of SATYAM

Satyam's investors lost about INR 3,400
crore in the related panic selling.
The USD $1.6 billion (INR 8,000 crore)
acquisition was met with skepticism as
Satyam's shares fell 55% on the New
York Stock Exchange.
Because of this three members of the
board of directors resigned on Monday
29th Dec 2008.

Letter from Raju

Letter from Raju

Legal Action against Satyam

Kaubhand
On 10 January 2009, Chartered
accountants regulator ICAI issued showcause notice to Satyam's auditor
PricewaterhouseCoopers (PwC) on the
accounts fudging.
"We have asked PwC to reply within 21
days," ICAI President Ved Jain said.

Legal Action against Satyam

Kaubhand
On the same day, the CID team picked up
Vadlamani Srinivas, Satyam's then-CFO,
for questioning. He was arrested later and
kept in judicial custody.

Nominated Member in Satyams

Board
On 11 January 2009, the government
nominated noted
Deepak Parekh (Banker),
Kiran Kartik (Ex-NASSCOM chief)
C Achuthan (Ex-Sebi member) S.
Balakrushanan (LIC)
T. N. Manohar (Ex-President ICAI)
Traun Das (Mentor-CII) to Satyam's board.

Effects after Scam

Satyam was the 2008 winner of the
coveted Golden Peacock Award for
Corporate Governance under Risk
Management and Compliance Issues,
which was stripped from them in the
aftermath of the scandal.

Effects after Scam

Satyam's shares fell to 11.50 rupees on 10
January 2009, , their lowest level since
March 1998. Last year they hit a high of
544 rupees.

Effects after Scam

The Indian Government has stated that it
may provide temporary direct or indirect
liquidity support to the company.However
the life of many engineers working for
Satyam is questionable specially the new
recruits.

Rs. 20 Crore/month
On 22 January 2009, CID told in court that
the actual number of employees is only
40,000 and not 53000 as revealed earlier
and that Mr Raju had been allegedly
withdrawing INR 20 crore rupees every
month for paying these 13000 unknown
employees.

At the end
After the scandal broke, the then-board
members elected Ram Mynampati to be
Satyam's interim CEO.

Mynampati's statement on
Satyam's website said:
"We are obviously shocked by the
contents of the letter. The senior leaders
of Satyam stand united in their
commitment to customers, associates,
suppliers and all shareholders. We have
gathered together at Hyderabad to
strategize the way forward in light of this
startling revelation"

RESPONSIBLE FOR THIS SCAM :

[1] POLITICIAN OF AP
[2] GOV. OF AP [ Y.S. RADDY.].
[3] OFFICER OF RBI
[4] OFFICER OF SEBI
[5] OFFICER OF HDFC BANK
[6] OTHER PRIVET BANK
[7] ICAI
[8] DEPARTMENT OF COMPANY
AFFAIRS

General Comments from Business

Leader
As we all know that India is highly
sensitive country and whichever company
is listed in stock market, has big
responsibility towards investor.
At that time this type of situation faces is
deep regret to us and many other
business leader told that it is MASCATT of
investor and their money.

 ``WHOEVER LOST THEIR MONEY IN

SATYAM SCANDAL, MOST OF THEM
ARE GUJARATI
- NARENDRA MODI (C.M.)

17 OFFICER WHO ARE RELATED

TO THIS SCAM
[1] RAM MAYNAPATI (9.50 LACS SHARES) PRESIDENT OF
COMPANY
[2] KESAV PANDA (7LACS 10,000 THOUSEND SHARES) CHIFE
OF RURAL
BUSINESS
[3] PAVAN K.MADALI(5LACS 50000 THOUSEND SHARES) CTO
OF COMPANY
[4] RAVI BOMAKANT (5LACS 95,000SHARES) SENIOUR VICE
PRESIDENT
[5] VIRENDRA AGRAVAL (5;ACS SHARES) SENIOUR VICE
PRESIDENT
[6] V.P. ANIL KUMAR (4LACS 20,000THOUSEND SHAERS)
[7] V.P. NIK SHARMA (4LACS 20,000THOUSEND SHAERS)
[8] KISHORV RACHPUDI(4LACS 20,000THOUSEND SHAERS)
[9] KIRAN KAVATE (4LACS 18,000THOUSEND SHAERS)

 [10]V.P. PRAKASHCHHALA(3LACS 10,000THOUSEND SHAERS)

[11] TIM MONEGARY(2LACS 20,000THOUSEND SHAERS)
[12] ARVIND MALHOTRA (2LACS 12,000THOUSEND SHAERS)
[13] S.V. KRUSHAN (1LACS 7000THOUSEND SHAERS)
[14] PANKAJ DAS GUPTA(1LACS 5,000THOUSEND SHAERS)
[15] FOLDEN(1LACS 3,000THOUSEND SHAERS)
[16] BIPIN THOMS(1LACS 25000THOUSEND SHAERS)
[17] NISHITH MATHUR (1LACS 10,000THOUSEND SHAERS)

 Why are we so surprised that Satyam

Computer blew up?

How to prevent this kind of

Surprise?
Make the watchdogs accountable for the
theft
Rotate the watchdogs: Fixed, finite and
rotating tenure
Make independent directors : truly
independent with a finite tenure
Subsidiaries over a certain size should have
different auditors than the parent company
Institutional nominees on the board

Now its your turn !!!

Any questions?