Published by: KAMALINI KUMAR


Information technology has developed a lot in our country, especially in the past twenty years. IT companies have employed a lot of students and have played an important role in stabilizing the economy of the company. There are a lot of advantages and at the same time scandals around the Information technology sectors. One such famous scam which made headlines was the Satyam scam. Satyam computers were one of the famous IT Company which had branches across our country. The scam came as a shock to the entire nation. This article will deal in detail about the scam and the aftermath of it.


The Satyam computers were started in Hyderabad in the year 1987. Their services include software development, maintenance of software, and outsourcing services. The Satyam computers were founded by Mr Ramalinga Raju. The company slowly developed and had more than fifty thousand employees. The company was converted into a Public limited company in the year 1991. In the year 1992, the company started issuing equity shares to the public.

They entered in a joint venture agreement with a U.S based company for developing software next year and the joint venture company were incorporated in 1994. After two years, the company started two branches offices in Japan and the United States of America and a lot of business partners were there from various countries like Australia, Canada and Europe. The company had a lot of clients including fortune five hundred companies. They started four subsidiary companies in the year 1996. They received various awards and were considered as one of the reputed IT Company. It was named a 2000 Web business 50/50 award winner for Satyam world and it was the only company to be featured on that list. They also received National HRD award in 2000 for their outstanding involvement to HRD.[1] Dataquest awarded IT Man of the year 2000 award to the Chairman Mr B. Ramalinga Raju.


The scandal came into limelight on January 2009 after the chairman confessed that the accounts have been falsified to show that the company is healthy and he resigned. The scam was considered as one of the biggest corporate scandals in our country. This came as a shock to the investors, the employees and the stock market. The scam came into attention when the company planned to take over Maytas (reverse of name Satyam) Infrastructure, a real estate company. The board of directors agreed for this and the consent of shareholders was not there. This was an attempt to bridge the gap between falsified and original accounts, which was not successful. This transaction if it had been successful would have provided the founder a chance to exploit the cash resources of Satyam. It was discarded and the decision was reversed in twelve hours after the institutional shareholders did not provide their consent. From this day onwards the shares of Satyam began to decrease. Later the founder confessed the scam in a detailed five page confession. It was discovered that the chairman has created numerous bank statements in his personal computers which were false to balance the actual back balance and fake balance.

He also understated the liabilities and overstated the profits to meet the expectations of the analysts. All attempts were made to project the company that it is healthy and profitable. It was also revealed he made 6000 fake salary accounts for the appropriation of money. He claimed that he overstated the company Balance sheet by $1.47 billion nearly $1.04 Billion in Bank Loans and the cash the company claimed to own was nonexistent.[2] According to Hindustan Times, it was said that more than eight hundred and ninety crores of fictitious income were provided in the records from the year 2002 to 2008, and more than two hundred crores of fictitious foreign gain were reported between the years 2002 to 2008. There was also more than seven thousand and five hundred false invoices that were recorded which was found later on. These false records seemed very promising and ensured that the company receives more investors and it is healthy.

The brother of the founder was also involved and he was also arrested when the crime came to limelight. The charted accountants were also in the big trouble and it was also doubted that they were also involved in the scam, they had same auditors for more than eight years and they could not figure out any discrepancy or red flags came as a shock to everyone. Their charted accountants were Price Water House (PWC) also faced a lot of troubles as they have been managing the accounts for more than nine years and yet they could not figure out the false records. The scam is compared to that of the Enron scam in the United States. The chairman confessed that he has falsified more than 14,162 crores in various ways. The chairman told, "It was like riding a tiger, not knowing how to get off without being eaten."


The Satyam Computers had more than five hundred clients before the scam came into limelight and they were all shocked because of the confession. The stock rate dropped and the stock market had a lot of loss on that particular day when the confession was released by the founder. It was figured out the stock value reduced to over seventy seven percentage of its original value. The foreign investment was also hugely affected after this scam came into attention of the investors, the foreign investors were reluctant for a certain period to invest here after this scam.

The case was handled by the Central Bureau of Investigation (CBI) as soon as the confession came. The CBI formed a Multi-Disciplinary investigation team and completed the investigation in forty-five days. There were several charges on the founders and the others involoved by the CBI like,

· Criminal conspiracy;

· Cheating;

· Forgery;

· Auditors involved in the scam were found guilty of professional misconduct;

· Providing fictitious accounts.

The Special Bench was formed by CBI and they found the Chairman and others involved in the scam guilty and were awarded the punishment a fine of rupees five crores and seven years of imprisonment. SEBI came out with a sixty-five page judgment in the year 2014 with regards to this scam and accepted the fact that this is a sophisticated white-collar crime. There were four other persons, the Ex-financial officer, Managing director of Satyam, Ex-vice president and head of internal audit were also found guilty with the founder and chairman. SEBI ordered that the founder and four others should be barred to deal in the markets for 14 years and also asked for an amount of Rs. 1,849 crores worth of unlawful gains with interest.[3] The penalty amount was later decreased to eight hundred crores by the SEBI in 2018 in a new order.

The government intervened once the scam was found in order to save the employment of more than fifty thousand employees. The Company was purchased by Mahindra in the year 2009 in an auction and now it is currently known as Mahindra Satyam and it is functioning in the same name till now from 2009. This measure was carried out by our government entirely to provide relief to the employees.


There were a lot of changes made in the corporate world and legislations in order to prevent such crimes in the future. The government introduced amendments in the Companies Act in which corporate fraud was considered to be a criminal offence and there were a lot of checks and balances to ensure transparency and proper governance of companies. SEBI introduced Listing Obligation and Disclosure which came out with strict rules and regulations regarding the disclosure of company accounts and records and it was made applicable to all the public companies in our country. There were also various reforms made in the corporate governance rules to solve all the current loopholes. The Confederation of Indian Industries even formed a separate task force in order to resolve all the loopholes in the corporate governance rules. The founder served a jail sentence for some period and is currently in bail.

This scam recently made into news because of the documentary by Netflix India which described the events of the scam and the founder got stay for its release. However, it was released later and this episode was removed. The scam is one of the notable scams in our country and it made the officials understand the various deficits in the corporate governance in our country which was later rectified through various amendments and introduction of new legislation. Thus it affected a lot of employees and the investors and stockholders who were a part of the company in that period. Therefore this scam which was shocking and at the same time came as an eye-opener to the corporate world to be cautious in the future.


1. www.firstpost.com/india/satyam-case-sebi-bans-ramalinga-raju-others-for-14-years-seeks-rs-1849-cr

2. https://www.thehindu.com/specials/in-depth/all-you-need-to-know-about-the-satyam-scandal/article7227938.ece

3. https://www.hindustantimes.com/business/satyam-scam-all-you-need-to-know-about-india-s-biggest-accounting-fraud/story

4. https://economictimes.indiatimes.com/markets/stocks/news/satyam-scam-sebi-passes-modified-order-with-respect-to-3-individuals/articleshow/66252006.cms

5. https://blog.finology.in/investing/satyam-scam

6. https://the company.ninja/satyam-scam/

[1] Available at https://economictimes.indiatimes.com/satyam-computer-services ltd merged/info company history /companyid-11407.cms [2] Arpit Khurana “Corporate Governance : A case study of Satyam Computers Services Limited.” [3] Satyam case: SEBI bans Raju and others for 14 years Available at https://www.firstpost.com/india/satyam-case-sebi-bans-ramalinga-raju-others-for-14-years-seeks-rs-1849-cr-1620061.html.