Satyam top brass had to know about fraud: AnalystsJanuary 7th, 2009 - 5:39 pm ICT by IANS
Hyderabad, Jan 7 (IANS) Satyam Computers founder-chairman B. Ramalinga Raju, who opened a Pandora’s box Wednesday by revealing inaccuracies in his company’s balance sheet to the tune of Rs.4,578 crore (Rs.40 billion or $823 million), has cleared board members of any knowledge of the happenings. But his claim has baffled analysts and the government.”None of the board members, past or present, had any knowledge of the situation in which the company is placed,” Raju said in a letter that woke corporate India to a rude shock Wednesday morning, adding: “Even business leaders and senior executives in the company are unaware of the real situation as against the books of accounts.”
It is a claim that is being questioned.
“It is hard to believe that he (Raju) was the lone perpetrator all along. In any company, the CFO (chief financial officer) and financial committee members would have full access to balance sheet details,” Manoj Vohra, head of the intelligence wing of Economist magazine, told IANS.
Satyam has a presence in 66 countries and is listed on the New York Stock Exchange (NYSE).
“A company filing returns in the US according to (its) Security Exchange Commission (SEC) guidelines could not have done this without the cognizance of key executives,” says Jagannadham Thunuguntla, head of the capital markets arm and director of Delhi-based SMC Group.
Board member and interim chief executive Ram Mynampati issued a statement shortly after Raju’s resignation expressing shock and surprise.
“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 strategise the way forward in (the) light of this startling revelation,” Mynampati said.
Added Vijay Chopra, national head for business alliances with Unicorn Investment Solutions, an investment advisory and brokerage: “It’s impossible to go by the claim that none of the board members had any clue about the inconsistencies in Satyam’s balance sheet; if the fraud went on for ’several years’, it won’t be wrong to rule out that most of them, if not all, had some idea about the happenings.”
Apart from the board, fingers are also being pointed at the possibility of the auditors PricewaterhouseCoopers (PWC) being hand in glove with the conspirators in the multi-crore scam.
Economist’s Vohra says it’s highly unlikely auditors did not have any idea about the scam brewing for so many years.
“Auditors will have to be scrutinised. PWC can only be unaware of the loose balance sheet if Raju forged and doctored documents to support fraudulent claims,” he said.
“Credibility of audit firms has come into question as the amount was too big for any audit firm not to notice. If the audit firm claims that they didn’t know about then their capabilities would come under the scanner,” Thunuguntla added.
Even the government is waking up to the fact that all may not have been overboard at the company.
Corporate Affairs Minister Prem Chand Gupta Wednesday said appropriate action would be taken against auditors and board members involved in perhaps one of the biggest scam corporate India has witnessed till date.
“We have received a communication in regard to this. The authenticity has to be established once the investigation is done. Appropriate action will be taken against auditors if they are found to be involved.”