Latest Massive Fraud: Satyam Found To Be Swimming Naked

from the tide-goes-out dept

Warren Buffet's famous quote is that "It's only when the tide goes out that you learn who's been swimming naked." Over the past few months, the tide has been going out with a vengeance, and we're certainly discovering plenty of folks swimming naked. The latest, of course, is Satyam, the Indian tech company whose CEO admitted that he basically has been making up the company's financial reports for years. It turns out that about $1 billion in cash the company claimed it had... don't actually exist. That's a pretty big problem, because that $1 billion represented about 94% of all the cash the company claimed to have. Oops. It makes you wonder what, exactly, Satyam's auditors have been up to the past few years.

This might explain why the company attempted to do a highly controversial merger deal last month, where Satyam tried to buy construction firms Maytas (Satyam backwards), owned by the sons of Satyam's founders. The deal between companies in two obviously unrelated industries seemed like a pretty clear cash grab for the family -- except most people didn't realize that the cash grab was actually to cover up all the lies on the financial statements.

Of course, there are some amusing side notes to this whole thing. Just a few months ago, for example, Satyam was awarded the "prestigious" Golden Peacock award for (of all things) corporate governance. That award is now being stripped away, but it seems a little late for that. Then, of course, there was the stock analyst who claimed that Satyam was an obvious buy just after the original merger deal fell apart. Considering that the stock dropped 90% today, that seems like an awfully bad call.

Anyway, as with any downturn, it's no surprise that some of the scammers are being outed. It certainly doesn't mean that all companies are scamming, but it is a reminder that unless you're personally involved, it's pretty tough to take a company's word on what it's actually been doing with its money.
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Filed Under: fraud
Companies: maytas, satyam


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  1. identicon
    Joe Smith, 7 Jan 2009 @ 4:28pm

    corruption

    One is tempted to make a snide remark about India's famously corrupt society but given what has been happening on Wall Street we have no right to feel superior (at least not until we've put ten thousand Wall Street bankers and stock brokers in in prison where they belong.)

    reply to this | link to this | view in thread ]

  2. identicon
    Fsm, 7 Jan 2009 @ 4:47pm

    Fooled!

    I clicked this link with the words "swimming naked" running through my imagination.

    ...

    I was fooled!

    reply to this | link to this | view in thread ]

  3. identicon
    noone_important, 7 Jan 2009 @ 5:02pm

    Re: Fooled!

    yeah, i was really hoping for some NSFW links ... oh well.

    reply to this | link to this | view in thread ]

  4. identicon
    Hyrulio, 7 Jan 2009 @ 5:40pm

    What's to say...

    ... that this hasn't been happening worldwide for years?

    reply to this | link to this | view in thread ]

  5. icon
    Mike (profile), 7 Jan 2009 @ 6:59pm

    Re: What's to say...

    ... that this hasn't been happening worldwide for years?

    Nothing. We're saying it obviously *has* been happening worldwide for years. That was the point of the post...

    reply to this | link to this | view in thread ]

  6. identicon
    stockresearch52, 7 Jan 2009 @ 7:57pm

    satyams corporate fraud

    Satyam's episode is a blot on Indian IT industry.Where are the so called audit experts and government rules and regulations?The end result is Employees lost their bread.

    reply to this | link to this | view in thread ]

  7. identicon
    Cecil, 7 Jan 2009 @ 7:59pm

    Fooled as well...

    I was expecting nude swimming shots of some Russian model I'd not heard of. Sarah Satyamovich or something.

    reply to this | link to this | view in thread ]

  8. identicon
    Brav, 7 Jan 2009 @ 8:10pm

    Will Satyam Come Back

    What should each Satyams' Employee should do next to save himself and to save investor?

    reply to this | link to this | view in thread ]

  9. identicon
    Rajkumari, 7 Jan 2009 @ 9:28pm

    shcked , feared and frightened!

    as on of the employees of satyam , I strongly feel that it was one man's fault for whatever the reason may be, but as an organisation, it has the capablity to emerge as a leader once again , all we need is the support, in terms of finances, especially from the government,
    if it happens, we can prove our strength.

    reply to this | link to this | view in thread ]

  10. identicon
    Rajkumari, 7 Jan 2009 @ 9:28pm

    shcked , feared and frightened!

    as on of the employees of satyam , I strongly feel that it was one man's fault for whatever the reason may be, but as an organisation, it has the capablity to emerge as a leader once again , all we need is the support, in terms of finances, especially from the government,
    if it happens, we can prove our strength.

    reply to this | link to this | view in thread ]

  11. identicon
    Ramesh Srivats, 7 Jan 2009 @ 10:26pm

    The trial of the chairman of Satyam

    reply to this | link to this | view in thread ]

  12. identicon
    Dan, 8 Jan 2009 @ 12:00am

    Behold the king's new cloths! It seems the crooks are on Wall Street, not Las Vegas.

    reply to this | link to this | view in thread ]

  13. identicon
    Lunatic, 8 Jan 2009 @ 1:24am

    Inside Satyam

    To know the latest happening inside satyam, log on to my blog at www.satyam-news.blogspot.com

    reply to this | link to this | view in thread ]

  14. identicon
    Cine Valley, 8 Jan 2009 @ 2:28am

    Re: Re: Fooled!

    for that you folks need to go to any beach in Bombay.

    All those who sold their last shirt & bought Satyam scrip are left with nothing to wear ;)

    reply to this | link to this | view in thread ]

  15. identicon
    Khan, 8 Jan 2009 @ 4:47am

    Satyam's fraud

    Satyam's fraud and moral of the story would be to keep off from the seemingly big 'corporate' sharks. One is easily lured to invest in such ventures but the end result is either bankruptcy or fraud. Satyam in Asia and Lehman Bro. in West should serve as best examples for investors.

    reply to this | link to this | view in thread ]

  16. identicon
    nasch, 8 Jan 2009 @ 9:51am

    Re: shcked , feared and frightened!

    Yes great idea, reward fraud with government funds!

    reply to this | link to this | view in thread ]

  17. identicon
    Sports Player, 9 Jan 2009 @ 1:04am

    There's no way he was acting alone. Not possible to cook financial reports without the connivance of the top management.

    reply to this | link to this | view in thread ]

  18. identicon
    Hyrulio, 9 Jan 2009 @ 4:13pm

    Hahahaha

    From the linked article - "Satyam means 'truth' is Sanskrit"

    reply to this | link to this | view in thread ]

  19. identicon
    Guesswho, 11 Jan 2009 @ 2:18am

    Its a BIG game

    Satyam's scam is a very small one when compared to the ongoing global economic recession by Israelis or Jews.

    Believe me or not, its all because of the dirty games being played by Jews....

    reply to this | link to this | view in thread ]

  20. identicon
    gaurav, 20 Sep 2009 @ 11:39pm

    Re: corruption

    gud dude that u thought about ur own wall street before making any remark on our society.
    one thing more our culture is one of the best culture in the world

    reply to this | link to this | view in thread ]


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