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January 9, 2009

Satyam’s Computer Services Chairman Arrested , Board Sacked, in Fraud Probe

According to Bloomberg: “Satyam Computer Services Ltd. chairman Ramalinga Raju and his brother Rama were arrested and the remaining directors of the software exporter sacked, as India started investigating an alleged $1 billion fraud.”

“Satyam, India’s fourth-largest software exporter, plunged for a second day in Mumbai trading on concern it may run out of money after Raju said he falsified the accounts “for several years.” The scandal, whose scope is being likened to the 2001 bankruptcy of Enron Corp., has shaken confidence in Indian companies and accounting standards.

“The Satyam case is an aberration,” Prem Chand Gupta, the Corporate Affairs Minister said. “The credibility of the Indian corporate sector in general, and IT sector in particular, should not be allowed to suffer because of this.”, according to BBC

Update (01-10-2009): “The chief financial officer of India’s Satyam Computer Services Ltd. was arrested Saturday, the third person taken into custody in a scandal that began when the company’s chairman admitted inflating profits with “fictitious” assets and non-existent cash.

Company founder B. Ramalinga Raju and his brother, Rama Raju, Satyam’s managing director, were arrested Friday in connection with the scandal. In a letter written to investigators, B. Ramalinga Raju admitted that he and his brother were responsible for cooking the books at Satyam”, according to CNN

Satyam founder B. Ramalinga Raju

Satyam founder B. Ramalinga Raju

Update 2 (01-10-2009): According to Naatmad: “Satyam Computer Services, [..] has said it will take fewer people on board to cut costs due to the unstable global economic environment. The company is planning to hire only 8,000-10,000 people this fiscal as against 15,000 that it had earlier planned to recruit. [..] Around 250 employees were given the pink slip last quarter.”

Update 3 (01-14-2009): According to BusinessStandard (India): Satyam may get full-time directors in a week

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