Don't blame Satyam's Raju, blame me - A Daily Download

Don't blame Satyam's Raju, blame me

Sukumar Ranganathan - Wednesday, January 07, 2009 12:33 PM

Mea culpa.
This blogger and the paper he works for owe Satyam's investors a huge apology.
Just like everyone else who opposed the Maytas deal does.
Those who came in late, will find the gristly details of Satyam's efforts to take over two companies promoted by the family of its chairman Ramalinga Raju here.
The deal was called off amidst an outcry from media and analysts.
Now, it looks like everyone would have been better off if the deal had gone through (not everyone, of course; journalists such as this blogger are very happy that India finally has its own Enron-like story).
It  emerges (from Ramalinga Raju's resignation letter which can be seen here) that the story wasn't about Satyam trying to rescue Maytas, but Maytas trying to save Satyam.
The letter reads like a letter in moral and financial fraility: company mis-states accounts to keep investors happy; gap between reality and fiction grows with every passing quarter; and soon the chasm is too wide to be bridged by a particularly good quarter (and in these trying times IT companies have as much chance of seeing a good quarter as bird watchers have of spotting a Dodo).
How would the Maytas acquisition have helped?
Satyam would have paid at least Rs 5000 crore to acquire the two companies from the promoters (the Raju family).
The money was non-existent. So, it would have pretended to pay the money and ended up with the assets (the two Maytas companies). The promoters may have never got paid but that would have served them right.
And everyone would have been alright: Satyam would have had assets, real assets on its books instead of non-existent cash; the Raju family would have continued to manage Satyam, but would have been poorer by quite a bit; and investors would have still had their money invested in a halfway decent company.
That hasn't happened.
So, sorry and thanks for all the eyeballs

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49 Comment

From Rajesh

January 7, 2009 1:01 PM
This is funny. At least to someone who doesn't own any Satyam stock :). R

From SK

January 7, 2009 1:43 PM
How do you know Mytas is really worth 5000 Crores ?

From Sukumar Ranganathan

January 7, 2009 1:48 PM

No one knows anything SK. A company that manages to live with fictitious cash (which isn't easy at all) can very well have associates that have fictitious assets. It's like one of those logic puzzles: Raju is a liar; Raju says...

From Akshay

January 7, 2009 2:29 PM
Maytas had _some_ actual assets; loads of land in and around Hyderabad and it also got the deal for the Hyderabad Metro. Which, of course, is not to say it was worth 5000 crores.

From ramki

January 7, 2009 2:34 PM
This is horrible news. Even though I do not own satyam stock, I am really saddened by this news. If a company that has won successive corporte governance awards, been listed in Fortune 500 and has world-class board-members can do this, how can we trust most of the other companies listed? Maybe the real valuation of the sensex should also be in the 3-4000 range....

From G.CHANDRA MOHAN IYER

January 7, 2009 2:43 PM
AUDITORS PWC IS THE CULPRIT NO 1 SO ARREST THEM FIRST.IN OUR COUNTRY CHARTERED ACCOUNTENT ARE BIGGEST FRAUDSTERS ALWAYS IN LEAGUE WITH PROMOTERS TO LOOT SHARE HOLDERS.

From Suresh Ramasubramanian

January 7, 2009 2:51 PM
This article says it all .. http://www.zeenews.com/zeeexclusive/2009-01-07/496727news.html He seems to have hired a bunch of people and appointed so-called independent directors just on the basis of being from the same community, same village, family friendships etc. Call it social networking taken to absurd lengths. So while his village is quite grateful to him and cant ever believe he can go wrong .. all that happened was that he was perfectly capable of treating the entire company as his ancestral property, without any of his cronies objecting. This businessworld article by an Infy independent director - ironically syndicated by sify.com - says it all about the pitfalls of packing your company with people whose only qualification is that they are your cronies. http://sify.com/finance/fullstory.php?id=14828335 Much more worth a read than most of the pontificating that's gone on, on this subject.

From Lahar

January 7, 2009 2:51 PM
One question, of course. How did the auditors certify 5000 crores that wasn't there?

From vijay..

January 7, 2009 3:05 PM
Certain questions to be asked 1. How did a reputed Auditor allow this to happen 2. What happens to the employees now? No one will want to stay in Satyam 3. What about their clients who have ongoing projects?. If no employees, who will implement the projects. 4. If such a big company has done such a thing, how will external clients trust their projects with other companies. 5. Is this a failure of the system. Are things like corporate governance , SOX etc just for academic interest

From Sukumar Ranganathan

January 7, 2009 3:09 PM

You have me there Lahar. Cash, as I've said, is the easiest to audit

From venu

January 7, 2009 3:16 PM
After some time we may find out that Mytas was created buy using Satyam's cash which is missing now. The Ekta Kapoor serial goes on..........

From Meena

January 7, 2009 3:19 PM
I am really taken aback with this news. Whom to believe and whom not to believe in this country. In developing country like india, we totally depend on our leaders and entrepreneurs. Wish they show us better paths rather than giving such shocks.

From venu

January 7, 2009 3:43 PM
Who named it "SATYAM" by the way

From Moose

January 7, 2009 4:32 PM
The question which nobody seems to be asking is why did Raju come out with this news now? Was it that he saw that his demise was inevitable or is he trying to take all the blame and protect someone else who might have been implicated in a due diligence? Is it that this somebody has promised some leniancy if he does not drag others along with him? I know these are fancy conspiracy theories - but hey - this is also the season for such theories. The thing to note was the way the other "suspect" stocks behaved today. By suspect - I mean those widely believed to have cooked up numbers. I won't name them - all you have to do is to check the names that plunged by more than 15% today. Conspiracy theory apart - you have to give it to Raju that he did admit his fraud instead of dragging on hoping to get some life line. His biggest mistake was that he got caught. Will we have the guts to probe the "suspect" guys - or are they too big to fall? As US markets have shown, eventually, none of them are.

From conspiracyGuru

January 7, 2009 6:32 PM
My take (yet another conspiracy theory) 1. Mr. Raju needs cash, and finds he can usurp Satyam's cash balances 2. Proposes a deal between Satyam and Maytas, to get hold of these reserves. The plan backfires. 3. Yet, Mr. Raju is still desperate to get hold of those Satyam's reserves. 4. What does Mr. Raju do now? Well, he usurps Satyam's real reserves..and releases a statement saying they were fictitious all the while! That no one knew they were fictitious. Big QUESTION: What would make someone like Mr. Raju so desperate to siphon money and claim all the money was fictitious in the first place??

From Naveen

January 7, 2009 7:06 PM
Satyam-gate is a result of the real business culture in India. Anyone who knows how things work in India will know that its all informal, growth at all costs 'despite' (and not with) the laws and restrictions and relationship-based, manipulative and corrupt business culture. Until yesterday Raju was Satyam and Satyam was Raju - it was his child and he did everything to keep it running - irrespective of the laws or rules etc - to a point where he lost control of the manipulation due to the events of the last few weeks. Something did not add up when he called off the Maytas deal - now its clear he did this to prevent the lenders from selling his shares. Now still somethings don't add up in my mind - PwC would have been an accomplice in this or best case, would have turned a blind eye. In either case, they surely would have covered their backs, but I can't fathom how, unless Raju himself fabricated the Bank Statements and Balance Confirmation Certificates. Maybe the bank/s played accomplice? The CFO signs the accounts too and it is surely impossible that Ram Mynampati (who I believe was CFO) did not know of the cooked up Balance Sheet? So why leave this incharge for now? Who's gonna pay next's months salary? I pity Raju though, wish he did away with his coterie and stayed rooted to the ground. He ran it like his kirana shop - wonder if they taught him that at his Ohio MBA! Let the heads roll now.......

From Great Ambanis

January 7, 2009 8:08 PM
Scrutinise the Reliance Group for Accounts

From Meena

January 7, 2009 9:40 PM
Gentlemen, I am surprised to see that the employees of Satyam have developed a website in dedication to the CEO. Did anybody see it? Please go through.ramalingaraju.com. It says "Satyameva Jayate"

From Tarpan

January 7, 2009 10:53 PM
So is the name of the company is still going to by Satyam? actually Mithyam fits actually

From rama

January 7, 2009 11:16 PM
Ramalinga raju tried his level best to save the company . If not for the recession he would have got good corportate business . he tried his best to save the company by trying to buy maytas thereby having an having an opportunity to use maytas finances to make good loss of satyam. he invested his personal promoters shares in satyam.

From xyz

January 7, 2009 11:18 PM
It's Aasatyam(Liar) computers not Satyam('Truth' according to Sanskrit)

From sai

January 7, 2009 11:26 PM
Hey, if what now Raju says is truth then in spite of all lies the company made profits...Not loss. Raju had the guts to say the truth now in front of the whole world. It is not SEBI or other regulators saying this. Again he would have blames his executives. What are those "auditors" doing? How many parmoters have told the truth so far?? How many companies gone burst without even we knowing the truth. I wish strength to Raju and all shareholders too.......

From SpiciDesi

January 7, 2009 11:47 PM
ASatyam Computers Ceo RavanalingaRaju why investors are greedy

From vivek sharma

January 8, 2009 12:09 AM
For how many quarters did the Satyam group topi-pehnao the world? And what were are business reporters doing all this while? Apart from falling head over heels over each other to get the 'inside' soft stories we keep seeing on Biz TV and the features in the pink press? Now this very biz press will pontificate on the damage ad nausum...and piranha like live off the blood on the street. I never had a stock in my life, but I LOVE reading all of you and smacking my tongue. Talking of blame, as a fly on the wall I am begining to come to a conclusion. A Marxist is NEVER at fault and for a Capitalist it is always SOMEONE ELSE's fault. LOL. Happy New Year!

From Ashmeer

January 8, 2009 12:22 AM
What will happen to 53000 associates of satyam ??

From amolpatil2k

January 8, 2009 2:30 AM
Last few hours, I have been doing a google blog search on satyam with secondary keywords like pledged, maytas, systemic and so on. I want to know what really happened. Despite all the resources we have today, my search hasn't been better than say reading a couple of newspapers and watching some TV. All this points to the need for specialists who can search the Net for various angles to a story and then stitch it all up. I know that everyone is tired of the word conspiracy. And yet the biggest achievement of the Net has been to prove that EVERYTHING might be one. So clearly we need not just data specialists but also theory specialists. For instance ConspiracyGuru above posted a lovely comment. It is obviously too simplistic to be the truth but something along these lines would be terrific to have. But then probably mainstream media may not let it grow.

From jo

January 8, 2009 4:22 AM
What ever, he has given life to so many people for 20 years. Saw so many software engg lives changed after joining satyam. He gave shelter to so many in this 20 years. Wrong step by Big brain. Regards, Jo

From Malovika

January 8, 2009 8:05 AM
Sukumar, how many more Satyams could be there in India waiting to be exposed in similar manner? should we suspect the books being cooked by all the IT majors then? Or do you think Raju is lying again, only to protect a bigger and stranger lie??

From SS

January 8, 2009 8:25 AM
Hi, I am no way supporting what Mr Ramalinga Raju did..it indeed is shameful and well today's papers could be the biggest slap to him..it is like baring him to the core. It is funny how the media builds up companies and individuals over years and at the slightest oppurtunity brings them down....it was indeed going through all the papers today..having said that I credit Mr Raju for coming forward and confessing..I am sure it was not easy for him and going ahead the road will not be easy. I have a question though what about PWC, how come they are getting a small mention in the story..and what people are talking about Satyam being an Indian Firm and India being a growing economy now would be looked at with a frown...but hey the auditors are from a global firm, are they not???????? I am amused too by all of this..I work in the media industry working with lesser known brands and I find it challenging, in fact very challenging to talk or create awareness about the companies I work with becasue the response that I get from people is that people would like to know about only known companies and people...well here now what do you have to say...it is the known brands/ people (will not like to name them) that do what they are doing. Anyways all of this is indeed shameful and sad..hope other larger corporates playing with shareholders money and having a large workforce mend their ways in case they are doing something similar....

From anonymous

January 8, 2009 8:32 AM
I would never blame Mr. Raju's action. He acted like any father would to grow and support his child (Satyam)... we have all seen this in real life, parents’ support children by going to any extreme... they hope, pray and work expecting positive to happen. It is unfortunate that most people do not see the fact that Mr. Raju's action was only to strengthen Satyam... he did not try to make personal profit/siphon money out and run away with it. It was just desperate action to get the company growing and prevent a buyout/takeover. This should be taken in the right spirit at least by Satyamites and get the company back on track in the next 6 months and make the missing money real. Satyam, you can do it! Satyamave jayathe!!

From Surya

January 8, 2009 10:13 AM
At least Ramalinga Raju confessed, not like many corrupt politicians/ businessmen having account at swiss banks and roaming in our country freely. (You are these guyz are ?)

From Niki

January 8, 2009 10:16 AM
He is the man who spent three decades in IT services and built Satyam into India's fourth largest IT services firm. At least he confessed, not like many other CEO/Chairman in this world (look at the US financial fraud..none of the CEO's confessed.)

From Malovika

January 8, 2009 10:16 AM
"Who watches the Watchmen?" or Quis custodiet ipsos custodes? the original Latin phrase. I am referring to the so called independent Directors and a very reputed Auditor Price Waterhouse. Who was watching them as they watched over the Satyam affairs? I dont know if its appropriate to draw parallels with the graphic novel - Watchmen, but the story ends with a newspaper boy finding Rorshach's journal, and oh yes, nothing happens to the guy responsible (Ozymandias). So will it end the same way in the case of Satyam too? Sukumar, I would love you to draw these parallels (since you are a huge follower of Watchmen), and waiting for your response eagerly.

From Satya

January 8, 2009 10:54 AM
I am surprised it took so long. I am sure all I.T companies are doing the same and will be exposed only if our system of governance is regulatedwith accountability. All corporate companies are the same. Hopefully they are exposed sooner than later. Does anyone really believe that Infosys or Reliance group really makes that much money a day/moth/year? You must be kidding.

From su25

January 8, 2009 12:02 PM
The only reason Maytas would have solved the problem is if these fictious assets were actually given to Maytas, and on consolidation of acounts of both companies, these would have got off-set.

From KR

January 8, 2009 1:33 PM
something similar to what you have said... http://www.dnaindia.com/report.asp?newsid=1219762 Honest crook? Why investor activism may have backfired Raj Nambisan You must hand it to Ramalinga Raju. After 10 years of fraud, his conscience finally began to speak. So the taciturn capo of binary code tried to come clean on December 17, but you, me, the shareholders and the world did not get it. Not at all. On that day, when Raju stunned investors by announcing that Satyam will acquire two family firms — Maytas Properties for $1.3 billion and Maytas Infrastructure for $300 million — we got it all wrong, we thought he was trying to enrich his own kin. Turns out, he was actually trying to save Satyam. With no cash left in India’s fourth-largest IT company — a truth that Raju, chief financial officer Srinivas Vadlamani and top management knew all along, unlike us — all Raju was looking for was one book entry for absolution — a grand delusion to end a decade of numerical sins, to correct a reverse fraud, by using real assets to replace fictitious ones. And how could he have executed such a book entry, where a company would just admit — verbally or in written — to receiving $1.3 billion but in reality get zilch? It was possible only through a private, closely held company where nobody asked questions. Or Maytas Properties. As for the open offer for Maytas Infrastructure, well that wouldn’t have cost much in the scheme of things — once Properties was in, the rest seemed eminently manageable considering that the balance-sheet would have bulked up. Here is the macabre twist: had shareholders allowed the acquisitions to go through, things would not have come to such a pass. The Satyam share, which was quoting at Rs 226.50 on December 16 just before Raju announced his plan, is now down 82% at Rs 39.95. The Satyam ADR opened down 91% on Wednesday. Shankar Sharma of First Global says the share can go below Rs 10. Certainly, a case where shareholder activism backfired badly!

From fundu

January 8, 2009 1:36 PM
Guys... There are billions of fraud corruption happens in every policy matters of the country and big political games... including spectrum fraud.. of lakh crore... we indians are least bothered to criticse our politicins and bring them to justice... rather we are very happy critisise write blog and insult the man who made live more than 50000 families so far and still admitted his mistake also daringly. Yes he did mistake , but it is less wehn compared to those which dont come in light..shaem on indian media and indian public who jst want to beat the dead elephant and not the one which is alive and havng lxury of asssests by corruptions....

From RK

January 8, 2009 2:19 PM
I think this could be the culmination of a formula error and a slip in the lie-management. Formula error because the successful formula that worked well to fill the small gap did not work for the bigger hole. Second, managed to fudge so long but fell short of it when needed at this unfortunate moment..perhaps it is the tip of an iceberg?! of our governance and regularity system.

From Fayaz

January 8, 2009 3:22 PM
I think Infosys, Wipro and TCS are doing same. They inflate their Balance Sheet. Govt should act now.

From Krishnan

January 8, 2009 10:23 PM
I am looking forward for a Corporate Governance case on Satyam. Six months down the line every B Schooler will read it to understand how not to get caught while doing a scam. I'm sure it will be taught in ISB also, but....

From SS

January 8, 2009 10:57 PM
as mentioned in a post above, am sure other corporates are doing something similar - well it happens everywhere..Mr Raju got cornered, sure what he has done is not right but then it would be interesting to see Infy's doing...somehow feel TCS and Wipro will not be bad... I live in Bangalore which is supposed to Infy's home...and all that is said about Honest Infy and the works...i cant get over the fact the leaders have done nothing for the city, let alone the state....go to Hybad and see where Satyam offices are..its a joy..but go to Electronic City...it is scary..the size of a pot hole is as big as the city itself...sorry for digressing from the topic... Reading comments from all corporate honchos being shocked and asking for stronger governance and am sure in the mean time pulling their socks and cleaning their books. These people have the money and are comfortable, its the common man that gets affected..think of the Satyam employees and the sleepless nights, the honest PWC staff and also the 1000's of peole who were being supported by Satyam in Andhra village - what would they learn...looking upto Raju Anna till yesterday and today ???? guess they would say it is better to earn less but remain in the village... I liked Pradeep Kar, CMO Microland's quote in one publication where he said there is a very fine line between making money and greed...sad greed is seen in people who have more than people can imagine :(

From gvnrao

January 9, 2009 3:12 AM
I honestly believe that BRR is a honest person but took a bad investment decision unfortunately. Now I am douting whether the SCSL really possess any fixed assets in its name or all those assets r in the names of BRR or his family members including STC its global HQ which have been leased out to SCSL. If that be the case, so many implications may crop up in the days to come. Secondly if BRR is honest enough he can at this point of time too can transfer the land bank & other fixed assets of Maytas pro & infra in favour of SCSL which he openly admits in his letter to the present directors of the board, then any bigwig come to take over SCSL in the near future. (The Maytas Pro & Infra' assets were built on the share proceeds of SCSL shares which were jacked up based on the inflated revenues only) Mr. BRR act honestly

From vishoo

January 9, 2009 9:17 AM
Dear All, Whatever Ramalinga Raju done is not acceptable. we can't hide anything from society and share hodlers. If company is making loss he should have shown as it is.

From Saki

January 9, 2009 7:45 PM
The company was definitely making profit, that's why so many new investments in expanding the offices and employee base. What he couldn't control was his greed and son's ambitions. Strip him naked and hick his butt... if none is doing this I would like to definitely.

From Rahul

January 9, 2009 11:56 PM
Do we agree that Politicians & Beauraucrats made their money from Mr. Raju, and now leaving him in this mess. At least there is one of millions corrupt businessmen in India, who is himself accepting the fraud. What about other corrupt businessmen. Even our Media is just making one TRP story. Himmat hai to baaki sab ko bhi expose karo...

From babla

January 10, 2009 2:15 PM
Gandu , madarchod , ullu ka patha.Jitna gali do utna kam hai

From Bilora

January 11, 2009 2:44 PM
http://www.free-press-release.com/news/200706/1182919752.html

From SB

January 13, 2009 9:39 PM
This is a hilarious post. The deal fell through on account of shareholder resistance not media outcry cause they didnt buy satyam shares for the company to diversify into areas which have no relavnce to the core business(had it gone through the blameless R Raju would have gotten away for a little longer deepening Satyam's woes and deferring it for possibly a little longer until some more cash had been siphoned). And lest we forget, Maytas Infra is also listed - also has public shareholders. Think its quite funny to suggest the deal going through would have been beneficial for anyone.

From Vishnu

January 29, 2010 10:24 AM
Raju ban gaya papuer!

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