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India's Madoff?Satyam?

Anand Prabhu
Ranch Hand

Joined: Dec 19, 2003
Posts: 299
Link

I just don't get it.

1) Why do these CEOs think they can get away with beating the system? Do they even think of the consequences they and the people under them face if they are exposed?
2) Even after Enron, why on earth are the Accounting firms unable to expose the fraud? In this case, an effective analysis of the Bank Statements could have brought this to light before this became so big. Or is it possible they were bought off too? The World Bank case is fresh in mind.
Pankaj Halder
Greenhorn

Joined: Sep 10, 2008
Posts: 25
How many these job postings rea real?

http://seeker.dice.com/jobsearch/servlet/JobSearch?SAVESEARCH=&op=300&caller=2&LOCATION_OPTION=2&AREA_CODES=&ZIPCODE=&RADIUS=64.37376&COUNTRY=&METRO_AREA=33.78715899%2C-84.39164034&TRAVEL=0&SORTSPEC=0&FRMT=0&DAYSBACK=30&NUM_PER_PAGE=30&N=0&EXPANDED_NE=&FREE_TEXT=Satyam+Computer&Ntx=mode+matchall
Anand Prabhu
Ranch Hand

Joined: Dec 19, 2003
Posts: 299


It's tough to say. I do not apply to the job postings from Indian outsourcing companies. Five years back, when I was looking for new opportunities, I had applied for some positions. When they found that I had a green card, the channel went cold and things did not proceed further. Also, for some postings, I heard from a colleague who used to work for one of the big outsourcing firms that many of these postings were related to green card or H1 postings to satisfy labor law requirements and the chances of getting a shot for other applicants were next to nothing. So, I save myself time and avoid wasting time applying for phantom job posts. The only way you will have a fair idea about the postings are applying for the above and trying your luck. Honestly, I would love to work for Satyam right now as much as I would love to work at the Detroit Big 3.
Tim Holloway
Saloon Keeper

Joined: Jun 25, 2001
Posts: 15632
    
  15

Anand Prabhu wrote:Link

I just don't get it.

1) Why do these CEOs think they can get away with beating the system? Do they even think of the consequences they and the people under them face if they are exposed?
2) Even after Enron, why on earth are the Accounting firms unable to expose the fraud? In this case, an effective analysis of the Bank Statements could have brought this to light before this became so big. Or is it possible they were bought off too? The World Bank case is fresh in mind.


There are people who found companies with bad intentions, but those companies are usually rotten from the ground up. I don't think that's what we have here.

An old saying goes "The Road to Hell is paved with Good Intentions", and I think it's probably what happened here. One of the reasons why I maintain that it's difficult to maintain ownership of your soul as you rise through management is that part of the job is to lie. A lot of good management is to take something that's not true today and persuade people to make it true tomorrow. This can spill over, however, and get out of control.

On a smaller scale, I knew someone who was in charge of his employer's vending machines. Every so often, he'd be short on cash and borrow a few dollars from the change boxes. Except that he never remembered to pay it all back. One day, it turned out he'd shorted them over $2500, which would probably be about $6K in today's dollars. He ended up hiding from the law, until his friends convinced him to turn himself in.

What I know about the Satyam story so far is a lot like that, except for the amount of money involved. And, of course, the damage done to the company, investors, employees, and customers.

We're hearing a lot of this stuff lately, because tough times put that extra level of stress that causes insecure structures to fail. It actually happens all the time. I could mention a very large and famous company whose IPO was done with cooked books - at least one person quit rather than certify them. But they got their IPO, and as far as I know, are about as financially sound as any other in the industry now.

Accounting firms, alas, have been remiss for a lot longer than Enron. There used to be 8 or 10 major ones, and one reason that there no longer are is that as they tended to fail or became weakened enough that one of the others acquired them.

One thing the recent collapse has brought out is the danger of having a few large companies that are responsible for everything. If there were 2 dozen moderately-large accounting firms and one failed, it would cause concern. But when there's only 1 or 2 or 3 and one fails, you get a major crisis of confidence that - as we have seen - can paralyze economies world-wide.


Customer surveys are for companies who didn't pay proper attention to begin with.
Joe Harry
Ranch Hand

Joined: Sep 26, 2006
Posts: 9243
    
    1

They call it the SWITCH companies and now the S seems to be over. Horrible and shame!


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Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
I just read in one newspaper that few big indian IT companies are blocking to hire Satyam employees to show solidarity with Satyam. If it is true, it is very sad. What employees have done? They are already cheated because when they joined Satyam, they must have joined looking at the company's position in market which turned out to be fake. So they are cheated already. Now other companies will not hire them to show solidarity with Satyam. If it is true, it is extremely sad.


Sandeep
Rambo Prasad
Ranch Hand

Joined: Feb 23, 2006
Posts: 628
I just read in one newspaper that few big indian IT companies are blocking to hire Satyam employees to show solidarity with Satyam


This is crap..so does it imply they are also in the same league as Satyam


Helping hands are much better than the praying lips
Mark Herschberg
Sheriff

Joined: Dec 04, 2000
Posts: 6037
Rajesh Thakare wrote:big indian IT companies are blocking to hire Satyam employees to show solidarity with Satyam


What does the phrase "blocking to hire" mean?

--Mark
Rambo Prasad
Ranch Hand

Joined: Feb 23, 2006
Posts: 628
The article in Times of India which I read too could prove to be an eye opener. Especially the following lines......

Here's why. Raju said that in the second quarter (July-Sept) of 2008, Satyam showed an operating margin of Rs 649 crore (which was 24% of revenue) when it was actually only Rs 61 crore (thats 3% of revenue). This, he indicated, was part of a fudging exercise over years to inflate profits — presumably to keep the stock price up and the magic of Satyam alive.
Essentially, what Raju confessed to was creative accounting — showing cash where none was generated and therefore did not exist. But, as he kept emphasizing, he did not profit personally from it. Still a crime, but not top of the pops in order of heinousness.
Here's the catch: A 3% margin — which is what Raju said Satyam had actually made — is ridiculously low in the IT industry. Forget Infosys, which made 33% in the same quarter, all IT firms of similar or even smaller size make between 20% and 30%. There's no way Satyam, which services 185 Fortune 500 firms, could have such a low profit margin, said every analyst we spoke to. What's more, even people in Satyam dont believe Raju. TOI, in its Thursday edition, quoted a Satyam staffer saying, ``His letter implies that we worked at a margin of 3%. That's pure unadulterated crap.''
So, if Satyam was operating on a much higher margin, why would Raju choose to say it was actually much lower? The implication is that more money was coming into the company in the form of higher profit, but it was being siphoned out.
And the link is ......
http://timesofindia.indiatimes.com/Business/India_Business/Did_Raju_own_up_only_lesser_of_the_two_crimes/articleshow/3954373.cms
Rambo Prasad
Ranch Hand

Joined: Feb 23, 2006
Posts: 628
Latest news..

Government takes over Satyam to protect investors,clients and employees interest..Sacks all the directors and appoints its own directors..
Rambo Prasad
Ranch Hand

Joined: Feb 23, 2006
Posts: 628
A message from a unknown Satyam employee


Dear all of my Satyamites,

Yesterday will be a memorable day to us throughout our life. Little bit of business & human nature knowledge is forcing me to write few of my thoughts (Please ignore them if they doesn’t make any sense). Ask yourself who is worst affected by all this mayhem. Is it you & me (employees), Govt or Satyam & Ramalingaraju ?. My conviction says that employees of any MNC are associated to that company as long as they don’t have any better option, the best thing government can do for a company is to keep itself away from it. But there was a visionary who created wealth for a nation for 20 years, the only thing that cannot be separated from Satyam for these 20 years & ahead also if Satyam remains was\is a name called “Ramalinga Raju”. Fortunately I got some 15 min of time talking to him when i was an ELTP. He’s much softer then we see him. Imagine what would be going on in his mind when he was writing yesterday’s letter accepting all the things which he did only to save his company. All have made him scapegoat for what has happened & left the company keeping their integrity intact. He was cursed badly for putting the money of a public limited company into his family driven company but it only now clear that how he was transferrring the risk from 50,000 people to his two sons & his known-integrity.

The worst which can happen to we the employees is that we are out of our current job, jobless for time being & then again getting a job which we deserve & our families will be worried for us(as they are always). But a relatively bitter truth will be for the Raju-family who will be annoyed for ages & will be treated as miscreants by those who do not know the truth or more about Greedy investors & money market. And the truth is that he has not stolen some thousand crores rupees into his own pocket, it was a bubble he created which busted. (And every other company on earth does so, being wary of not getting trapped)

One more thing which annoys me is does a philanthropist guy deserve this disgraceful exit ? I really feel sad about the way he’s been portrait in the media. Our rustic fellows have already started comparing him with Harshad Mehta. Tell me any incident in corporate India where any chairman has dared to confess such irregularities in his own firm. And believe me it takes hell lot of guts to accept all this publicly. And as I read the news today morning it was published there that even his community members have suggested him not to tell anything and later on he can play with the Indian laws as every politician does in India. But as he mentioned it was all deep regret in his conscience which lead him to confess all this.

I am not at all saying that he’s totally innocent and unaware of what’s been going there but a person who has started a journey called Satyam 20 yrs ago with few associates and made it 4th largest IT Company in India, done all this for sake of his 50000 Satyam family members. In the end i’ll ask only one question to all of my friends,” for whom he has created this bubble, if it was he who was going bankrupt? ”

The day before all this mayhem started, we all were proud to be called as Satyamites and were wearing the Satyam tag displaying our esteem to others, and now due to a single incidence you are feeling awkward to show the same Satyam tag in public?? I don’t know about others, but still I am proud to be a SATYAMITE!!!
David O'Meara
Rancher

Joined: Mar 06, 2001
Posts: 13459

Sounds like positive spin :roll:
Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
What does the phrase "blocking to hire" mean?

Should be "will not hire to block"
Arjun Shastry
Ranch Hand

Joined: Mar 13, 2003
Posts: 1871
Rajesh Thakare wrote:
What does the phrase "blocking to hire" mean?

Should be "will not hire to block"

IMO companies will not hire any Satyam employee.One big IT company has instructed all its employees not to entertain any l phone call from Satyam. What they say is they won't hire Satyam employees as it might cause trouble to ongoing projects at Satyam.Ofsourse the real reason behind this is bad IT market not the generosity as shown by other IT companies!.


MH
Deepak Bala
Bartender

Joined: Feb 24, 2006
Posts: 6657
    
    5

One of the reasons why I maintain that it's difficult to maintain ownership of your soul as you rise through management is that part of the job is to lie. A lot of good management is to take something that's not true today and persuade people to make it true tomorrow. This can spill over, however, and get out of control.


I could not agree more. Your spine will slowly dissolve if you want to climb the management ladder

Tell me any incident in corporate India where any chairman has dared to confess such irregularities in his own firm


That does not seem very surprising when you have Merril Lynch, Citi bank, et all breathing down your neck.

And the truth is that he has not stolen some thousand crores rupees into his own pocket


Or so he says :roll:

The scenario is a little scary and leaves open many questions

What is to happen to all the Satyam employees ?
Is Ram Maynampati, the new CEO captaining a sinking ship ?
Will we see a rat race to steal Satyam's clients ?

A cruel world indeed.


SCJP 6 articles - SCJP 5/6 mock exams - More SCJP Mocks
Chetan Parekh
Ranch Hand

Joined: Sep 16, 2004
Posts: 3636
Three newly appointed directors by government are genius in their field of expertise - this is really good step by goverment. Government may give temporary monetary aid to Satyam to resolve liquidity issue.Elections are coming in couple of months, hence Indian governments can’t just let Satyam to fall.


My blood is tested +ve for Java.
Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
Elections are coming in couple of months, hence Indian governments can’t just let Satyam to fall.

It's not just elections. It's more about image of Indian IT industry in international market. Government will try it's best to save Satyam. And I have no doubt that government will save Satyam.
Anand Prabhu
Ranch Hand

Joined: Dec 19, 2003
Posts: 299
Rambo Prasad wrote:A message from a unknown Satyam employee


He was cursed badly for putting the money of a public limited company into his family driven company but it only now clear that how he was transferrring the risk from 50,000 people to his two sons & his known-integrity.



Maybe he was contemplating the choice between facing 50,000 angry people and his two sons who were privy to whatever he was doing.
Anand Prabhu
Ranch Hand

Joined: Dec 19, 2003
Posts: 299
Rajesh Thakare wrote:
Elections are coming in couple of months, hence Indian governments can’t just let Satyam to fall.

It's not just elections. It's more about image of Indian IT industry in international market. Government will try it's best to save Satyam. And I have no doubt that government will save Satyam.


You are right. The Government will do all it can to save Satyam and the 50,000 staff who somehow could find jobs in other companies as many are skilled. Working closely with the local NGOs, I can't but shake my head over this as millions of jobs have been lost in Textiles, Gems, Jewelry, Carpets, Real Estate etc in India. And most of these people are poor villagers who don't have transferable skills beyond their domain.
Eric Lemaitre
Ranch Hand

Joined: Jul 03, 2004
Posts: 538

Hi all,

Anand Prabhu wrote:1) Why do these CEOs think they can get away with beating the system? Do they even think of the consequences they and the people under them face if they are exposed?
2) Even after Enron, why on earth are the Accounting firms unable to expose the fraud? In this case, an effective analysis of the Bank Statements could have brought this to light before this became so big. Or is it possible they were bought off too? The World Bank case is fresh in mind.


It looks like Wipro did some bad thing (sorry, source in French): L'Inde au chevet de Satyam, la Banque mondiale bannit Wipro.

Now World Bank has put 2 more Indian IT companies on its black list, Wipro (3rd biggest Indian IT company, Satyam was the 4th) which immediately lost 12% on Monday, and Megasoft India.

It looks like Satyam was far from being the only one to behave badly in Indian IT consulting world...

Best regards.


Eric LEMAITRE
CNAM IT Engineer, MS/CS (RHCE, RHCX, SCJA, SCJP, SCJD, SCWCD, SCBCD, SCEA, Net+)
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Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
It looks like Wipro did some bad thing


Wipro might not have done anything unethical.

This is what Mr. Premji said

"The company, in 2000, had provided staff option to purchase its American Depository Shares at IPO price through a Directed Share Programme. However, the World Bank in June 2007 determined that this was a conflict of interest. "
Tim Holloway
Saloon Keeper

Joined: Jun 25, 2001
Posts: 15632
    
  15

Rajesh Thakare wrote:
It looks like Wipro did some bad thing


Wipro might not have done anything unethical.

This is what Mr. Premji said

"The company, in 2000, had provided staff option to purchase its American Depository Shares at IPO price through a Directed Share Programme. However, the World Bank in June 2007 determined that this was a conflict of interest. "


More accurately, what they did was probably not illegal. However, this kind of largess does tend to come across as ethically suspect, since it gives the appearance, at least, that it's payment for favors granted.
Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
Most big companies do not do anything illegal otherwise they will fall before they become big.
Now question is ethical or not ethical in case of Wipro, I would prefer to wait for sometime because news came just a day before. Today several analysts came out in support of Wipro. This is why I said Wipro might not have done anything unethical.
Better to wait for sometime instead of jumping to conclusions.
Chetan Parekh
Ranch Hand

Joined: Sep 16, 2004
Posts: 3636
Rajesh Thakare wrote:
Elections are coming in couple of months, hence Indian governments can’t just let Satyam to fall.

It's not just elections. It's more about image of Indian IT industry in international market. Government will try it's best to save Satyam. And I have no doubt that government will save Satyam.


This is one of the reasons as well, but not the sole reason.

SEBI, Naidu turned off Satyam alarm in 2003.
Mandar Khire
Ranch Hand

Joined: Sep 11, 2007
Posts: 485
Govt plans Rs 2000 C bailout package for Satyam!
I didn't understand all concept related to finance!
I have 1 question about this:-
If Some one make fraud in company, then before recovery of that money involve in fraud, is gov give bailout package to that company?
When that money will recover for gov?
If persons who involve in any fraud, he may saved by lawyers from punishment?


Millions saw the apple fall, but Newton asked why.
If you understand, say "understand". If you don't understand, say "don't understand". But if you understand and say "don't understand". How do I understand that you understand? Understand!
Arjun Shastry
Ranch Hand

Joined: Mar 13, 2003
Posts: 1871
From the latest news I read, Govt. says No to Satyam bailout.Bailout is a loan given to failing business.From the news:
Satyam has 53,000 employees and needs over Rs 500 crore a month to meet the staff cost Thats quite a huge amount.IMO Govt apppointed board will make sure Satyam business goes smooth for a while.
Satyam is a sinking ship. Its competitors(Indian and international) are trying their best to attract Satyam's clients behind the curtain.Satyam might survive too but will not be able a same Satyam again.Govt might try to acquire some of its companies or sell them later.
Tim Holloway
Saloon Keeper

Joined: Jun 25, 2001
Posts: 15632
    
  15

Rajesh Thakare wrote:Most big companies do not do anything illegal otherwise they will fall before they become big.


Would that it were so. I direct your attention to the case of Bernie Madhoff. One of the single biggest reasons why companies do illegal things is because they think that it will help make them bigger and more successful without spending all the time, effort, and money required to grow the honest way.

Disclaimer: I own shares in both Satyam and Wipro, so it's not in my best interest to see either of them fail.
Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
Tim Holloway wrote:
Rajesh Thakare wrote:Most big companies do not do anything illegal otherwise they will fall before they become big.


Would that it were so. I direct your attention to the case of Bernie Madhoff.


I said Most of the big companies, not all of the big companies. There are always exceptions to every rule. The big companies which does illegal practices are not even 1%. We should not generalize our statement for rest 99%.

I have worked in few big companies which are far bigger than Satyam and Wipro. Though their main business was not IT, but their IT business unit was like one of the software company. So I am aware of how much these companies are careful about their brand name. And they do most of their business on their brand name. This is the reason they are scared to do something illegal and destroy their brand name. Because it takes years to establish a brand in the market. And value of their brand name is much bigger than something they can achieve by doing illegal. If some company still does soemthing illegal , then I assume it's not company behind that illegal act, but some indvidual like in Satyam's case.


Disclaimer: I own shares in both Satyam and Wipro, so it's not in my best interest to see either of them fail.


We all do not want any company to fail may be it Satyam , Wipro or any company in the world because if one company fails, several families get affected.
Tim Holloway
Saloon Keeper

Joined: Jun 25, 2001
Posts: 15632
    
  15

I think you are making an artificial distinction - or perhaps lack of distinction - here treating everyone as equally culpable. Further, no attempt is being made to paint the majority of companies, whether in India, the US, or worldwide as Organizations of Evil. This is just an analysis of why some of them go bad.

Corporations are not democracies. They are hierarchical organizations, and those at the top are answerable only to the law and the shareholders. At present in corporations that follow the model of US public stock companies, even the shareholders have only limited control over the executives - shares are not distributed evenly per person, but rather per dollar/rupee/whatever, and it's one vote per share[/], not per [i]person. Generally the majority of shares are held by institutions who aren't interested in details. Direct oversight is done by the Board of Directors, who are usually elected Soviet-style - shareholders are not given choices of potential directors, just the opportunity to approve or withhold approval, and all votes not cast are credited towards the board's preferences.

One of the most infamous "Organizations of Evil" of our time was Enron Corporation. A few high ups treated the company as their private playground. People who knew about it mostly kept silent in order to preserve their own positions. External co-conspirators helped keep the scam going, just as Price Waterhouse has allegedly done with Satyam.

There were a lot of really bad people in Enron, but that didn't make every single employee evil by any means. The problem was that the evil was at the heart of the organization, and when the heart died, the rest followed, innocent or not.

The stain then spread to like industries, since it was reasonable to assume that since it was not only possible, but since it had happened in one place, there was quite possibly an "Everybody else does it, so why not me" effect going on with multiple companies similarly misbehaving. It takes a certain amount of time to rebuild one's reputation once damaged, even if it was damaged undeservedly. In cases where the damage really is more than just one offender, it becomes that much harder for the truly innocent.
Sandeep Awasthi
Ranch Hand

Joined: Oct 23, 2003
Posts: 597
I think we both are trying to say same thing in a different manner.
 
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