Satyam Fraud Twice As Large As First Thought

In January of this year, the IT outsourcing world was stunned to learn that the Chairman of India's Satyam Computer Services resigned after he confessed to doctoring the country's fourth largest IT outsourcing company's books for the past several years. The Chairman, Ramalinga Raju, admitted at the time that fictitious assets and non-existent cash concealed a $1.1 billion operating deficit.

Raju, who originally claimed that he acted alone, is in Hyderabad's Chanchalguda jail along with along with his brother and Satyam's former managing director, Rama Raju, along with six others including their former auditors. They are charged with the fraud, forgery, cheating, embezzlement and insider trading.

Last week, the Wall Street Journal reported that India's Central Bureau of Investigation (CBI) is saying that the actual fraud was more than $2.8 billion. The CBI noted that the company had paid out some $5.5 million in dividends to shareholders, which surprise, surprise included the accused.

On good explanation for cooking the revenue books, I suppose.

The shares of Mahindra Satyam fell on the news, but later recovered. Tech Mahindra took over Satyam in April.

The WSJ also reported that the trial of Ramalinga Raju will begin in the next few weeks.

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