“It was like riding a tiger, not knowing when to get off without being eaten.”
So said B. Ramalinga Raju, chairman and chief executive of Satyam Computer Services, who resigned after confessing to falsifying the company’s financial records in a $1 billion fraud. The Satyam fraud has been immediately dubbed “India’s Enron” by many.
Raju admitted in a stunning letter to the company’s board of directors that he had manipulated the accounts for “several” years to show hugely inflated profits and fictitious assets. Satyam was audited by PwC and was the first Indian company to list on three international stock exchanges – Mumbai, New York and Amsterdam – yet the fraud went unnoticed for years, the FT reports. A copy of Raju’s confession note is available here (via this post on the D&O Diary)
In his confession note, Raju said he would resign and “subject myself to the laws of the land.” He said the fraud began as a short-term fix for a poor quarterly performance but spiraled out of control to the point that it “was like riding a tiger, not knowing when to get off without being eaten.”
Already a securities class action has been filed against Satyam and certain of its directors and officers in the U.S. on behalf of purchasers of the American ADRs. A copy of the complaint in that case is available here (also via the D&O Diary). The case was filed in the Southern District of New York.