Latest Massive Fraud: Satyam Found To Be Swimming Naked

from the tide-goes-out dept

Wed, Jan 7th 2009 3:04pm — Mike Masnick

Warren Buffet's famous quote is that "It's only when the tide goes out that you learn who's been swimming naked." Over the past few months, the tide has been going out with a vengeance, and we're certainly discovering plenty of folks swimming naked. The latest, of course, is Satyam, the Indian tech company whose CEO admitted that he basically has been making up the company's financial reports for years. It turns out that about $1 billion in cash the company claimed it had... don't actually exist. That's a pretty big problem, because that $1 billion represented about 94% of all the cash the company claimed to have. Oops. It makes you wonder what, exactly, Satyam's auditors have been up to the past few years.

This might explain why the company attempted to do a highly controversial merger deal last month, where Satyam tried to buy construction firms Maytas (Satyam backwards), owned by the sons of Satyam's founders. The deal between companies in two obviously unrelated industries seemed like a pretty clear cash grab for the family -- except most people didn't realize that the cash grab was actually to cover up all the lies on the financial statements.

Of course, there are some amusing side notes to this whole thing. Just a few months ago, for example, Satyam was awarded the "prestigious" Golden Peacock award for (of all things) corporate governance. That award is now being stripped away, but it seems a little late for that. Then, of course, there was the stock analyst who claimed that Satyam was an obvious buy just after the original merger deal fell apart. Considering that the stock dropped 90% today, that seems like an awfully bad call.

Anyway, as with any downturn, it's no surprise that some of the scammers are being outed. It certainly doesn't mean that all companies are scamming, but it is a reminder that unless you're personally involved, it's pretty tough to take a company's word on what it's actually been doing with its money.

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Filed Under: fraud
Companies: maytas, satyam

20 Comments

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Joe Smith, 7 Jan 2009 @ 4:28pm

corruption
One is tempted to make a snide remark about India's famously corrupt society but given what has been happening on Wall Street we have no right to feel superior (at least not until we've put ten thousand Wall Street bankers and stock brokers in in prison where they belong.)
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- gaurav, 20 Sep 2009 @ 11:39pm
  
  Re: corruption
  gud dude that u thought about ur own wall street before making any remark on our society.
  one thing more our culture is one of the best culture in the world
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Fsm, 7 Jan 2009 @ 4:47pm

Fooled!
I clicked this link with the words "swimming naked" running through my imagination.

...

I was fooled!
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- noone_important, 7 Jan 2009 @ 5:02pm
  
  Re: Fooled!
  yeah, i was really hoping for some NSFW links ... oh well.
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  - Cine Valley, 8 Jan 2009 @ 2:28am
    
    Re: Re: Fooled!
    for that you folks need to go to any beach in Bombay.
    
    All those who sold their last shirt & bought Satyam scrip are left with nothing to wear ;)
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Hyrulio, 7 Jan 2009 @ 5:40pm

What's to say...
... that this hasn't been happening worldwide for years?
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- Mike (profile), 7 Jan 2009 @ 6:59pm
  
  Re: What's to say...
  ... that this hasn't been happening worldwide for years?
  
  Nothing. We're saying it obviously *has* been happening worldwide for years. That was the point of the post...
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stockresearch52, 7 Jan 2009 @ 7:57pm

satyams corporate fraud
Satyam's episode is a blot on Indian IT industry.Where are the so called audit experts and government rules and regulations?The end result is Employees lost their bread.
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Cecil, 7 Jan 2009 @ 7:59pm

Fooled as well...
I was expecting nude swimming shots of some Russian model I'd not heard of. Sarah Satyamovich or something.
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Brav, 7 Jan 2009 @ 8:10pm

Will Satyam Come Back
What should each Satyams' Employee should do next to save himself and to save investor?
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Rajkumari, 7 Jan 2009 @ 9:28pm

shcked , feared and frightened!
as on of the employees of satyam , I strongly feel that it was one man's fault for whatever the reason may be, but as an organisation, it has the capablity to emerge as a leader once again , all we need is the support, in terms of finances, especially from the government,
if it happens, we can prove our strength.
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Rajkumari, 7 Jan 2009 @ 9:28pm

shcked , feared and frightened!
as on of the employees of satyam , I strongly feel that it was one man's fault for whatever the reason may be, but as an organisation, it has the capablity to emerge as a leader once again , all we need is the support, in terms of finances, especially from the government,
if it happens, we can prove our strength.
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- nasch, 8 Jan 2009 @ 9:51am
  
  Re: shcked , feared and frightened!
  Yes great idea, reward fraud with government funds!
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Ramesh Srivats, 7 Jan 2009 @ 10:26pm

The trial of the chairman of Satyam
He uses defence 2.0 :-) Check http://www.rameshsrivats.net/2009/01/satyam-chairman-on-trial.html
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Dan, 8 Jan 2009 @ 12:00am

Behold the king's new cloths! It seems the crooks are on Wall Street, not Las Vegas.
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Lunatic, 8 Jan 2009 @ 1:24am

Inside Satyam
To know the latest happening inside satyam, log on to my blog at www.satyam-news.blogspot.com
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Khan, 8 Jan 2009 @ 4:47am

Satyam's fraud
Satyam's fraud and moral of the story would be to keep off from the seemingly big 'corporate' sharks. One is easily lured to invest in such ventures but the end result is either bankruptcy or fraud. Satyam in Asia and Lehman Bro. in West should serve as best examples for investors.
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Sports Player, 9 Jan 2009 @ 1:04am

There's no way he was acting alone. Not possible to cook financial reports without the connivance of the top management.
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Hyrulio, 9 Jan 2009 @ 4:13pm

Hahahaha
From the linked article - "Satyam means 'truth' is Sanskrit"
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Guesswho, 11 Jan 2009 @ 2:18am

Its a BIG game
Satyam's scam is a very small one when compared to the ongoing global economic recession by Israelis or Jews.

Believe me or not, its all because of the dirty games being played by Jews....
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