Satyam Computer Scam Fraud Reality: Some Unusual Questions to Mr. Ramalinga Raju

By on January 8, 2009 - Filed Under PHP Developer, Satyam Compuer Scam, Satyam Computer Fraud

Before writing on Satyam Computer’s So called fraud or scam, I would like mention that once I was a devoted investor (Or you can say trader) of Satyam Computer and I am watching this company since last nine years.

After Today’s Fraud News, I got some questions in my mind which I think Mr. Ramalinga Raju should answer.

  • Which is actual fraud the current one or the mid-representation of Balance sheet during previous years?
  • If company was not having cash then why you was trying to buyout your relatives companies? At least you was aware of the truth (?) that Satyam did not have any cash.
  • In India there is saying in Hindi “Hum to dubenge sanam aap ko bhi le dubenge” (I will not sink alone), are you just trying to do that. After you loose the control over company due to your low level of holdings and other great reasons known to everyone, You may have decide to do just that only
  • Now you are saying that you have shown wrong balance sheet for properties as well as cash in hand, Is it really true or you have done something great (like stealing the company fund ) and now trying to hide the actual thing?
  • Comments

    2 Responses to “Satyam Computer Scam Fraud Reality: Some Unusual Questions to Mr. Ramalinga Raju”

    1. Vipin on January 8th, 2009 12:50 pm

      I am agree with your views, there is something more, some hidden facts … a confession letter seems to be another fraud.

    2. Anil Dhar on January 9th, 2009 2:00 pm

      Yes, your points seems to be correct, now media has started talking about such things.

      Here is the news items published in Times of India.
      Did Satyam Computers promoter-chairman Ramalinga Raju pick the lesser of two crimes when he decided to confess to India’s largest-ever corporate
      fraud of Rs 7,136 crore? That question had begun to niggle at a few people on Wednesday itself when the contents of his five-page letter hit the headlines. In the 24 hours since, the question has gained a whole lot more traction.

      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.

      It’s a crime to show money in the books where none existed, which is what Raju said he did. But it’s a worse crime to take out money that actually did exist. There’s speculation that Raju was doing so in order to invest in other businesses such as real estate, and did intend to put it back in Satyam at some point of time, but possibly got into such a jam that he couldnt replenish the company’s coffers.

      The 3% margin question was put to the interim CEO Ram Mynampati at a press conference in Hyderabad on Thursday. He side-stepped the question.

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