Satyam Computer Chairman Admits Fraud, Stock Virtually Worthless
January 7, 2009 by Tisa Silver
Filed under Finance
Satyam Computer Services (Ticker: SAY), a once globally respected IT firm is now being referred to as the “Enron of India.” That name says it all, but what happened?
Like Enron, it appears this company engaged is massive accounting fraud. According to CNBC’s Street Signs, the vast majority of the company’s cash position was a lie! The chairman appeared on CNBC back in November to say that profits were up 28 percent. Watch the interview.
Unlike Enron, the Chairman of this company admitted to the fraud (and in great detail). According to MarketWatch, Satyam’s Chairman, B. Ramalinga Raju, resigned after announcing the company had inflated assets, deflated liabilities and overstated profits to the tune of billions.
In a statement, Mr. Raju said he is prepared to subject himself to the “laws of the land and face consequences thereof.”
Satyam’s shares lost 91 percent of their value before the NYSE halted trading. I decided to look at analyst coverage and saw two interesting opinions: In January 2008, SAY was upgraded to ‘BUY’ by none other than Lehman Brothers. In December 2008, SAY was downgraded to SELL by Citigroup.
When will these execs learn: honesty is the best policy?!?! You can not keep up fraudulent accounting forever. Aside from the fact that it is wrong, there are too many people involved in the process, there is a paper trail and the lies become too big to continue.
What makes this even more ironic is that ’satyam’ means truth in the Sanskrit language.
My advice: Be honest and take a few punches now or tell lies and get knocked out later.
BTW: Speaking of frauds, I came across a Bernie Madoff Ringtone on citylife.com. While it is not what I would like to hear in place of my boring ringer, it is hauntingly ironic and FREE!
