Satyam computer scam: Legal scam 

Satyam fraud case

Author: Shreya, a student at The North Cap University, Gurugram 


This article tells about the most famous scandal i.e. satyam computer case, one of the India’s largest fraud. This fraud is the biggest accounting scam in India. Analysis of the case highlight the fraud has been done in corporate sector and shed lights on the scam done by hacking the computers and made changes in the company’s records in terms of money and showed the company with more profit. Later on CBI investigated in the company and came to know how much money was defrauded by the Satyam Company. The owner of Satyam Company was then sent to jail for committing the fraud. 


Satyam Company was founded in 1987 by Ramalinga Raju. Before starting the satyam company, Raju started two companies knows as Maytas Infra and Mayats properties but both of these companies flopped. So he thought of opening a company which would grow and give profits and that time IT industry was blooming, so he started his Satyam Company with 20 employees which provide the services related to IT and BPO. Satyam computers becomes the crown jewel of the IT (information technology) Industry. After the beginning of the company, employees worked hard for at least 4 years and company got the contract of Fortune 500, those companies are registered who performs and grow fastest, in 1991. The company also gets registered in the Bombay Stock Exchange by fulfilling all the eligibility criteria and there IPO is released and also comes in demand. 

About the scam 

The huge corporate scam was committed by Ramalinga Raju, founder and chairman of Satyam computers services, with his bothers. He admitted to falsifying and exaggerating the company’s accounting for many years in 2009. This confession shocked everyone especially the investors, employers and regulators, ruining the image of Satyam Company. 

This scam was planned one to defraud the stakeholders.  Raju and a small group of alliance (which includes his brothers or family members) increased sales, earnings, and cash levels, providing a false sense of financial exploit. Forging bank statements, faking invoices to show profit, and inflating customers were all part of the fraudulent operations. He also hired the auditors from pwc Company and tasked them to show wrong data and also protect shareholders’ interests and the results or scam should not be exposed to the public. 

  • In 2003, Raju started falsifying financial records of Satyam to show the growth and the profits more than the firm actually achieved. Raju participated in a web of fraud with his brother Rama Raju, Satyam’s managing director, faking audit reports and generating false invoices, clients and bank employees. Also, Raju used Satyam’s finances to invest in his family’s enterprises, such as Maytas, for personal benefit in real estate and other projects, making thing worse and worse.
  • However, the facade started to disintegrate at the end of 2008, coinciding with the global financial crisis, which ravaged the IT sector. Raju faced increased pressure from lenders and creditors to settle his obligations as Satyam’s sales and profits decreased. Additionally, the World Bank examined his behavior and prohibit Satyam from participating in its projects for eight years.
  • In the effort to save his disintegrating enterprise, Raju used Satyam’s financial reserves in December 2008 to launch an ill-fated $1.6 billion offer for Maytas Infra and Properties. The strategy, however, backfired unfortunately, sparking a furious uproar from Satyam shareholders and board members who saw the transaction as a diversion of cash and the open conflict of interest. Raju had just 12 hours to cancel the deal, but Satyam’s stock price had dropped by 55% by then.
  • Raju ultimately admitted to his frauds after being cornered and given no other choice. On January 7, 2009, he acknowledged increasing Satyam’s assets by a stunning Rs. 7000 crores, accounting for approximately 94% of the company’s assets, in a letter to Satyam’s Board of Directors and authorities. Additionally, he admitted to exaggerating Satyam’s revenues by Rs. 5,040 crores, accounting for nearly 75% of the company’s revenue. Raju also stated that he worked independently and that neither the auditors nor the board members knew about his illegal operations.
  • The Serious Fraud Inquiry Office (SFIO), the Securities and Exchange Board of India (SEBI), and the Central Bureau of Investigation (CBI) launched a thorough inquiry in response to Raju’s confession. Raju and his associates were caught and charged with various offences, including money laundering, insider trading, forgery, criminal conspiracy, breach of trust and account falsification. 

This scam results in the destruction of the whole Satyam and employees of Satyam suffered a lot. So, to protect the interest of the stakeholders and the employees, Satyam was purchased by Tech-Mahindra for the recovery. 

Awards received by Satyam or Ramalinga Raju 

  • In 2008, he received Golden Peacock Award for corporate accountability.
  • The Ernst and Young entrepreneur Award was received by Raju in 2008.

Who is responsible for exposing Satyam scam?

Whistleblower, who sent e-mails to one of the director of the company and also alerted media and SEBI about the scam. The e-mails result in the investigation and it leads to the confession ad arrest of Raju.

  • Whistleblower is a person who exposes any information that is deemed illegal, dishonest or incorrect within an organization. 


Satyam scam emphasizes more need for ethics, strict governance and strict regulations on the industries especially IT firms.  Also, the regulatory bodies like SEBI, CBI etc. should keep watch on the firms from time to time so that frauds like Satyam should not commit in future. Because of these frauds, it becomes difficult for foreign investors and people within the country to trust these firms. Corporate governance and security legislation are required in the countries with emerging markets like India. 

Frequently Asked Questions

Q1. Who is responsible for Satyam scam?

Ans. Ramalinga Raju, his brother and the auditors of pwC Company 

Q2. Which are the other two companies except Satyam acquired by Raju?

Ans. Maytas Infra and Maytas Properties 

Q3. Who acquired Satyam?

Ans. Tech- Mahindra, an Indian Technology company acquired Satyam computers after the scam. 

Q4. What is the full form of pwC?

Ans. Pricewaterhouse coopers  

Q5. What is the main cause for this scam?

Ans. The main cause was the fraudulent accounting practices like manipulating sales and profits books, fake invoices etc.

Satyam computer scam: Legal scam 

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