|
Bangalore: In a stunning 5-page letter detailing years of financial deception at the firm he founded, Satyam Computer Services Chairman B Ramalinga Raju brought an illustrious corporate career to an undignified end.
A poster boy of Indian business after setting Satyam on a path of high growth, hiring thousands of staff and bagging lucrative outsourcing contracts from overseas clients, Raju admitted on Wednesday that profits at the company had been falsely inflated for years.
India's biggest corporate scandal in memory hammered Satyam's shares, which had already been under pressure since last month. The stock fell more than 80 per cent on Wednesday, leaving the company worth around $500 million, against nearer $7 billion just six months ago.
Life for the 54-year-old Satyam chief became tough last month after a botched attempt to buy two firms partly owned by the company's founders, which he said on Wednesday was a final attempt to resolve the problem of the fictitious assets.
"It was like riding a tiger, not knowing how to get off without being eaten," he said in his resignation letter.
His problems were compounded last month when the World Bank barred Satyam from business, citing 'improper benefits' given to Bank officials. Satyam has demanded the World Bank retract those comments.
But nothing prepared investors for Raju's stunning revelation of years of inflated profits based on non-existent assets. He acknowledged no other board member had been aware of the financial irregularities, and insisted he had not profited from the company's inflated results.
Softly spoken Raju, born into a family of farmers, said he was prepared to face up to the legal consequences of a scandal that analysts swiftly dubbed ‘India's Enron’.
"This development was the last straw to break the camel's back," said Sudin Apte, country head of Forrester. "I believe possibly a third of Satyam's clients will exit in the next 2-3 months."
Indian market regulators and government officials were quick to condemn, and banker Merrill Lynch terminated its engagement with Satyam, which counts General Electric and Nestle among its clients.
A management graduate from Ohio University, Raju moved away from agriculture to start a textile unit in 1977 before later moving into real estate.
In 1987, he founded Satyam Computer along with his brother B Rama Raju and brother-in-law D V S Raju, taking the company public four years later. That year, he won his first offshore contract from US tractor maker...
More from Companies
| Single Page Format | 1 - 2 - Next |
Discuss this story on expressindia forums
|
|
 |
 |
 |
About Us | Contact Us | Advertisers | Site Map | Make us your homepage | Work for Us | RSS | Subscribe | Electronic Edition | Privacy Policy© 2009: The Indian Express Limited. All rights reserved throughout the world
