Former Satyam chief may have siphoned cash - NYT

B. Ramalinga Raju, the founder and former head of Satyam Computer Services may have skimmed huge amounts of cash from the company, rather than padded its books as he claims, according to a report in the New York Times that cited a person involved in the Satyam investigation.

Satyam, India's No. 4 software services exporter, has been battling for survival since Raju resigned as chairman earlier this month, revealing profits had been falsified for years and that $1 billion of cash on the books did not exist.

Investigators looking into the fraud have found a maze of about 300 companies related to Raju that were used to siphon as much as $1 billion in cash from Satyam, the report said, citing a senior official involved in the inquiry.

The article said the picture emerging from the investigation of Satyam is very different from the one painted by Raju in a letter to Satyam's board earlier this month.

In the letter, Raju said about $1 billion of Satyam's cash was "non-existent" and that he had falsified its profits for years to avoid losing control of the company.

Raju said neither he nor his brother, B. Rama Raju, who co-founded Satyam, "took even one rupee/dollar from the company."

The New York Times report, citing the person involved with the investigation, said the entire $1 billion Raju said was faked might have actually been earned by the company but then skimmed from it.

A spokesman for Satyam declined to comment on the report.

The report said Raju's lawyer did not return calls seeking comment

'Satyam con will have a huge impact on India Inc'

The Satyam controversy has come as a rude shock and is going to have a larger impact on India Inc. The roles of independent directors, the external auditing agencies and the regulatory mechanisms will undergo major upheaval.
This was the verdict that emerged at a congregation of human resource and business experts at the three-day Nirma International Conference on Management (NICOM 2009), which started here on Thursday.
Dalit Mirchandani, chairman, Ingersol Rand, India, who was the chief guest, said: "The Statutory Audit Committee in every company relies solely on the audit report. It is surprising how a fraud of this magnitude escaped at least three filters."
He elaborated on such frauds being related to issues of corporate governance in India, as the majority of businesses here are family-run. "Unless the Indian corporates learn to attract and retain the best of talent, my advice to them is always to exit from business," Mirchandani added.
Endorsing this, Prof Allan Cohen, former Harvard professor and co-founder of the Indian Institute of Management, Ahmedabad, said: "The situation in the west is the same. Although on the face of it, the hierarchy may appear neutral, the underlining issues don't differ much."
Another issue that the delegates at the NICOM, which aims for 'Strategic Human Resource Management and Entrepreneurship in the Changing Business Scenario', discussed was the ailing Small and Medium Enterprises (SMEs) in Gujarat.
Suggesting a three-pronged strategy to tackle such problems, Mirchandani said: "All stakeholders in the SME sector must develop a future organisational model for growth; attract and manage human talent; and must learn risk mitigation while enhancing the spirit of entrepreneurship."