Satyam Computers, winner of the Golden Peacock Award for excellence in corporate governance, ironically became a noted failure in the history of governance in India when Ramalinga Raju, founder and chairman, admitted fraud in a resignation letter. An acquisition in an unrelated industry by Satyam Corporation created discontent among shareholders, leading to a series of investigations. The investigations revealed a fraud of about INR 50 billion ($1.5 billion). This led to resignations by several board members and the CEO. Ultimately, Tech Mahindra acquired the company. The entire episode became a mockery of corporate governance practices, raising questions about the efficacy of well accepted norms.

Discuss the circumstances under which Satyam's fraud was exposed. What do you think were the reasons for the fraud? How was the fraud able to occur?

Critically evaluate the corporate governance mechanisms adopted by Satyam. What characteristics of the board of directors may prevent financial statement fraud? What lessons about the audit committee can be learned from this case? What other governance mechanisms should be adopted to ensure compliance?

Answer rating: 100% (QA)

The circumstances under which Satyams fraud was exposed can be traced back to January 7 2009 when Ramalinga Raju the founder and chairman of Satyam Computers confessed to committing a massive financia... View the full answer