What Went Wrong with Satyam?
WHAT WENT WRONG WITH SATYAM?
PROFESSOR J. P. SHARMA
J.P Sharma, Professor of Law & Corporate governance, Department of Commerce, Delhi School of
Economics, University of Delhi
WHAT WENT WRONG WITH SATYAM?
INTRODUCTION
Till about two decades ago corporate governance was relatively an unknown subject. The subject came into prominence in the late 80’s and early 90’s when the corporate sector in many countries was surrounded with problems of questionable corporate policies or unethical practices. Junk Bond fiasco of USA and failure of Maxwell, BCCI and Polypeck in UK resulted in the beginning of codes and standards on corporate governance. The USA, UK and number of other developed countries reacted strongly to the corporate failures and codes & standards on corporate governance came to the centre stage. Enron debacle in 2001 and number of other scandals involving large US companies such as the Tyco, Quest, Global Crossings, the World.Com and the exposure of auditing lacunae, which led to the collapse of the Andersen, triggered the reform process and resulted in the passing of the Public Accounting Reform and Investor Protection Act of 2002 known as SarbanesOxley (SOX) Act, 2002 in USA.
BACKGROUND
On 24th June 1987, Satyam Computer Services Ltd (Popularly known as Satyam) was incorporated
1
by the two brothers, B Rama Raju and B Ramalinga Raju , as a private limited company with just 20 employees for providing software development and consultancy services to large corporations (the company got converted into public in 1991). During the year 1996, company promoted four subsidiaries including Satyam Renaissance Consulting Ltd, Satyam Enterprise Solutions Pvt. Ltd., and Satyam Infoway Pvt. Ltd. Satyam Computer Services Ltd in 1997 was selected by the
Switzerland-based World Economic Forum and World Link Magazine as one of India's most remarkable and rapidly growing entrepreneurial companies. Satyam Infoway (Sify), a wholly owned
subsidiary
PROFESSOR J. P. SHARMA
J.P Sharma, Professor of Law & Corporate governance, Department of Commerce, Delhi School of
Economics, University of Delhi
WHAT WENT WRONG WITH SATYAM?
INTRODUCTION
Till about two decades ago corporate governance was relatively an unknown subject. The subject came into prominence in the late 80’s and early 90’s when the corporate sector in many countries was surrounded with problems of questionable corporate policies or unethical practices. Junk Bond fiasco of USA and failure of Maxwell, BCCI and Polypeck in UK resulted in the beginning of codes and standards on corporate governance. The USA, UK and number of other developed countries reacted strongly to the corporate failures and codes & standards on corporate governance came to the centre stage. Enron debacle in 2001 and number of other scandals involving large US companies such as the Tyco, Quest, Global Crossings, the World.Com and the exposure of auditing lacunae, which led to the collapse of the Andersen, triggered the reform process and resulted in the passing of the Public Accounting Reform and Investor Protection Act of 2002 known as SarbanesOxley (SOX) Act, 2002 in USA.
BACKGROUND
On 24th June 1987, Satyam Computer Services Ltd (Popularly known as Satyam) was incorporated
1
by the two brothers, B Rama Raju and B Ramalinga Raju , as a private limited company with just 20 employees for providing software development and consultancy services to large corporations (the company got converted into public in 1991). During the year 1996, company promoted four subsidiaries including Satyam Renaissance Consulting Ltd, Satyam Enterprise Solutions Pvt. Ltd., and Satyam Infoway Pvt. Ltd. Satyam Computer Services Ltd in 1997 was selected by the
Switzerland-based World Economic Forum and World Link Magazine as one of India's most remarkable and rapidly growing entrepreneurial companies. Satyam Infoway (Sify), a wholly owned
subsidiary