Today the Media has been airing, what they attribute to sources,that the jailed and disgraced Promoter Chairman of Satyam,Ramalinga Raju,has disclosed on interrogation that he has been fudging the Books of satyam for the last Seven Years !
So we are talking about “Saat-Yama” !…That’s Seven Years which heralded the Beginning of the End with the God of Death,Yama, Dancing around in the Accounts !
So this would mean that the Re-statement of Account has to be atleast from the Financial Year 2000-2001
The Government has stepped in and constituted a New Satyam Board that begins with three Members, Deepak Parekh,Karnik and C Achuthan…The New Board appeared before the Media this evening and it was conveyed that an Independent Firm of Auditors will be appointed in the next 48 hours to get working on restating the Accounts
This has to be the Priority,as No urgent funding can be obtained unless the Accounts reflect the true state of Affairs…Banks will not lend
My advice is to begin with the Accounts of FY 2000-2001 as this would then include investigation of the hyped Indiaworld Deal between Sify and Rajesh Jain for US $ 116 Million
Read Ramalinga Raju’s Chairman Statement in the Annual Report of FY 2007-8…Incredulous !….This man knew he was lying,as he had been cooking the Books for Seven Years and yet he had the Boldness & Brashness to boast of Satyam Success
Methinks he would make an interesting case Study for Psychiatrists…this guy had to be psychotic as he lost contact with external reality….what was he thinking !? to have persevered with Seven Years of Creative Accounting and not be found !…..and perhaps the Auditors too would make an Interesting Case study for how they failed to Detect such Creative Accounting !
Interestingly,the jailed CFO,V Srinivas too has confessed that he was completely in the dark on what Ramalinga Raju did…he was only concerned with quarterly results and never looked at the Balance Sheet.He was only instructed by Ramalinga Raju and his Brother,to manage payments with Operational cash and when some Payments got delayed,he suspected something was wrong !…This is realy difficult to swallow ! As CFO for years he had to be privy to what was happening…he did say that the Fixed Deposits were fictitious !….Also he was invited to and attended every Audit Committee Meeting that also included four Independent and Non Executive Directors as Members and both the Auditors,Internal and Statutory as Invitees
“Saat – yama” ! what a Sorry State of Affairs
Satyam Share Price jumped from Rs 20 close on Friday to close at Rs34 today on some hope with this New Board at the helm….Yet till date several Class action suits have been filed against Satyam already in USA…this exposes the Company to Hundreds of Millions of Dollars in Liability Claims….Cannot see how Satyam,in this Legal Form can survive….As I blogged earlier,Transfer of Business Contracts and Employees to another Company would salvage Clients and Employees,leaving Satyam only as a shell company…problem is the Status of Existing Shareholders…their Holdings would amount to Zilch in such a shell Company that would be battling Legal Cases….If they too can be allotted shares for free in proportion to their holding in Satyam in the New Company,then they could recoup losses through this new Holding…It must be checked if this could be a legally tenable option…Class Action Suits in USA would not be able to touch the New Company….they may then involve the Auditors,Price Waterhouse in their suits.
In another Blog I’ll post, for especially those who have no finance and accounting background,the nature of fictitious Accounting Entries that would have been passed to inflate Revenues,Cash and Receivables and Profits and their Impact in the Profit and Loss A/c and the Balance Sheet ….Readers would gain a better insight into what really happened in Satyam