Satyam CEO confesses Fraud

January 7, 2009

Satyam Computers Founder and Chairman Ramalinga Raju has resigned from the Board. Raju has put in his papers and is waiting for the Board’s decision.

Satyam has been in news lately because of the Maytas deal. The resignation comes with shocking revelations from Raju himself.

Confessing to fraud, Raju has written a letter to the board giving details of how the balance sheet has inflated cash balances of Rs 5040 crore and accrued interest of Rs 376 crore is non-existent. Rs 1230 crore was arranged to Satyam and is not reflected in the books.

“I am now prepared to subject myself to the laws of the land and face consequences thereof”, the letter said.

Raju has suggested Ram Maynampati as the interim CEO

Securities and Exchange Board of India (SEBI) says that the letter has important implications for the markets and investigation is required to find out who else is involved in this fraud.

It further added that similar disclosures should be made for the US regulators also. Meanwhile the Satyam board members are unaware of the financial situation.

Analysts are of the view that Raju’s resignation would not make much of a difference to investors. They further said that the responsibility lies on the whole Board as it was an unanimous decision where this Board is in no place to decide on the issue.

Shares of Satyam plunged over sixty per cent following these reports.

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