The Fallout From 'India's Enron'
He's not Bernard Madoff, but B. Ramalinga Raju has some explaining of his own to do.
Raju, the founder of one of India's largest outsourcing companies, Satyam, revealed yesterday in an emotional, 4-1/2-page letter (copy) to investors that he basically made up accounting figures for his firm, to the tune of $1 billion.
He likened it "riding a tiger, not knowing how to get off without being eaten." Every attempt to eliminate gaps in the balance sheet and fill the "fictitious assets with real ones" and "non-existent cash" failed, he said.
Investors are understandably upset and ready to take Satyam to court (although the International Herald-Tribune reports that investors are more inclined to go after the firm's "deep-pocketed" auditor, PricewaterhouseCoopers, instead of the "cash-strapped" Satyam.)
India's stock market is shuttered today for a public holiday but the New York Stock Exchange has stopped trading on Satyam's American depository receipts, Forbes reports, and several banks, including HSBC Investment Bank and Goldman Sachs, have suspended their coverage of the firm.
Indian officials are trying to reassure investors that everything will be fine but experts are holding little hope that Satyam will recover. Reuters reports that outsourcing rivals Tata Consultancy Services and Infosys Technologies "could pick up defecting Satyam clients."
And what of Raju?
The 53-year-old son of a southern Indian grape farmer, Raju is now being investigated by the Securities and Exchange Board of India, the market regulator, according to The Associated Press.
But Raju said he personally has taken no money from the company. "Not one rupee," he wrote.
"I am now prepared to subject myself to the laws of the land and face the consequences thereof."
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Posted by: hughes_168 | January 8, 2009 8:05 PM