Satyam Chairman Resigns After Falsifying Accounts, Shares Fall

Anybody ever worked with Satyam consultants or developers?

I previously had a server with 64G of RAM. Satyam requested a 128G swap file, because 'the server was running our of memory'.

I mentioned that I could certainly create a 128G swap file, however when using swap their app would be 300,000 [1] times slower when accessing memory, which would slow down their app to the point of unusability. I also mentioned they had 14 x 12G Java processes running, which may be unneccessary.

Satyam mentioned that the 12G processes were necessary, as the entire heap was being used. I mentioned that Java, being Java (and having its roots in embedded hardware), will walk it's entire -Xmx heap size over time.

I was employed as a Linux administrator. And here I was explaining Java heap to a bunch of Java developers. In three separate conference calls. With all their managers present, asking questions.

Eventually (after around a month of meetings) they decided that the massive swap file request was no longer needed, and I noticed the heap size of the processes had shrunk to a couple of gig each.

[1] Memory speed vs hard disk seek time

Wow that's really an amazing failure of auditing. It's not like with Enron where management had cooked up some really complex accounting schemes. Satyam was overstating CASH! Didn't the auditors go to the company's bankers and brokers to get independent account statements? Perhaps they were in on it, too.

Right, so the accounts are falsified by the chairman of a company whose name means "truth".

Oh, the irony.

Here's the letter he wrote to the board and stock exchanges:

http://www.moneycontrol.com/news_html_files/news_attachment/...

Just watched the news on TV. It seem he had shown profits as Rs.649cr while the actual profit was only Rs.61cr!!!

I always wondered why Indian IT companies pay people so low when compared to the rest of the world. May be the above is one of the reasons. These guys do this stuff to over-state their success. Now that one is now in the limelight, some govt law and commerce team should inspect other bizzardly successful organisations.

This situation begs 2 1/2 questions:

1) Should the SEC attempt to regulate/audit/oversee companies whose ADRs trade on American stock exchanges, given that they have become so popular with investors?

  1.5)  If so, how?

2) What prompted Raju to offer even the limited explanation that he gave? Guilt? Corporate responsibility?

To prevent such frauds, I believe all stock exchange listed companies in India must comply with RTI Act (Right To Information Act).

In Bangladesh all listed companies comply with their RTI Act.

One breathlessly awaits the amusing libertarian spin.