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Case Study
Case Study
Ans. The case is basically about the failure of corporate governance. The CBI
raided the house of Raju’s youngest sibling where 112 sales deeds to different land
.
purchases were found The CBI also found 13000 fake employees records created in
Satyam and claimed that the scam counted to over Rs.7000 crores. The Indian stock
markets were now in turmoil.
It had been the example for the following ”poor performance” of corporate governance
producer. It had failed to show fair connections with the stakeholders ,shareholders as
null as the employees (farmers on whose name the properties were purchased.
corporate governance was the issue at Satyam arove because of non-fulfillment of
obligation of the company towards the various stakeholders.
then comes the twisting move, the World Bank announced on Dec 23,2008
That satyam has been banned from business with World Bank 4 for 8 yrs for providing
Bank staff the ”improper benefits “and charged with data theft and building the staff .
The case is about US $1.4 billion corporate governance fraud .satyam is India’s 4th
largest IT company .It offered IT services to around 690 clients ,including 185 fortune
500 companies such as GE ,Nissan Motors and general motors.
Ques 2. What are the reasons behind inadequate corporate governance at
system?
Ans. The implication which we observed in Satyam scam due to a vital role of
corporate governance failure can be define with in a short list that concerns its
difficulty in retaining clients. Satyam could not retain its contract worth US
$500 million and all its major clients moved to TCS, Satyam biggest
competitor .the second implication is for corporate India . Satyam’s collaps
triggered a crisis of trust and the whole Indian industry suffered from investors
who reviewed their outsourcing programs. The third implication touched
closely the credibility of international audit firms such as PWC, who neglected
their duties and allowed inaccuracies in Satyam’s audit.PWC was immediately
replaced by auditing firm like KPMG and Deloitte. The third implication was
also a result of the Satyam scam which led to questioning the presence of
adequate law for corporate governance in India . Satyam board was blamed for
allowing the Maytas transaction . But the responded saying that the depended
on PWC to present accurate auditing which they distrot .The last implication is
about government intervention . After that scandal exploded the government
took care of putting in jail . All major responsible in the affair and what even
furthur by designating new independent directors.
Ques 3. What is the role of independent and non-executive board members?
Ans. The Satyam scam helps us learning some lessons from every
scandal. For instance , companies should know that all inaccuracies
should be investigated. If your accounts are not balance or if
something seems inaccurate , it must be investigate . Dividing
responsibilities across a team of people makes it easier to detect
irregularities or misappropriates future . Satyam company not only
ruined its reputation but also ruined the reputation of the country.
Earlier India was known to be fraud land . Therefore ,Indian rivals
will come under greater scrutiny by the regulators investors and
customers .The third lesson concerns the need of a good corporate
governance. Spitting up the rules of the CEO and the chairman of the
board . thus helps avoid situations like the one at Satyam.
Conclusion-
There has been no scam that affected the CA and audit firms like the
Satyam scam. the increasing nature of these scams has made
dependence on such professionals much more crucial highlighting the
importance of ethics and CG in their roles.
White-collared crimes like these do not only make the company look
bad but also the industry and the country.