Trends Report

Satyam's Fraud Leaves Clients In The Lurch

Chairman Admits To Massive Financial Fraud; Customers Have To Assess Options And Exposure

January 8th, 2009
SA
Sudin Apte
John McCarthy, null
John McCarthy
With contributors:
Christine Ferrusi Ross , Elizabeth Rose , Stephanie Moore

Summary

On January 7, 2009, Satyam's chairman and founder, B. Ramalinga Raju, tendered his resignation and took responsibility for years of financial fraud. The scale of the fraud in terms of the overstatement of revenue, profit, and cash on hand is significant. The largest scandal in the history of corporate India calls into question the viability of the company as an independent entity. As a result, sourcing and IT executives need to actively review their exposure to the company and their options as a cloud of uncertainty hangs over the company. This review should include a portfolio assessment of all of the work Satyam is doing to understand what the potential disruption could be.

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