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Indian Outsourcing Giant Admits Fraud
B. Ramalinga Raju, Satyam's chairman, said the book-cooking built up over several years. "It was like riding a tiger, not knowing how to get off without being eaten," he wrote.
(By Mahesh Kumar A -- Associated Press)
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"His confession is an event of horrifying magnitude. We have to go beyond this letter and find out what actually has happened," C.B. Bhave, the chairman of SEBI, told reporters in Mumbai. "This is an issue which has very serious implications. It also raises the issue of authenticity of accounts that have been audited and certified by the auditors."
The Indian minister of company affairs, Prem Chand Gupta, said that the case was a "serious fraud" and that "there will be no leniency in dealing" with it.
Raju said that the gaps in the company's books arose because of inflated profits recorded over several years.
"What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years," he wrote. "It has attained unmanageable proportions as the size of the company operations grew significantly."
However, Raju said, he and the company's managing director did not take "even one rupee/dollar from the company and have not benefited in financial terms on account of the inflated results." The interim chief executive, Ram Mynampati, wrote an open letter to his colleagues Wednesday: "What we are confronted with is the challenge of continuing our business operations, seamlessly. Rumors will abound and it would be fair to assume that competition will try and leverage it to their advantage."
Mynampati said a fully empowered team was formed to weather the crisis and address issues such as maintaining delivery systems, customer retention, pipeline management, cost controls and collections.
Staff writer Annys Shin in Washington contributed to this report.
