Latest News on Satyam Computers

US Auditors missed Satyam Fraud. The Public Company Accounting Oversight Board (PCAOB), which was set up by the US Securities and Exchange Commission to oversee auditors in the wake of the Enron and WorldCom scandals, visited India for the first time last year and conducted a review of the auditing processes of several international accounting firms that audit US-listed Indian firms.

Satyam employees have set themselves a deadline, January 31, whether to stay with the IT major or switch jobs. Incidentally, the date also coincides with many multinational corporations (MNCs) unveiling their new projects and recruitment drives for the next fiscal.

US-based employees of the embattled Satyam Computer Services have been asked to return their credit cards by an American financial institution. Employees, who are still coming to terms with the uncertainty about the firm’s fate, have also found that their medical insurance is no longer valid.

Speculation is rife that the government is considering a package of up to Rs 2,000 crore to bailout the crisis-ridden Satyam Computer but no confirmation could be obtained.

The government has sounded out the former chief of software industry body NASSCOM Kiran Karnik among other luminaries to join the board of Satyam.

The government will not appoint executives of Satyam's rivals such as Infosys, TCS or Wipro or anyone directly in the IT industry to this board because of concerns about conflict of interest. Appointment of a new board was seen a key to restore confidence in the company, and by extension to the rest of India's IT sector.

Ramalinga Raju and his brother Rama Raju have been arrested

Ramalinga Raju, Satyam founder surrendered himself to the police in the night. News was coming out that he will be arrested.

B Ramalinga Raju tonight surrendered before the Director General of Andhra Pradesh Police S S P Yadav, a police spokesperson said.

"I am prepared to subject myself to the laws of the land and face the consequences thereof" Raju had said in a confessional statement.

Raju, whose whereabouts were a matter of speculation ever since he made the startling disclosure on Wednesday about the Rs 7,800 crore financial fraud, had been in hiding and was summoned to appear before the SEBI tomorrow.

According to TV reports, Satyam CFO Srinivas Vadlamani would also be arrested by AP police on Saturday.

CBCID will produce Raju in court within 24 hrs.

Future of Employees of Satyam.

Future of employees in Satyam company is not same as what happened in US. Indian government and mostly Andhra Pradesh government is backing employees and definetely employees will be protected as state and central elections are around the corner.

Inside news is that a high ranking political minister has given the word that employees won't be facing the worst as expected. It seems Government is going to take over the company. Existing board is dissolved and 10 new directors would be appointed.

There is lot of sympathy shown by employees on Raju.

How The Fraud of Satyam Began

Satyam (Sanskrit for 'truth') Computer Services Ltd. was founded by B.Ramalinga Raju in 1987. The company offers information technology (IT) services spanning various sectors, and is listed on the New York Stock Exchange and Euronext.

Satyam's network covers 67 countries across six continents. The company employs 52,000 IT professionals across development centers in India, the United States, the United Kingdom, the United Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. It serves over 654 global companies, 185 of which are Fortune 500 corporations. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and Visakhapatnam.

According to Wikipedia , Mr.Raju stated that:

"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. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.”

In the fiscal year to March 2008, Satyam reported a 46.3 per cent rise in revenue to $2.1 billion under the US accounting standards, while net income rose 39.7 per cent to $417 million.

In October, it said revenue in this fiscal year ending in March 2009 will rise 19-21 percent to $2.55-$2.59 billion. Earlier the company said that it plans to expand its presence in Europe, Asia-Pacific and the Middle East to cut its dependence on the United States.

The news of Satyam acquiring Maytas Infrastructure for $1.6 billion (Rs 7658-crore) sent shockwaves across the country,Many questioned the things behind the deal. There was heavy pressure by share holders and lots of criticisn over governance issues,by this satyam has withdrawn the Offer with in hours of the making of the proposal.But by the time damage was done. The scrip lost over 30 per cent in India.

There was a quick change in plan after investors shown their opposition to the deals by pushing shares in India's No. 4 software services company down 55 per cent in New York Stock Exchange trade. Satyam founder and Chairman B Ramalinga Raju and other insiders hold 36 per cent in Maytas Infra and 35 per cent in Maytas Properties.

Analysts questioned the motives of Satyam's top executives, saying there was a potential conflict of interest because they hold stakes in both companies.

Also questions raised in the minds of analysists like when the market is down and companies are saving their cash to help weather the global economic slowdown , satyam goin for huge aquisision.Ramalinga Raju originally said the deal by saying it would "de-risk" Satyam's core business in IT services.Then immediately came a severe blow to the Hyderabad-based IT provider facing flak from investors on its decision to acquire Maytas' was World Bank banning it for 8 years.

The World Bank has banned Satyam from providing it services for eight years for alleged malpractices, including bribery.The ban will severely impact the business prospects of the Hyderabad-based company, already battling to retain and attract fresh business in a recession-hit global market.

The World Bank debarment has been meted out for "improper benefits to bank staff" and "lack of documentation on invoices.” World Bank information security chief Robert Van Pulley admitted to the ban during a recent meeting with the officials of Government Accountability Project (GAP), a whistleblower protection organisation in the US. The bank has handed over the case to the US Justice Department and the Treasury Department.

Satyam started providing IT services to the World Bank in 2003. Two years later, allegations of bribery surfaced. In 2007, an internal World Bank investigation found that former VP Mohamed Muhsin had secured contracts and purchase orders worth $100 million for the Indian firm in return for Satyam's stock options (ADRs) at preferential prices. After which Muhsin was banned permanently from the bank. However, Satyam was allowed to work for the bank till 2008.

There have also been allegations against Satyam of causing security breaches at the bank. World Bank's records, which contain sensitive financial information, have reportedly been illegally accessed over the last year.

Now the question is , is it really a fraud or a mistake which brought them here or Wrong step taken by satyam like aquiring maytas as if it has been succeeded nobody might have known this.

Raju said

"It was like riding a tiger, not knowing when to get off without being eaten," Mr Raju said, describing how the fraud, which he claimed had begun as an effort to smooth over a minor accounting discrepancy, had "attained unmanageable proportions as the size of the company operations grew".

According to Raju this was done few years back in order to smoothen small accounting difference which means like it was done intentionally to a small extent but as the company was growing it was also growing at a rapid pace.

Now from past few years satyam haven't faced huge loss , share holders were in profit and investers were also in profit as the company was globalizing at a rapid pace.It made Indian software giant on the global market. Other companies have gained up their business looking at the pace of satyam which resulted in the development of IT.

Satyam was trying to cut down the dependencies on the US market which is good for India.There was lot of employeement given by satyam. I agree this is a FRUAD which effects investers.But please comment on this, like they have done unethical business , but what do we say for their achievements of satyam for we people.what should have been done by satyam, do they have said this issue 7 years back when they are gaining the name in the market or what else could have been done in order to save our Indian IT Giant
SATYAM.

WHAT WOULD BE THE FUTURE OF SATYAM?????

Dollar is still Strong.....

The great challenge confronting the foreign exchange market at the start of 2009 is finding a good alternative to the US dollar. One of the ironies of market events during 2008 was that the US financial crisis produced a flight to safety in the dollar. The dollar emerged triumphant from a financial debacle that centred on $1,300bn (€960bn, £890bn) of subprime US mortgage loans. The fallout has triggered a $32,000bn decline in global stock market capitalisation and driven all the Group of Seven leading industrialised countries into recession.

The dollar slumped against the euro during the final weeks of 2008 but fears about the financial system still drove US Treasury yields down to zero on three-month paper and less than 2.1 per cent on 10-year notes. This fear factor is likely to sustain demand for the dollar during the early months of 2009.

There is not now a clear alternative to the dollar because all big economies have slid into recession. Real gross domestic product could contract by 1.5 per cent in both the US and Europe during 2009 and by as much as 2.5 per cent in Japan. The decline in world trade and commodity prices will also reduce significantly the growth rates of the emerging market economies. South Korea and Taiwan are already in severe slumps. The growth rate of China could halve.

Source FT... http://www.ft.com/cms/s/0/5b21dafc-db5a-11dd-be53-000077b07658.html?nclick_check=1

Fed Minutes: Pain & Unemployment Ahead... And Deep Recession

The minutes from the December FOMC meeting where rates were essentially taken to zero have now been released.  What is interesting here is that there is very little expected hope for anything great in 2009.  The FOMC has noted substantially weaker conditions persisting.  This quote pretty much sums it up, although even this minimizes the total commentary:

• "...investors seemed to become more concerned about the likelihood of a deep and prolonged recession."

The economic risks are substantial to the economy despite substantial easing to inflationary pressures.  It also noted that there were some who see inflation as too low, meaning the deflationary worries are there.  The Fed staff now admits that it sees a decline in GDP for 2009 and unemployment will rise significantly into 2010.

If you read through the minutes it reads like a tragedy.  About the only good news in there is that the FOMC noted the commercial paper markets had improved.  They improved because of that government guarantee, otherwise there would not even be that.

Economic Reports for Next Week

Monday: November construction spending is due shortly after the start of trading. Spending is expected to have fallen 1.2% in November after falling 1.2% in the previous month.

Monthly truck and auto sales figures are due throughout the session.

Tuesday: The Institute for Supply Management's survey of the services sector of the economy is due shortly after the start of trade. The December index is expected to have dipped to 37 from 37.3 in November, remaining deep in recessionary territory.

The government's November factory orders report is due around the same time. Orders are expected to have fallen 2.6% after dropping 5.1% in October.

Data on November pending home sales, a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 a.m. ET. In October, he number of homes under contract to be sold fell by a mere 1% year over year. Analysts had expected pending sales to slip by 3.6%.

Also, the Federal Reserve will release the minutes from its Dec. 15-16 policy-making meeting. At that meeting, the Federal Open Market Committee established a target range for the federal funds rate of 0% to 0.25% and said it would likely keep rates at that level for some time.

Wednesday: The House Financial Services Committee meets to discuss how the next administration might make use of the remaining TARP funds, amid criticism that the $700 billion bailout has not been working.

Also Wednesday, a House panel holds an economic recovery plan hearing that will feature testimony from some of the nation's top economists.

Thursday: The nation's chain stores will be releasing December sales reports, giving investors a better sense of how badly the consumer has been hit amid the recession.

Separately, the Fed is slated to release its monthly consumer credit report at 3 p.m. ET. Consumer credit, a measure of consumer borrowing, for November is forecast to show an increase of $0.5 billion. In October, consumer credit fell by $3.6 billion