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India vows to end corporate fraud
India vowed to strengthen laws to prevent corporate fraud after Satyam Computer, the country's fourth-largest software company, shocked investors by revealing profits had been falsely inflated for years.
- Reuters
- Published: 23:38 January 8, 2009
Hyderabad: India vowed to strengthen laws to prevent corporate fraud after Satyam Computer, the country's fourth-largest software company, shocked investors by revealing profits had been falsely inflated for years.
Chairman Ramalinga Raju resigned on Wednesday after revealing India's biggest corporate scandal in memory, sending the company's shares plunging nearly 80 per cent.
Investigators were expected to swoop on the company's headquarters in Hyderabad in southern India yesterday to search for clues on how the fraud could have been hidden for so long.
"The government will take all necessary action to ensure these types of scandals do not take place again. Whatever steps could be taken will be taken," Corporate Affairs minister Prem Chand Gupta told Reuters late on Wednesday.
The scandal has cast a cloud over foreign investment in Asia's third-largest economy and over its once-booming outsourcing sector, which posted stunning sales growth for years and lavished investors with handsome returns.
It may increase investor nervousness about weak corporate governance and oversight in emerging markets.
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