The Resurgence of Satyam: The Global IT Giant

By Zafar Anjum

Random House, India, 384 pages, £15.99

Satyam in Hindi means truth. However, what we are talking about is the biggest lie — a $1.5 billion (Dh5.5 billion) accounting fraud committed by Satyam Computer Services’ founder and chairman B. Ramalinga Raju.

He had been inflating the books of Satyam quietly from 2001 to 2008 by planting electronically created fictitious order receipts. Then Raju and his accomplices forged letters from banks to external auditors. By January 2009, when Raju admitted the fraud, there was a $1.5 billion hole in its books — it became too big to hide!

It is the world of business that preaches values, ethics, transparency, accountability and corporate social responsibility. However, deep down, businesses are guided by profits and greed, more often than not compromising these values. The story of Satyam — which makes a mockery of its name — is one such. Its corporate culture was instilled by the same person who carefully carried out the biggest fraud in the history of corporate India! That is why most people who know Raju can’t believe he did it.

Raju’s fall from grace when he announced his resignation on January 7, 2009, admitting the fraud committed by him, was the biggest shock faced by corporate India. It raised a number of questions about the survival of Satyam, corporate governance, compliance and the government’s ability to handle corporate fraud and possible failure among others. In many ways, it was a test for India Inc and the regulators.

Although as the name suggests, the book, “The Resurgence of Satyam”, by Singapore-based journalist Zafar Anjum, is not only about the corporate fraud, but the turnaround of the company following the government’s intervention and later a takeover by Tech Mahindra following a transparent auction three months later.

After the takeover by Mahindra, the company was renamed Mahindra Satyam, and the rest is history. The synergy would eventually help the company become one of the biggest IT services companies in India. However, throughout the book, Anjum cannot not stop discussing the unbelievable fraud committed by its founder.

One question remains, though — to which no one seems to care to find an answer — and that is: Why on earth did Raju commit this fraud? Was he under pressure to keep the shareholder value — stock prices of the company — up?

Anjum tries to answer that, but without a definite conclusion. The answer could lead to a Hollywood thriller on financial crimes. There are indications that Raju and his family benefited by more than Rs10 billion (Dh668 million) by selling 15 million of the family shares at an average price of Rs700 per share. If the motive was to keep the share price high by cooking up an inflated balance sheet so that the family of the founder and chairman could cash in on it, then that could merit a thriller. However, those who know Raju doubted that as a possible motive. The question remains — why do it, then?

No matter how you look at it, Anjum says, “Satyam’s is an extraordinary story”, — indeed. “Never before in India’s history had someone inflated the company books by $1.5 billion. It is also the story of a company that went to hell and came back …”

The beauty of the whole saga is that the fraudster Raju himself blew the whistle and surrendered himself to law. It wasn’t unearthed by investigative journalists or government agencies.

The only jarring note to this story is what happened, or actually, did not happen, Anjum says. “When the scandal broke out, everyone said Raju and his accomplices deserved harsh punishment for carrying on the mega fraud. But the mastermind got out of jail on medical grounds on August 18, 2010.”

On November 4, 2011, Raju along with his brother Rama Raju and former CFO V. Srinivas were granted bail by the Supreme Court of India, because charges had not been filed against them, even though they were in jail for two years and 8 months.

At present he lives a quiet life in Hyderabad, rich enough to maintain a healthy lifestyle.

Was it a calculated risk taken by Raju? Raju was very farsighted, Anjum explains. He had the ability to take risks and then follow them through to the last details on the execution.

“Perhaps, after all, Raju’s calculations were correct. Perhaps, being the shrewd man that he is, he knew that by confessing his crime he would escape with light punishment. Perhaps he knew how the system could be played,” Anjum says.

Reading the whole saga I was left wondering about the persona of Raju. “Successful performers, for good and sometimes for ill, know how to play a role,” management guru Tom Peters says. They don a persona — a mask of leadership that commands others to follow.”

In discussing persona, Peters gives three examples: George Washington, Barack Obama and Bernard Madoff — who weaved the mother of all frauds in modern financial world. “I think, Raju’s case is similar to that of Madoff’s,” sums up Anjum.

On Madoff, Peters says, “It was a product of a very carefully concocted persona acted out without let-up or slip-up for decades.” It sounds true in Raju’s case too.

Had Satyam been an American company, Hollywood producers would have lined up blockbusters by now. However, Mumbai is no Wall Street. Neither can Bollywood make a film on financial fraud, the way Hollywood does. To make things worse, there are no roles of females to spice it up with song and dance — a formula on which Hindi commercial films rely for success. However, the story of Satyam has all other ingredients of a blockbuster.