7. Major Reasons of Corporate Frauds in India
Weak Financial Control leads to poor performance.
Poor Performance Companies as due to poor compensation don’t have
qualified internal audit department, internal control and checks.
Poor Performance Companies are Defaulters of banks/ financial institution.
Profit making company absorbs debts, loans and advances, fixed assets and
investments to achieve tax planning.
Additional disclosures in financial statements reduces or prevent fraud.
Proper and complete disclosures give complete picture of any financial
Mergers and Amalgamations provide an opportunity to commit fraud
8. Major Corporate Scams after existence of SEBI
Total amount involved in corporate frauds- Rs. 50,414 Crore
Harshad Mehta securities scam
Preferential allotment scam
Virender Rastogi scam
Ketan Parekh securities scam
Reebok Shoes Company scam
National Spot Exchange Limited scam
YEARNO Name of the Scam AMT
12. Impact of scam
Reebok sales declined 26
per cent on a currency-
Reebok brand’s revenue in the
quarter 2011-2012 was at 336
million euro as against 427
million euro in the year- 2010-
SATYAM COMPUTER SERVICE LIMITED
Founded in 1987 by MR.B RAMALINGA
The company offers consulting and information technology
The company was listed with
New York stock exchange
national stock exchange
Bombay stock exchange
16. People behind satyam scam
Ramalinga raju :satyam former chairman
B Rama raju: Brother of Ramalinga raju
V srinivas :Ex-chief financial officer
S gopalakrishna :price Waterhouse auditor
Talluri srinivas :price Waterhouse auditor
17. Reason for satyam scam
He was blamed that he was using the funds of the investors for
the family business
Raju wanted to take over his MAYTAS INFRA and MAYTAS
PROPERTIES(Company of his sons)
World bank had banned the satyam to take any services for 8
years (due to illegal profit and lack of essential document).
18. What crime he has constituted ?
1) Raju and his brother, B Rama Raju, were arrested by the
Andhra Pradesh police on charges of breach of trust,
conspiracy, cheating, falsification of records
2) Raju has mislead various investors.
3) Raju had also used dummy accounts to trade in Satyams
4) He has violated the insider trading norm.
5) Funds from Satyam were diverted to Maytas
6) On 22 January 2009, CID told in court that the actual number
of employees is only 40,000 and not 53,000 as reported earlier
and that Mr Raju had been allegedly withdrawing INR 20 corer
rupees every month for paying these 13,000 non-existent