Case Analysis

Satyam Case Analysis

Satyam is an Information Technology Consulting company based in India and was founded by two brothers, B. Rama Raju and B. Ramalinga Raju in 1987. As a company, Satyam had seen much success in terms of reputation as they were highly praised for their corporate governance practices. The awards won for their corporate governance practices were ultimately nullified as the company Chairman wrote a letter to sponsors, investors and executives detailing the deceitful actions made by himself and members of his immediate circle. His letter listed the different ways he and his associates committed fraud in the company’s name; not only were his admissions unfortunate, they were also ironic for the fact that they received awards praising their compliance practices and that the word “Satyam” means truth in an Sanskrit. Mr. Raju had disregarded truth for over two decades of time before finally admitting his mistakes.

Satyam was a ranked fourth-largest software development and IT consulting company in 2008 before the letter of resignation and confession had been written. With hindsight always being 20/20, there were many problems with how the company could have better managed their finances and business operations, however, I have provided a list of these problems along with a few recommended changes that should been made. The first mistake the company made was not ensuring a solid system of checks and balances. The board of directors was comprised of ten members; of this ten only six were independent directors. The lack of outside directors affected them because it provided more room for bias judgment and limited the amount of people to check unwise decisions before they were made. Additionally, of the outside owners, only a few of them attended all the meetings in which many of the falsified decisions were proposed and discussed, another negative affect of having too little independent director presence. The outside influence would have provided better...