Page 66 - Veritas Vol 3, Issue 2

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CORPORATE FRAUD

CASES: LESSONS

LEARNED AND

PRECAUTIONS

Corporate fraud is the term used to describe any unethical, unlawful, or

deceitful acts carried out by a corporation or by a person working for the firm.
Consumers or clients, creditors, investors, other firms, and ultimately the

crime's originating company and its staff are the victims of corporate fraud.
Fraudulent accounting techniques are a common component of corporate fraud

schemes, which aim to inflate a company's perceived profitability. Corporate
fraud may also result from product flaws or issues that a company seeks to
conceal. The government's regulatory agencies work to prevent, identify, and

penalise corporate fraud through laws and regulations. Corporate fraud
incidents have been reported on a number of occasions as a result of the growth

of massive, multinational organisations and conglomerates.

The Satyam Computer (Satyam) Case: The Satyam fraud exposed the gaps in

India's corporate governance laws once more, and SEBI's negligence once more
proved to be disastrous for small investors. Here, B Ramalinga Raju, the

company's founder and previous chairman, and his brother B Rama Raju
deceived the board, investors, and other shareholders. The company's financial

situation and investment were misrepresented in its accounts. By falsifying the
amount in the books of accounts, Mr. Ramalinga embezzled money from the

firm and invested in real estate around the country. As a result, the company's
share price skyrocketed but its core values stayed the same. Mr. Ramalinga was
eventually found guilty of this because he was unable to sell the properties he

held to close the gaps in the books of account due to the real estate market's
decline in value. Rs. 7,136 crores were lost in the Satyam scam. The fraud

revealed a network of individuals, ranging from auditors to the board of
directors, who helped to enable the crime.

VERITAS VOLUME: 3, ISSUE: 2 WRITER: R V ISHITHA REDDY