Page 67 - Veritas Vol 3, Issue 2

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The 2009 Satyam Computers books of accounts revealed a profit of Rs. 5,200

crores, although the actual profit was only Rs. 4,100 crores, with a growth
percentage of 3% as opposed to 24% as shown in the company's books.

Investors were drawn to purchase a part in the firm due to its remarkable
improvement in the fundamentals, which at the time appeared to be highly

promising. Following his confession, Mr. Ramalinga and his brother were
sentenced to seven years in prison and a fine of Rs. 5 crores

LESSONS LEARNED :

Some key takeaways from the Satyam include::
Absence of ethical leadership: The senior executives at Satyam participated

in a culture of greed, dishonesty and immorality.
Ineffective board of directors: The board of directors exhibited impartiality

and was unable to effectively supervise the management.
Regulatory shortcomings: At the time, the regulatory framework was

insufficient to stop the companies’ misconduct.
The relevance of independent directors: The significance of independent

directors on the board of directors was brought to light by the Satyam
controversy.

Need for whistleblowing techniques: Whistleblowing strategies are necessary
since it is imposed upon employees to disclose unethical behavior.

PRECAUTIONS THAT CAN BE TAKEN :

Establish an anti-fraud policy and ensure that all staff members are
informed about it.

Regularly check your financial accounts through audits.
Encourage staff members to report any unusual activities.

Stay up to date on any legal developments that might impact your business.

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