Satyam Computer Services: $1B Fabricated Cash and Ghost Employees
Satyam Chairman B. Ramalinga Raju confessed that 94% of the company's reported cash balance (over $1 billion) was entirely fictitious, inflated by 7,561 fake invoices and non-existent interest income.
- Target Issuer: Satyam Computer Services Ltd. (IN).
- Fraud Period: January 1, 2003 to December 31, 2008.
- Reported Overstatement: $1.0B.
- Total Fines & Penalties: $290.0M.
- Maximum Incarceration: 7 years (84 months).
- Independent Auditor: PricewaterhouseCoopers LLP.
- Primary Schemes: fictitious revenue, fictitious cash and assets, audit failure.
- Enforcement Status: ADJUDICATED (admitted).
ACCOUNTING MECHANICS FOR THIS CASE
HOW IT WAS DONEIn settled proceedings with admissions, the regulator found that Raju and coconspirators created thousands of fake customer accounts and generated monthly invoices in an internal software tool called 'Excel Bill'. The corresponding revenue was recognized in audited accounts, and the receivables were periodically marked as paid into fake fixed-deposit bank accounts at Citibank, HSBC, and Bank of Baroda. Satyam forged bank balance confirmation certificates that independent auditors accepted without direct confirmation.
CHARGED RESPONDENTS & OUTCOMES
2 NAMED PARTIES| Respondent | Role | Disposition & Judicial Outcome | Prison | Civil Penalty | O&D Bar |
|---|---|---|---|---|---|
| Satyam Computer Services Ltd. | ISSUER | Taken over by Indian government and auctioned to Tech Mahindra. | None | $0 | No |
| B. Ramalinga Raju | CEO | Convicted of criminal breach of trust, forgery, and cheating; sentenced to 7 years imprisonment. | 84 mos | $0 | BARRED |
RED FLAGS OBSERVED PRIOR TO DISCOVERY
EARLY SIGNALSENFORCEMENT ACTIONS & PRIMARY DOCKETS
PRIMARY SOURCE CITATIONSSEBI Order Against B. Ramalinga Raju and Satyam Promoters
SEBI ordered Raju and accomplices to disgorge Rs 1,849 crore in unlawful gains plus 12% annual interest.
TIMELINE OF EVENTS
CHRONOLOGYMajor corporate accounting scandals frequently intersect with parallel financial crime domains. For violations outside financial reporting scope, explore the companion reference libraries in our open research series:
Consumer fraud, advance fee fraud, romance scams, phishing, social engineering, impersonation
Placement, layering, integration, trade-based money laundering, smurfing, shell companies, bank secrecy
OFAC enforcement, dark fleet shipping, transshipment hubs, export control violations, circumvention networks
Spoofing, pump and dump schemes, wash trading, front running, insider trading, benchmark fixing
Offshore tax havens, transfer pricing abuse, carousel fraud, undeclared foreign accounts, aggressive tax shelters