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The Seeds Of The Satyam Scandal

How B. Ramalinga Raju’s pride–and risk-taking–created India’s Enron.

Until the past few weeks, the corporate headquarters of Satyam Computer Services was an island of calm a short drive outside the bustling city of Hyderabad. Flags of countries representing Satyam’s customers line the driveway leading to the front door. Visitors to its center were treated to a multimedia display that showcased what Satyam felt were its core values: efficiency, flexibility, trust, reliability.

B. Ramalinga Raju, faxed a five-page letter to the company detailing how he’d faked revenues and earnings for years. Read actual letter

It was a horrifying turn for a man long considered one of India’s self-made success stories–and active philanthropists. Other Indian executives are quick to contend this is an isolated case. Even so, a few quietly note that it’s hard to imagine how a publicly traded company, which must comply with U.S. Sarbanes-Oxley disclosure rules, could have been mislead for so long by one or even two individuals.

“This is almost unthinkable,” adds Manish Dugar, chief financial officer at Wipro Technologies in Bangalore. “I’d say it’s very difficult” to pull off such a deception, “even if a lot of people colluded.”

Raju had been a one-of-a-kind man, deeply loyal to his family, patriarchal toward his employees, benevolent to the poor. And yet, suggest some who have known him, Raju grew up in an environment that enjoyed gambling and so ran his career with the bravado of a gambler.

He was born in a tiny village Jalli Kakinada (population: 1,652), 250 miles southeast of Hyderabad. Jalli Kakinada didn’t get electricity until 1965; phones came in 1991. A water purification plant for the whole village just got started within the past few years.

- Source/courtesy : Forbes