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Satyam scandal shocks India

The Satyam scandal has shocked India.

It is being called India’s Enron.

Many in the financial circles are dismayed that the biggest-ever corporate fraud in the country could have escaped unnoticed for so many years.

It has brought into question the levels of corporate governance in the country, and has cast an ugly shadow on the once shining image of Indian industry overseas.

Investors stunned

For the last couple of days outside the Bombay Stock Exchange, all anyone can talk about at the chai stalls and sandwich stores is how Ramalinga Raju, the former boss of Satyam Computers, managed to rack up a billion-dollar fraud right under their noses.

Investors in Indian shares were stunned by Mr Raju’s revelation, in a letter to the stock exchange this Wednesday, when he confessed his wrongdoing and admitted that he had effectively cooked the books of his firm for the last several years.

Satyam’s shares plummeted on the news by 75%, dragging down India’s stock main market by 7%.

“I can’t believe it,” says investor Rajiv Gupta outside the stock market.

“It’s very worrying, and it’s happened at the worst possible time. Markets here were just started to look like they were recovering. But this news - it is very very bad.”

Ashok Bakliwal, another investor, agrees:

“This will put the spotlight on Indian companies, and overseas investors will be wary of putting their money here without taking a good, hard look at the company’s books.”

“As if India wasn’t going through enough of a bad time - now this? I really don’t know what will happen next. How could a fraud of this magnitude take place and go unnoticed? ”