Satyam Case Study - Management Issues

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Satyam Computer Services is a global IT service company with clients including Telstra, Coca-Cola, Qantas, NAB and Suncorp. Satyam was once a leader in IT services in India until pressures to keep up with the growing outsourcing industry overwhelmed the company. This convinced company chairman Raju to falsify operation figures, embezzle funds and purchase lands resulting in fraud. Raju’s admission to fraud in 2009 caused Satyam share value to drop by 70% and the collapse of the Indian stock market with a dramatic 7% plummet in one day. There are several management issues within this case including unethical behaviour of Raju, fraud, corporate governance, cultural relativism and corporate social responsibility. Ramalinga Raju, Chairman and founder of national Indian IT services company Satyam, admits to fraud in 2009 resulting in share value depletion, diminished public trust and loss of credibility. A massive rebuild of the company must be initiated by the appointment of new company directors, by regaining trust of public and investors, and re-establish the company image within the IT services industry. Management Issues

Unethical acts of fraud committed by Satyam chairman Raju have resulted in loss of company image and loss of trust from customers, investors, stakeholders and the public. Raju had fabricated an estimated 94% of Satyams cash and assets, he was paying salaries of US$4 million to 13000 fictitious staff and using these company funds to purchase land in another family company’s name. Corporate governance was one of Satyam’s biggest management issues. Raju made decisions without consult from the board of directors and relevant stakeholders within the organisation, committing acts that were unlawful. Satyam’s auditor PricewaterhouseCoopers must hold some accountability in this case as they did not discover the extensive fraudulent activities earlier. Current corporate governance, auditing and legal consequences are obviously...
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