An interesting week in India unfolded as the justice and financial oversight processes continued their ponderous attempts to untangle Ramalinga Raju’s Satyam scam. It has been a year and a half since the founder of India’s fourth largest IT outsourcer and anointed poster child for 21st Century “India Inc.” announced to the world that he had been cooking Satyam’s books for over 10 years of business. Taking the high road, he declared that he had “inflated profits” rather than embezzling the money.
This week, Governancenow.com’s Gitanjali Minhas reports on Satyam’s use of its financial and accounting systems to “paper over” fraudulent accounts payable in the range of $580 million (US), in addition to the $2.1 billion (US) accounting fraud admitted to by Raju in January 2009.
It appears Satyam recruited its own programming teams to assist in the fraud — going so far as to implement changes to its SAP-supplied ERP to pay false invoices from fictitious companies — that Raju also created to back-up the authenticity of those invoices — “out of workflow” (as it is referred to among SAP programmers). More importantly, this effort was not directed towards hiding losses (a common motive among more garden variety crooks like at AIG), it was directed towards hiding profits.
By the way, did we mention that Satyam is really good at implementing SAP financial and accounting systems for its clients? It is so good at it that it has secured a great deal of outsourcing business from Fortune 500 companies world-wide to do just that. For its trouble, Satyam has received recognition from SAP itself. In fact, Satyam’s relationship with the World Bank and former CIO Mohammed Muhsin was based on Satyam’s SAP skills. Just saying.
The writer is an expert in this field whose identity must remain confidential.