Satyam Tech Center; Photo by Ranjit Nair
Roughly two years ago, Ramalinga Raju, the CEO of Satyam Computer Services, confessed to his board
that the company -- the fourth largest IT outsourcer in India at the time -- was insolvent. Approximately $1 billion in assets, Raju admitted
then, did not exist. Satyam, an acclaimed good corporate citizen, collapsed spectacularly, earning itself the moniker “India’s Enron”
in a few short weeks.
Defrauded investors filed a series of lawsuits, and criminal charges sent Raju, his PriceWaterhouseCoopers auditors
, and other Satyam officers to jail to await trial. There they remain, while the Securities and Exchange Bureau of India untangles the web of false invoices, inflated payrolls, fraudulent accounts, doctored balance sheets and offshore businesses that surround the Satyam debacle.
The company had enjoyed a meteoric rise in the corporate outsourcing business that began with its surprising selection as the principal IT vendor for the World Bank’s internal information technology work. In the late 1990s, Satyam was an obscure, mid-size, family-owned IT company headquartered in Hyderabad, India. There it was discovered by Mohamamed V. Muhsin, Chief Information Officer (CIO) of the World Bank. Muhsin, at the instigation of James Wolfensohn, had assumed the responsibility for establishing the IT architecture of the Bank. For reasons that remain somewhat unclear, he enlisted Satyam in the enterprise, selecting it over larger and better-known companies. In the digital hysteria leading up to following the Y2K scare, Satyam received a flow of ever-larger contracts from the bank, and rumors began to circulate in Muhsin’s department that held a financial interest in the company.