A Review on Satyam Computer Failure Lessons for Corporate Governance and World

Abstract

Satyam scam has been the greatest scam in the history of corporate world of the India. Satyam is the fourth largest IT Company in India. The CEO of the company has made a scam of around $2 billion; it appears that corporate accounting fraud is a major problem that is increasing both in its frequency and severity. The Satyam scam shockwaves also impacted the entire auditing structure of Indian Corporate world. The scam has added to a notorious list of companies involved in fraudulent financial activities, one that includes such names as Enron, WorldCom, Societe General, Parmalat, The increasing rate of white-collar crimes demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit. The fraud committed by the founders of Satyam in 2009, is a testament to the fact ― the science of conduct is swayed in large by human greed, ambition, and hunger for power, money, fame and glory. In the aftermath of the Satyam scandal, that has tested the efficacy of corporate governance norms in India; the existing framework fails to satisfactorily address the shortcomings in the prevailing regime. The Satyam scandal highlights the importance of securities laws and corporate legislation in emerging markets. Indeed, Satyam fraud spurred the government of India to tighten the corporate legislation norms to prevent recurrence of similar frauds in future. Satyam scandal has had a deep impact on how we construe “Corporate Governance”. Though it is well recognized that corporate governance is about “transparency”, “efficacy” and “accountability” but now the concerns are about the changing paradigm of corporate governance. Thus, major financial reporting frauds need to be studied for “lessons-learned” and “strategies-to-follow” to reduce the incidents of such frauds in the future.

Keywords: Satyam Computers, Corporate Governance, Accounting, Auditing Standards, Accounting Frauds, Corporate Frauds