Satyam Computer Services Limited, the fourth largest IT company in India was exposed , for several years, cooking its books by inflating revenues and profits. The whistle was blown by the Investment bank DSP Merrill Lynch, which was appointed by Satyam to look for a partner or buyer for the company. It terminated its engagement with the company soon after it found financial irregularities. It was found that the promoter-chairman of the company Mr Ramalinga Raju was lying for years to shareholders, employees and the community at large, building up to India's largest ever 'corporate' fraud of over Rs 7,000 crore. Interestingly on January 7, 2009 the disclosure of the fraud was made by Ramalinga Raju himself in his so-called resignation letter, where he accepted that he had been manipulating the company's accounting numbers for years and the following …show more content…
Raju had proposed to shell out $1.6 billion from the company to acquire his son's companies, i.e., Maytas Properties and Maytas Infra. In order to fill the fictitious assets with real ones and once the Satyam's problem was solved the payments of Maytas could be delayed. But it created such a furore that Raju was forced to backtrack his move and the deal was aborted.
• As a result of which law suits was filed in US contesting Maytas deal. The World Bank banned Satyam from conducting business for 8 years due to inappropriate payments to staff and inability to provide information sought on invoices. Four independent directors quit the Satyam Board and SEBI ordered promoters to disclose pledged shares to stock exchange.
• Indian Government in order to save Satyam from the same fate as that of Enron and World Com appointed a new Board of Directors for the company whose main goal was to sell the company within 100 days. Finally on April 13, 2009 Tech Mahindra bought Satyam for $1.13 per
In the beginning of March the newly joint corporation, McKesson HBOC started a negotiating process with Oracle Corporation. Unfortunately for McKesson, the negotiations ended without a contract. On April 1 Bergonzi let Hawkins know that he found an offer that could be a good deal. The agreement would require McKessonHBOC to sell $20 million worth of software to Data General, along with a license and a right to return any inventory that was not sold during the period of 6 months. The corporation would also have to help Data General find customers for the product. In return, they could buy $25 millions worth of computer hardware. The contract was signed on April 5 the same year. The senior management thought that backdating the sales and purchases would raise the company's revenues up to the desired levels. In order to cover their actions, the company created a false delivery receipt that showed the date of the delivery as March 31, 1999, while in reality the product was delivered in April. Both, the information about the $25 Million purchase of hardware from Data General as well as the return agreement concealed from the public.
In March 2001, FORTUNE pointed out that Enron's financial statements were nearly impenetrable. That time, all people began to talking and speculation truth of Enron financial statement. Securities and Exchange Commission also starts to investigation of Enron. At the same time, Andersen destroys Enron audit evidence, eventually also destroy their credibility. They stop to destroy after received the letter of Securities and Exchange
The company purchased Solomon’s business for 39,000 which was an excessive price for its value. His wife and five eldest children became subscribers and two eldest sons also directors.mr Solomon took 20,001 of the company’s 20,007 shares. Transfer of the business took place on June 1,1892. The company also gave Solomon 10,000 in debentures. On the security of his debentures, Solomon received an advance of 5,000 from Edmund Broderip. Soon after Mr Solomon incorporated his business a decline in boot sales, exacerbated by a series of strikes which led the government, Solomon main customer, to split its contracts among more firms to avoid the risk of its few suppliers being crippled by strikes. Solomon business failed defaulting on its interest payment on the debentures. Broderip sued to enforce his security in October 1893. The company was put into liquidation. Broderip was repaid his 5,000. This left 1,055 company assets remaining of which Solomon claimed under his retained
NO FACTORY OWNER WOULD RISK HIS CONTRACT WITH RALPH LAUREN TO SELL PART OF STOCKS TO A SMALL RETAILER IN NIGERIA
In modern day business, there can be so many pressures that can cause managers to commit fraud, even though it often starts as just a little bit at first, but will spiral out of control with time. In the case of WorldCom, there were several pressures that led executives and managers to “cook the books.” Much of WorldCom’s initial growth and success was due to acquisitions. Over time, WorldCom discovered that there were no more opportunities for growth through acquisitions when the U.S. Department of Justice disallowed the acquisition of Sprint.
In 2009, a sale for 51% of stake in Satyam was put through a global bidding process. Tech Mahindra won the bid, paying 17.57 billion rupees for a 31% stake.
The law requires auditors to report any fraudulent activities discovered during the course of an audit to the SEC. This is when Article I of Section 51 of the AICPA Code of Professional Conduct comes into play. The auditor may uncover illegal acts or fraud while auditing the financial statements of a company. In such instances, the auditor must determine his or her responsibilities in making the right judgment and report their discovery or suspicions of the said fraudulent activities. Tyco International is an example of the auditors’ failure to uphold their responsibilities. Tyco’s former CEO Dennis Kozlowski and ex-CFO Mark Swartz sold stocks without investors’ approval and misrepresented the company’s financial position to investors to increase its stock prices (Crawford, 2005). The auditors (PricewaterhouseCoopers) helped cover the executives’ acts by not revealing their findings to the authorities as it is believed they must have known about the fraud taking place. Another example would be the Olympus scandal. The Japanese company, which manufactures cameras and medical equipment, used venture capital funds to cover up their losses (Aubin & Uranaka, 2011). Allegedly, thei...
Rather than being sticklers for following GAAP accounting principles and internal controls, this company took unethical behavior to a whole new level. They lied when the truth would have been easier to tell. It is almost as if they had no comprehension that the meaning of the word ethics is “the principles of conduct governing an individual or a group (professional ethics); the discipline dealing with what is good and bad and with moral duty and obligation”, (Mirriam-Webster, 2011). To be ethical all one has to do is follow laws, rules, regulations and your own internal moral compass, all things this company seemed to know nothing about.
SUN Microsystems Case Analysis Sun Microsystems had an extremely tough decision to make in regards to its procurement strategy. They had to decide if they were going to take on an “E-sourcing” or “dynamic bidding” auction-type strategy with making purchases from their suppliers. Taking on this type of procurement strategy would benefit Sun with cost-savings on procurements, but may jeopardize their supplier relationships and quality of inputs for Sun products. After reviewing the enclosed financial data for Sun from 1996-1999, it is apparent that some trends are consistent. Sun’s cost of goods sold has consistently been around half of their revenue for prior fiscal years, resulting in an approximate gross margin of 50%.
As given in the case, Ranjit Singh, who was the Director of Shri Ranjit Singh and Sons. Ltd. acted as the Managing Agent of Shri Vikram Cotton Mills Ltd. which will hereinafter be referred to as the Company. The Company opened a cash-credit account with the Punjab National Bank and in order that the repayment of the balance is secured at the foot of the account on 27th June, 1953, four documents were executed- three of which were executed by the Managing Agents of the Company and one by Ranjit Singh. The three documents were as follows:
The demand of the strikers was reinstatement of 2 pilots. The refusal of the management was costing it 15 crore per day.
Enron was on the of the most successful and innovative companies throughout the 1990s. In October of 2001, Enron admitted that its income had been vastly overstated; and its equity value was actually a couple of billion dollars less than was stated on its income statement (The Fall of Enron, 2016). Enron was forced to declare bankruptcy on December 2, 2001. The primary reasons behind the scandal at Enron was the negligence of Enron’s auditing group Arthur Andersen who helped the company to continually perpetrate the fraud (The Fall of Enron, 2016). The Enron collapse had a huge effect on present accounting regulations and rules.
Lyke, B and Jickling, M. (2002). WorldCom: The Accounting Scandal. CRS Report for Congress, p2.
The Tyco accounting scandal is an ideal illustration of how individuals who hold key positions in an organization are able to manipulate accounting practices and financial reports for personal gain. The few key individuals involved in the Tyco Scandal (CEO Kozlowski and CFO Swartz), used a number of clever and unique tactics in order to accomplish what they did; including spring loading, manipulating their ‘key-employee loan’ program, and multiple ‘hush money’ payouts.
Because of the unexpected element of the M&A announcement would cause the stock market to react by changing the prices of the affected stocks. According to the EMH, only the stock price of those firms engaging in M&A should see any response of the market, as all available information pertain to other the firms is considered to be unchanged and accessible for anyone and has already been reflected in their prices by the market. Since the unexpected part of the M&A announcement has hypothetically influenced the price, the returns of a stock surrounding this event is deemed not truly a historical reflection. These returns, termed abnormal return by FAMA (1969), can be used to explain the market’s expectation of an M&A, as well as to predict if the acquisition is going to be successful and profitable. Therefore, abnormal returns is the critical factor to determine the efficiency of a market, and to quantify the value creation effect of M&A based on investors’