The above photograph shows Cisco chairman John Chambers and Satyam chairman B. Ramalinga Raju announcing a collaboration that evolved into Satyam Global LifeNet (SGL), a joint venture between Cisco and Satyam. In his resignation letter this week, Satyam chairman B. Ramalinga Raju listed the following financial fraud irregularities on the books of Satyam Computer Services:
|Nonexistent cash and bank balances of $1,026,581,108.66 USD.|
|Nonexistent accrued interest of $77,354,015.41 USD.|
|An understated liability of $253,491,055.26 USD.|
|An overstated debtors position of $100,988,273.72 USD.|
|For the September quarter (Q2) reported revenue was overstated by $121,136,167.40 USD.|
|For the September quarter (Q2) reported operating margin was overstated (surprise) by $121,161,163.62 USD.|
|Artificial cash and bank balances climbed by $121,223,755.01 USD in Q2 alone.|
|According to Satyam chairman - B. Ramalinga Raju, what started as a marginal gap between actual operating profit and the one reflected in the books of Satyam accounts continued to grow over the years. It attained unmanageable proportions as the size of Satyam operations grew significantly (annualized Satyam revenue run rate of $2,318,345,694.63 USD in the September quarter 2008 and official reserves of $1,725,395,210.21 USD). "Every attempt made to eliminate the gap failed. It was like riding a tiger, not knowing how to get off without being eaten," said B. Ramalinga Raju.|
|"The recent unfortunate developments unfolding at Satyam are not expected to have any material impact for Cisco. At this point, we would not like to comment further and have full confidence in the government and regulatory authorities to address this matter as appropriate. "While we had held discussions to explore the possibility of a potential minority investment in one of their subsidiaries (Satyam Global Lifenet), we have not reached any final agreement and are under no contractual obligation to make an investment towards the same."|
Note: When asked for further "clarification" as to why the Satyam Global Lifenet website lists Cisco as an investor and joint venture partner, Cisco reiterated the above 2nd paragraph in its response. Satyam Computer Services Ltd. Stock Chart: Trading in Satyam Computer Services Ltd (NYSE: SAY) was halted on the New York Stock Exchange. The security will remain halted until further notice. Update 01/12/09: Satyam shares resumed trading on the New York Stock Exchange.
Video message from Ram Mynampati - Interim CEO of Satyam Computer Services addressing its financial fraud crisis. Interestingly, Satyam was ranked #3 on the list of top H-1B Visa employers for 2007.
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