Corporate Fraud Schemes

Financial Forensic Investigation

Introduction

Any type of fraud by an organization will have a negative impact on the business, individuals, investors and communities. Some might get away with the fraud but once caught, it will damage the image of the organization. The customer will lose the trust in the organization and employees will be not proud to be associated with an organization that's reputation is going down the drain. The organization that I have identified involved in a corporate fraud is Satyam Computers that is India's fourth largest information technology company (IT) outsourcing company. 

Discussion

The Fraud

B. Ramilinga Raju , The ex chairman of Satyam computer service attested to heading the $1.2 billion fraud. Central Bureau of Investigation released a 200 page report which showed that Raju and his nine accomplices had embezzeled around $2.5 billion and piped it down to buy property and assets.Properties included commercial plots in different areas of India. and were bought under the name of 80 shell companies. Also it said that Satyam insiders said they faked board resolutions so that they could acquire bank loans worth $260 million that was solely for their own personal use.It also stated that Satyam over the previous years had created fake customer identities and account statements that had raised its revenues by millions .It also increased company's share price as well .They also falsifeied their profits , showing and increased number in their books.

The fraud unfolded in December 2008 as Satyam declared acquisition of the two $1.6 billion company of Maytas Properties and Maytas Intra. They were operated by Raju's son and he declared it to be a great diversification strategy. He said would go ahead even without the shareholders consent.Investigators claim that Raju wanted to buy the companied because they contained many of the illegitimazed properties and this move to incorporate them into Satyam would have covered up his tracks forever.This however did not suit well with a lot of Satyam's foreign stakeholders who owned 47% and they were antagonized and questioned the deal. They dumped the stock whic caused a staggering drop of 50% in the shares.Saatyam was thus forced to cancel the acquisition and then Raju confessed unable to hide the fraud any longer, confessed in 3 weeks. The auditors of Satyam PricewaterhouseCoopers (PwC), were accused of being involved and found guilty by USA.

Analysis of the Fruad

The aquistion deal proposed by was the alarming factor. This ...