The chairman of an Indian outsourcing company that serviced Fortune 500 companies has resigned after confessing to falsifying over $1 billion worth of the Indian outsourcing giant's books and assets.
Satyam Computer Services chairman Ramalinga Raju admitted that the majority of the cash and bank loans listed as assets were fictitious in the company's second fiscal quarter, leaving a hole of over $1.04 billion on its balance sheet. "It is with deep regret, and tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice," Raju (pictured) began in a letter to the board. He then listed the numerous discrepancies between the books and reality.
"What started as a marginal gap between actual operating profit and the one reflected in the books of accounts has continued to grow over the years," he added. "It has attained unmanageable proportions as the size of company operations grew significantly."
The company handles outsourcing for more than a third of Fortune 500 companies, including computer work and customer services for companies including General Motors and GE, according to The New York Times. For some companies, Satyam also performs accounting and financial services work.
Other Indian outsourcing companies have been tainted by the scandal, and it has called into question the effectiveness of the Indian financial and accounting regulatory system. U.S. accounting firms could also be affected. The company has been audited by PricewaterhouseCoopers and is listed on the New York Stock Exchange.
Questions about Satyam have swirled since the World Bank canceled its contracts with the company after discovering that Satyam had planted spyware on its computers.
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