Outsourcing Giant Admits Cooking The Books
RENEE MONTAGNE, host:
NPR's business news starts with the financial scandal rocking India.
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MONTAGNE: Police this morning are standing guard outside the home of one of India's most prominent business figures. The head of one of the country's top technology companies resigned yesterday after admitting he had cooked his books to the tune of $1 billion. It's been called one of India's biggest corporate scandals, and the fallout is being felt in the United States. NPR's Philip Reeves reports.
PHILIP REEVES: Satyam Computers was supposed to be a showpiece. It has a glittering headquarters in the Indian city of Hyderabad, befitting India's fourth-largest software company. It has more than 50,000 employees and an impressive list of clients, many in the U.S., some Fortune 500. Today, clients and investors are digesting the stunning news that Satyam's 54-year-old chairman, Ramalinga Raju, has for years, on a gigantic scale, been quietly inflating the figures.
Raju penned his confession in a letter in which he took sole responsibility for the fraud. He resigned and said he was submitting himself to the full force of the law. He tried to fix the fraud, but couldn't. He said it had been like riding a tiger. Not knowing how to get off without being eaten.
India has reacted with shock. Its stock market plummeted with the news. Satyam's share value dropped by 80 percent. There are concerns the scandal will discourage foreign companies from outsourcing to India. There are worries, too, that it'll generally dent foreign investor confidence at a time when, like everybody, India is trying to weather the fallout of the global economic meltdown.
Today, India's newspapers are full of angry questions about how Raju got away with his fraud for so long. One stands out. Why, they want to know, didn't the auditors spot anything? Philip Reeves, NPR News. Transcript provided by NPR, Copyright NPR.
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