On 7 January 2009, Satyam Computer Services Ltd. Chairman Ramalinga Raju resigned after notifying its board members and the SEBI that he had falsified accounts.
He stated that:
"What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.”
Analysts in India have termed the Satyam scandal as India's own Enron scandal. Immediately following the news, Merrill Lynch (Now with Bank of America) terminated its engagement with the company as Credit Suisse suspended its coverage of Satyam. It was also reported that Satyam's auditing firm PricewaterhouseCoopers will be scrutinized for complicity in this scandal. Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance Issues, which was stripped from them in the aftermath of the scandal.
The New York Stock Exchange has halted trading in Satyam stock as of 7 January 2009. India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX Nifty 50-share index from January 12. The founder of Satyam has been arrested two days after he admitted falsifying the firm's accounts. Ramalinga Raju is charged with offences including criminal conspiracy,breach of trust and forgery. Satyam's shares fell to 11.50 rupees on 10/01/2009, their lowest level since March 1998. Last year they hit a high of 544 rupees.
