Important regulatories o IRDA o TRAI o SEBI o DGCA

Important scams o ENRON o WORLD COM o SATYAM

MISSION STATEMENT OF THE AUTHORITY (IRDA)

To protect the interest of and secure fair treatment to policyholders; To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy; To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates; To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery; To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players; To take action where such standards are inadequate or ineffectively enforced; To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation.

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) (b) (c) a Chairman; five whole-time members; four part-time members,

(all appointed by the Government of India)

TRAI History
The policy of liberalisation that was embarked by Prime Minister P. V. Narasimha Rao in the 1990s helped the Indian Telecom sector to grow rapidly. The government gradually allowed the entry of the private sectors into telecom equipment manufacturing, value added services, radio paging and cellular mobile services. In 1994, the government formed the National Telecom Policy (NTP) which helped to attract Foreign direct investments and domestic investments. The entry of private and international players resulted in need of independent regulatory body. As a result, The Telecom Regulatory Authority of India was established on 20 February 1997 by an act of parliament called "Telecom Regulatory Authority of India Act 1997". The mission of TRAI is to create and nurture an environment which will the enable quick growth of the telecommunication sector in the country. One of the major objective of TRAI is to provide a transparent policy environment. TRAI has regularly issued orders and directions on various subjects like tariff, interconnections, Direct To Home (DTH) services and mobile number portability. In 2000, the Telecom Disputes Settlement Appellate Tribunal (TDSAT) was constituted through an amendment of the 1997 act, through an ordinance. The primary objective of TDSAT's establishment was to release TRAI from adjudicatory and dispute settlement functions in order to strengthen the regulatory framework. Any dispute involving parties like licensor, licensee, service provider and consumers are resolved by TDAST. Also, any direction, order or decision of TRAI can be challenged [2] by appealing in TDSAT. [edit]Board Per the "Telecom regulatory Authority of India (Amendment) Act, 2000", the authority shall have no more than two whole-time members as well as two part-time members. As of 2011, members are:

Name

Designation

Dr. J S Sarma

Chairman

R. Ashok

Whole time member

R.K.Arnold

Whole time member

H.S. Jamadagni Part time member

Part time member

SEBI
History
It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the business district of Bandra Kurla Complex complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata,Chennai and Ahmedabad. Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947. Initially SEBI was a non statutory body without any statutory power. However in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the securities and Exchange Board of India Act 1992. In April, 1998 the SEBI was constituted as the regulator of capital market in India under a resolution of the Government of India. The SEBI is managed by fix members, i.e. by chairman which is nominated by central government & members, i.e. officers of central ministry, one member from RBI & remaining two are nominated by central government. The office of SEBI is situated at Mumbai with its regional offices at Kolkata, Delhi & Chennai.

Functions and responsibilities

SEBI has to be responsive to the needs of three groups, which constitute the market: the issuers of securities the investors the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is presently headed by a former Chief Justice of a High court Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court. SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required under law. SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown [citation needed] [when?] and the Satyam fiasco. It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. More recently, in light of the global meltdown,it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI [5] has increased the application limit for retail investors to Rs 2 lakh, from Rs 1 lakh at present.

[edit]Powers For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are: 1. to approve bylaws of stock exchanges. 2. to require the stock exchange to amend their bylaws. 3. inspect the books of accounts and call for periodical returns from recognised stock exchanges. 4. inspect the books of accounts of a financial intermediaries. 5. compel certain companies to list their shares in one or more stock exchanges. 6. levy fees and other charges on the intermediaries for performing its functions. 7. grant licence to any person for the purpose of dealing in certain areas. 8. delegate powers exercisable by it. 9. prosecute and judge directly the violation of certain provisions of the companies Act.

Controversies
Supreme Court of India heard a Public Interest Litigation (PIL) filed by India Rejuvenation Initiative that had challenged the procedure for key appointments adopted by Govt of India. The petition alleged that, "The constitution of the search-cum-selection committee for recommending the name of chairman and every whole-time members of SEBI for appointment has been altered, which [6][7] directly impacted its balance and could compromise the role of the SEBI as a watchdog." On 21 November 2011 the court allowed the petitioners to withdraw the petition and file a fresh petition pointing out constitutional issues regarding appointments of regulators and their independence. The Chief Justice of India refused to the finance ministrys request to dismiss the PIL and said that the [6][8] court was well aware of what was going on in SEBI. Further, it came into light that Dr KM Abraham (the then whole time member of SEBI Board) had written to the Prime Minister about malaise in SEBI. He said, "The regulatory institution is under duress and under severe attack from powerful corporate interests operating concertedly to undermine SEBI". He specifically said that Finance Minister's office, and especially his advisor Omita Paul, were trying to influence many cases before SEBI, including those relating to Sahara Group, Reliance, Bank [9][10] of Rajasthan and MCX.

ESTABLISHMENT OF SEBI The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. PREAMBLE The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto"

DGCA

The Directorate General of Civil Aviation (DGCA) is the Indian governmental regulatory body for civil aviation under the Ministry of Civil Aviation. This directorate investigates aviation accidents and [1] incidents. It is headquartered along Sri Aurobindo Marg, opposite Safdarjung Airport, in New [2] Delhi.

Vision
Endeavour to promote safe and efficient Air Transportation through regulation and proactive safety [3] oversight system. [edit]Departments These are classified and divided into the following:- I. ADMINISTRATION DIRECTORATE. II. AERODROME STANDARDS DIRECTORATE. III. AIR SAFETY DIRECTORATE. IV. AIR TRANSPORT DIRECTORATE. V. AIRWORTHINESS DIRECTORATE. VI. FLIGHT STANDARD DIRECTORATE. VII. INFORMATION & REGULATION DIRECTORATE. VIII. AIRCRAFT ENGINEERING DIRECTORATE. IX. DIRECTORATE OF FLIGHT CREW LICENSING. X. TRAINING SECTION. XI. FG SECTION. XII. MEDICAL SECTION. [edit]Regional

offices

DGCA has fourteen Regional Airworthiness Offices (RAO) at Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Cochin, Bhopal, Lucknow, Patna, Bhubaneshwar, Kanpur, Guwahati and Patiala. It has also five Regional Air Safety offices located at Delhi, Mumbai, Chennai, Kolkata and Hyderabad. It has a Regional Research and Development Office located at Bangalore and the Gliding [4] Centre at Pune . [edit]Corruption

charges in Fake license scam

The Director General of Civil Aviation faced charges of corruption in April 2011, after 14 pilots flying [5] for several airlines were found to have forged their licenses. Additional director at the DGCA , Pradeep Kumar, and also Jyoti Bhattacharya and Mohammed K Ansari, dealing with cash and [6] [7] finances , have been arrested . However, it was found that the files containing the records of [8] several pilots had disappeared from the DGCA offices . There were calls for a thorough investigation [9] of the DGCA "top brass" .

Our Vision
Endeavour to promote safe and efficient Air Transportation through regulation and proactive safety oversight system.

ENRON
The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was [1] attributed as the biggest audit failure.

Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives not only misled Enron's board of directors and audit committee on high-risk accounting practices, but also pressured Andersen to ignore the issues. Shareholders lost nearly $11 billion when Enron's stock price, which hit a high of US$90 per share in mid-2000, plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and rival Houston competitor Dynegy offered to purchase the company at a fire sale price. The deal fell through, and on December 2, 2001, Enron filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Enron's $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history until WorldCom's bankruptcy the [2] following year. Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's auditor, Arthur Andersen, was found guilty in a United States District Court, but by the time the ruling was overturned at the U.S. Supreme Court, the firm had lost the majority of its customers and had shut down. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were enacted to expand the accuracy of financial reporting for public [3] companies. One piece of legislation, theSarbanes-Oxley Act, expanded repercussions for destroying, altering, or fabricating records in federal investigations or for attempting to defraud [4] shareholders. The act also increased the accountability of auditing firms to remain unbiased and [3] independent of their clients. Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and [1] paper companies, with claimed revenues of nearly $101 billion in 2000. Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the "Enron scandal". Enron has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the SarbanesOxley Act of 2002. The scandal also affected the wider [2] business world by causing the dissolution of the Arthur Andersen accounting firm. Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004, pursuant to a court-approved plan of reorganization, after one of the biggest and most complex bankruptcy cases in U.S. history. A new board of directors changed the name of Enron to Enron Creditors Recovery Corp., and focused on reorganizing and liquidating certain operations and [3] assets of the pre-bankruptcy Enron. On September 7, 2006, Enron sold Prisma Energy International [4] Inc., its last remaining business, to Ashmore Energy International Ltd. (now AEI).

WorldCom
MCI, Inc. (d/b/a Verizon Business) is an American telecommunications subsidiary of Verizon Communications that is headquartered in Ashburn, Virginia. The corporation was originally formed as a result of the merger of WorldCom and MCI Communications, and used the name MCI WorldCom followed by WorldCom before taking its final name on April 12, 2003 as part of the corporation's emergence from bankruptcy. The company formerly traded on NASDAQ under the symbols "WCOM" (pre-bankruptcy) and "MCIP" (post-bankruptcy). The corporation was purchased by [1] Verizon Communications with the deal closing on January 6, 2006, and is now identified as that company's Verizon Business division with the local residential divisions slowly integrated into local Verizon subsidiaries. MCI's history, combined with the histories of companies it has acquired, echoes most of the trends that have swept American telecommunications in the past half-century: It was instrumental in pushing legal and regulatory changes that led to the breakup of the AT&T monopoly that dominated American telephony; its purchase by WorldCom and subsequent bankruptcy in the face of accounting scandals was symptomatic of the Internet excesses of the late 1990s. It accepted a proposed purchase by Verizon for US$7.6 billion. For a time, WorldCom was the United States's second largest long distance phone company (after AT&T). WorldCom grew largely by aggressively acquiring other telecommunications companies, most notably MCI Communications. It also owned the Tier 1 ISP UUNET, a major part of [citation needed] the Internet backbone. It was headquartered in Clinton, Mississippi, before being moved to [2][3] Virginia.

WorldCom Case Study Update 2006

Read the original case.

by Edward J. Romar, University of Massachusetts-Boston, and Martin Calkins, University of Massachusetts-Boston In December 2005, two years after this case was written, the telecommunications industry consolidated further. Verizon Communications acquired MCI/WorldCom and SBC Communications acquired AT&T Corporation, which had been in business since the 19th Century. The acquisition of MCI/WorldCom was the direct result of the behavior of WorldCom's senior managers as documented above. While it can be argued that the demise of AT&T Corp. was not wholly attributable to WorldCom's behavior, AT&T Corp.'s decimation certainly was facilitated by the events surrounding WorldCom, since WorldCom was the benchmark long distance telephone and Internet communications service provider. Indeed, the ripple effect of WorldCom's demise goes far beyond one company and several senior managers. It had a profound effect on an entire industry. This postscript will update the WorldCom story by focusing on what happened to the company after it declared bankruptcy and before it was acquired by Verizon. The postscript also will relate subsequent important events in the telecommunications industry, the effect of WorldCom's problems on its competitors and labor market, and the impact WorldCom had on the lives of the key players associated with the fraud and its exposure. From Benchmark to Bankrupt Between July 2002 when WorldCom declared bankruptcy and April 2004 when it emerged from bankruptcy as MCI, company officials worked feverishly to restate the financials and reorganize the company. The new CEO Michael Capellas (formerly CEO of Compaq Computer) and the newly appointed CFO Robert Blakely faced the daunting task of settling the company's outstanding debt of around $35 billion and performing a rigorous financial audit of the company. This was a monumental task, at one

point utilizing an army of over 500 WorldCom employees, over 200 employees of the company's outside auditor, KPMG, and a supplemental workforce of almost 600 people from Deloitte & Touch. As Joseph McCafferty notes, "(a)t the peak of the audit, in late 2003, WorldCom had about 1,500 people working on the restatement, under the combined management of Blakely and five controllers(the t) otal cost to complete it: a mind-blowing $365 million"(McCafferty, 2004). In addition to revealing sloppy and fraudulent bookkeeping, the post-bankruptcy audit found two important new pieces of information that only served to increase the amount of fraud at WorldCom. First, "WorldCom had overvalued several acquisitions by a total of $5.8 billion"(McCafferty, 2004). In addition, Sullivan and Ebbers, "had claimed a pretax profit for 2000 of $7.6 billion" (McCafferty, 2004). In reality, WorldCom lost "$48.9 billion (including a $47 billion write-down of impaired assets)." Consequently, instead of a $10 billion profit for the years 2000 and 2001, WorldCom had a combined loss for the years 2000 through 2002 (the year it declared bankruptcy) of $73.7 billion. If the $5.8 billion of overvalued assets is added to this figure, the total fraud at WorldCom amounted to a staggering $79.5 billion. Although the newly audited financial statements exposed the impact of the WorldCom fraud on the company's shareholders, creditors, and other stakeholders, other information made public since 2002 revealed the effects of the fraud on the company's competitors and the telecommunications industry as a whole. These show that the fall of WorldCom altered the fortunes of a number of telecommunications industry participants, none more so than AT&T Corporation. The CNBC news show, "The Big Lie: Inside the Rise and Fraud of WorldCom," exposed the extent of the WorldCom fraud on several key participants, including the then-chairmen of AT&T and Sprint (Faber, 2003). The so-called "big lie" was promoted through a spreadsheet developed by Tom Stluka, a capacity planner at WorldCom, that modeled in Excel format the amount of traffic WorldCom could expect in a best-case scenario of Internet growth. In essence, "Stluka's model suggested that in the best of all possible worlds Internet traffic would double every 100 days" (Faber, 2003). In working with the model, Stluka simply assigned variables with various parameters to "whatever we think is appropriate"(Faber, 2003). This was innocent enough, had it remained an exercise. A problem emerged when the exercise was extended and integrated into corporate strategy, when it was adopted and implemented by WorldCom and then by the telecommunications industry. Within a year, "other companies were touting it" and the model was given credibility it should not have been accorded (Faber, 2003). As Stluka explains, "there were a lot of people who were saying 10X growth, doubling every three to four months, doubling every 100 days, 1,000 percent, that kind of thing" (Faber, 2003). But it wasn't true. "I don't recall traffic ... in fact growing at that rate still, WorldCom's lie had become an immutable law." Optimistic scenarios with little foundation in reality began to spread and pervade the industry. They became emblematic of the "smoke and mirrors" behavior not only at WorldCom prior to its collapse, but the industry as a whole. Fictitious numbers drove not just WorldCom, but also other companies as they reacted to WorldCom's optimistic projections. According to Michael Armstrong, then chairman and CEO of AT&T, "For some period of time, I can recall that we were back-filling that expectation with laying cable, something like 2,200 miles of cable an hour" (Faber, 2003). He adds: "Think of all the companies that went out of business that assumed that that was real." The fallout from the WorldCom debacle was significant. Verizon obtained the freshly minted MCI for $7.6 billion, but not the $35 billion of debt MCI had when it declared bankruptcy (Alexander, 2005). Although WorldCom was one of the largest telecommunications companies with nearly $160 billion in assets, shareholder suits obtained $6.1 billion from a variety of sources including investment banks, former board members and auditors of WorldCom (Belson, 2005). If this sum were evenly distributed among the firms 2.968 billion common shares, the payoff would (have been) well under $1 a share for a stock that peaked at $49.91 on Jan. 2000" (Alexander, 2005, 3). There are more losers in the aftermath of the WorldCom wreck. The reemerged MCI was left with about 55,000 employees, down from 88,000 at its peak. Since March 2001, however, "about 300,000 telecommunications workers have lost their jobs. The sector's total employment-1.032 million-is at an eight year low" (Alexander, 2005, 3). The carnage does not stop there. Telecommunications equipment manufacturers such as Lucent Technologies, Nortell Networks, and Corning, while benefiting initially

from WorldCom's groundless predictions, suffered in the end with layoffs and depressed share prices. Perhaps most significant, in December 2005, the venerable AT&T Corporation ceased to exist as an independent company. The Impact on Individuals The WorldCom fiasco had a permanent effect on the lives of its key players as well. Cynthia Cooper, who spearheaded the uncovering of the fraud, went on to become one of Time Magazine's 2002 Persons of the Year. She also received a number of awards, including the 2003 Accounting Exemplar Award, given to an individual who has made notable contributions to professionalism and ethics in accounting practice or education. At present, she travels extensively, speaking to students and professionals about the importance of strong ethical and moral leadership in business (Nationwide Speakers Bureau, 2004). Even so, as Dennis Moberg points out, "After Ebbers and Sullivan left the company, "...Cooper was treated less positively than her virtuous acts warranted. In an interview with her on 11 May 2005, she indicated that, for two years following their departure, her salary was frozen, her auditing position authority was circumscribed, and her budget was cut""(Moberg, 2006, 416). As far as the protagonists are concerned, in April 2002, CEO Bernie Ebbers resigned and two months later, CFO Scott Sullivan was fired. Shortly thereafter, in August 2002, Sullivan and former Controller David Myers were arrested and charged with securities fraud. In November 2002, former Compaq chief Michael Capellas was named CEO of WorldCom and in April 2003, Robert Blakely was named the company's CFO. In March 2004, Sullivan pleaded guilty to criminal charges (McCafferty, 2004). At that time, too, Ebbers was formally charged with one count of conspiracy to commit securities fraud, one count of securities fraud, and seven counts of fraud related to false filings with the Security and Exchange Commission (United States District Court - Southern District of New York, 2004). Two months later, in May of 2004, Citigroup settled class action litigation for $1.64 billion after-tax brought on behalf of purchasers of WorldCom securities (Citigroup Inc., 2004). In like manner, JPMorgan Chase & Co., agreed to pay $2 billion to settle claims by investors that it should have known WorldCom's books were fraudulent when it helped sell $5 billion in company bonds (Rovella, 2005). On March 15, 2005, Ebbers was found guilty of all charges and on July 13th of that year, sentenced to twenty-five years in prison, which was possibly a life sentence for the 63-year-old. He was expected to report to a federal prison on October 12th, but remained free while his lawyers appealed his conviction (Pappalardo, 2005). At the time of his conviction, Ebbers' lawyers claimed the judge in the case gave the jury inappropriate instructions about Ebbers' knowledge of WorldCom's accounting fraud (Pappalardo, 2005). By January of 2006, Reid Weingarten, Ebber's lawyer, was claiming that the previous trial was manipulated against Ebbers because three high level WorldCom executives were barred from testifying on Ebbers' behalf. At that time, too, Judge Jose Cabranes of the US Second Circuit Court of Appeals commented, "There are many violent criminals who don't get 25 years in prison. Twenty years does seem an awfully long time" (MacIntyre, 2006). Weingarten went on to assert that the government "should have charged the three former WorldCom employees that could have helped exonerate Ebbers or let them go" (Reporter, 2006). He charged, too, that "the jury was wrongly instructed that it could convict Ebbers on the basis of so-called "conscious avoidance" of knowledge of the fraud at WorldCom" (Reporter, 2006). Perhaps most compellingly, Weingarten called into question the fairness of Ebbers' sentence that was five times as long as that given to ex-WorldCom financial chief Scott Sullivan (Reporter, 2006). Weingarten's claims are not without merit. In August 2005, former CFO Sullivan was sentenced to five years in prison for his role in engineering the $11 billion accounting fraud. His relatively light sentence was part of a bargain wherein he agreed to plead guilty to the charges filed against him and to cooperate with prosecutors as they built a case against Ebbers. In doing so, Sullivan became the prosecution's main witness against Ebbers and the only person to testify that he discussed the WorldCom fraud directly with Ebbers (Ferranti, 2005). Others involved in the scandal were also treated less harshly than Ebbers. In September 2005, judgments were rendered approving settlement and dismissing action against David Myers and a number of others associated with WorldCom (United States District Court - Southern District of New York, Judgment Approving Settlement and Dismissing Action Against Buford Yates and David Myers, 2005, Judgment Approving Settlement and Dismissing Action

Against James C. Allen, Judith Areen, Carl J. Aycock, Max E. Bobbitt, Clifford L. Alexander, Jr., Francesco Galesi, Stiles A. Kellett, Jr., Gordon S. Macklin, John A. Porter, Bert C. Roberts, Jr., The Estate of John W. Sidgmore, and Lawrence C. Tucker, 2005). At the time of this update, Ebbers has been convicted by a court of law, but remains free on bail while he pursues an appeal. Although the extent of his punishment is under contention, one thing remains clear - that Ebbers and the other officers at WorldCom are guilty of presiding over what is to date, the largest corporate fraud in history.

Satyam scandal
Aftermath
Ramalingam Raju along with 2 other accused of the scandal, had been granted bail from Supreme court on 4 November 2011 as the investigation agency CBI failed to file the chargesheet even after more than 33 months of Raju being arrested. Raju had appointed a task force to address the Maytas situation in the last few days before revealing the news of the accounting fraud. After the scandal broke, the then-board members elected Ram Mynampati to be Satyam's interim CEO. Mynampati's statement on Satyam's website said: "We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation." On 10 January 2009, the Company Law Board decided to bar the current board of Satyam from functioning and appoint 10 nominal directors. "The current board has failed to do what they are supposed to do. The credibility of the IT industry should not be allowed to suffer." said Corporate Affairs Minister Prem Chand Gupta. Chartered accountants regulator ICAI issued show-cause notice to Satyam's auditor PricewaterhouseCoopers (PwC) on the accounts fudging. "We have asked PwC to reply within 21 days," ICAI President Ved Jain said. On the same day, the Crime Investigation Department (CID) team picked up Vadlamani Srinivas, [1] Satyam's then-CFO, for questioning. He was arrested later and kept in judicial custody. On 11 January 2009, the government nominated noted banker Deepak Parekh, former NASSCOM chief Kiran Karnik and former SEBI member C Achuthan to Satyam's board. Analysts in India have termed the Satyam scandal India's own Enron scandal. Some social commentators see it more as a part of a broader problem relating to India's caste-based, family[3] owned corporate environment. Immediately following the news, Merrill Lynch (now a part of Bank of America) and State Farm Insurance terminated its engagement with the company. Also, Credit Suisse suspended its coverage [citation needed] of Satyam. . It was also reported that Satyam's auditing firm PricewaterhouseCoopers will
[2]

be scrutinized for complicity in this scandal. SEBI, the stock market regulator, also said that, if found [4][5][6][7][8] guilty, its license to work in India may be revoked. Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance [9] [10] Issues, which was stripped from them in the aftermath of the scandal. The New York Stock [11] 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 on 12 [12] January. The founder of Satyam was arrested two days after he admitted to falsifying the firm's accounts. Ramalinga Raju is charged with several offences, including criminal conspiracy, breach of trust, and forgery. Satyam's shares fell to 11.50 rupees on 10 January 2009, their lowest level since March 1998, [13] compared to a high of 544 rupees in 2008. In New York Stock Exchange Satyam shares peaked in 2008 at US$ 29.10; by March 2009 they were trading around US $1.80. The Indian Government has stated that it may provide temporary direct or indirect liquidity support to the company. However, whether employment will continue at pre-crisis levels, particularly for new [14] recruits, is questionable . On 14 January 2009, Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam may have [15] rendered its audit reports "inaccurate and unreliable". On 22 January 2009, CID told in court that the actual number of employees is only 40,000 and not 53,000 as reported earlier and that Mr. Raju had been allegedly withdrawing 20 crore (US$4 [16] million)every month for paying these 13,000 non-existent employees. [edit]New

CEO and special advisors

On 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-day-long board meeting also appointed Homi Khusrokhan (formerly [17][18] with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors. [edit]Acquisition

by Mahindra Group

On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy. Effective July 2009, Satyam rebranded its services under the new Mahindra management as "Mahindra Satyam" with a new corporate website www.MahindraSatyam.com. C.P Gurnani is the current CEO. [edit]Restatement

of Results

As a result of the scandal, under the directions of the new Mahindra management team, Satyam Computer Services restated its financial results for the period 2002 to 2008. These restated results were published in September 2009.