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Corporate governance and scams in
India
Group member
• Pravesh
• Vijay
• Bharti
• Komal
• Himanshu• Srikant
Types of scam
Internet scam
Banking scam
Telecom scam
Corporate scam
What is corporate governance ?
Major Reasons of Corporate Frauds in India
Weak Financial Control leads to poor performance.
Poor Performance Companies as due to poor compensation don’t have qualified internal audit department, internal control and checks.
Poor Performance Companies are Defaulters of banks/ financial institution.
Profit making company absorbs debts, loans and advances, fixed assets and investments to achieve tax planning.
Additional disclosures in financial statements reduces or prevent fraud.
Proper and complete disclosures give complete picture of any financial irregularity.
Mergers and Amalgamations provide an opportunity to commit fraud
Major Corporate Scams after existence of SEBITotal amount involved in corporate frauds- Rs. 50,414 Crore
1 2345678 91011
Harshad Mehta securities scamPreferential allotment scamCobbler scamVirender Rastogi scamJVG scamKetan Parekh securities scamIPO-Demat scamSatyam scamSaradha scamReebok Shoes Company scamNational Spot Exchange Limited scam
5,000 5,000 2,880 43 1,000 1,250 14610,000 4000 8700 5600
19921995199519961998200120052008201320132013
YEARNO Name of the Scam AMT
Harshad Mehta securities scam
Introduction
History
cost
Impact on others
Regulatory action taken against Mehta
Reebok Shoes Company scam
Introduction
History
cost
Impact of scam
Reebok sales declined 26 per cent on a currency-neutral basis
Reebok brand’s revenue in the quarter 2011-2012 was at 336 million euro as against 427 million euro in the year- 2010-2011.
Satyam scam
INTRODUCTION
SATYAM COMPUTER SERVICE LIMITED
Founded in 1987 by MR.B RAMALINGA
The company offers consulting and information technology services
The company was listed with New York stock exchange national stock exchange Bombay stock exchange
HISTORY
Who is B.Ramlinga raju ?
Career of B.Ramlinga raju
Awards
People behind satyam scam Ramalinga raju :satyam former chairman
B Rama raju: Brother of Ramalinga raju
V srinivas :Ex-chief financial officer
S gopalakrishna :price Waterhouse auditor Talluri srinivas :price Waterhouse auditor
Reason for satyam scam
He was blamed that he was using the funds of the investors for the family business
Raju wanted to take over his MAYTAS INFRA and MAYTAS PROPERTIES(Company of his sons)
World bank had banned the satyam to take any services for 8 years (due to illegal profit and lack of essential document).
What crime he has constituted ?
1) Raju and his brother, B Rama Raju, were arrested by the Andhra Pradesh police on charges of breach of trust, conspiracy, cheating, falsification of records
2) Raju has mislead various investors.
3) Raju had also used dummy accounts to trade in Satyams shares
4) He has violated the insider trading norm.
5) Funds from Satyam were diverted to Maytas
6) 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 INR 20 corer rupees every month for paying these 13,000 non-existent employees.
IMPACT OF SCAM
Stock Market Employees Indian economy
Stake-holders Share-holders
More scandals like Satyam can be avoided if:
If auditing firm is honest.
SEBI plays an active role.
Periodic review of legal compliance reports by independent directors
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