Satyam’s scam is one of the biggest scams ever recorded in the Indian history! It was audacious, preposterous, outrageous and a shocking event- the Satyam-Matyas deal. That a promoter, with less than 9% stake in his company, would have the nerve to try and transfer $1.3billion of cash to two completely unrelated businesses by his sons is unthinkable. Chairman ramalinga raju, says he didn’t anticipate investors’ reactions and was surprised. It is not a mere coincidence that Matyas is Satyam spelt backwards i.e. Satyam-Matyas. As it became evident from Raju’s letter it was basically an effort to cover up Satyam fiasco. It all started on 16-12-2008, when ramalinga raju felt that the only way to cover up the scale of fraud perpetrated was through buying the infrastructure companies owned by his sons and other family members. It is common affair in Indian companies to make such pointless investments to divide the dividends by manipulating profit margins. Satyam intended to buy entire stake in matyas properties for $1.3 billion and 51% stakes in Matyas infra for another $300 million. Raju and his immediate family members own up to 35% stakes in Matyas. The deal was to be financed from surplus cash. Investors and the fund managers were shocked that the bidding process was carried without informing them. Raju said that the deal was in complete interest of the investors and informing them was unnecessary.
1. Inflated (non-existent) cash and bank balance of Rs. 5,040 crores 2. An accrued interest of Rs. 376 crores which was non-existent 3. An understated liability of Rs. 1230 crores Total Rs. 7136 crores!