Company secretaries can now act as whistle blowers when fraud is detected
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- 2 Min Read
- By Taxmann
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- Last Updated on 10 May, 2022
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Prof R Balakrishnan – [2022] 138 taxmann.com 85 (Article)
In the year 2009, the Satyam scam in India which was termed Enron of India happened from one of the respected business family managed company. Satyam was the fourth largest Indian information technology (IT) company listed in India and also in United States having over US$ 2 billion annual revenue size. The company was established in 1980s and grown to the size of having 53,000 employees and 600 plus customers including 185 fortune 500 companies. Not only that, the company had operations in 66 countries across the world and the financial advisors were Merrill Lynch (now Bank of America) and their auditors were one of the Big4 – i.e. Price Water House Coopers (PWc) and their bankers were Citi bank, BNP Paribas, HSBC and HDFC.
After the Satyam scam which came as a shock, the investors were panicked as stock plummeted and this particular incident resulted in immeasurable and unjustifiable damage to Brand India and Brand IT in particular. Many of the Satyam employees -stranded in many ways-morally, financially, legally and socially and people lost a staggering Rs.100 billion in Satyam in market capitalisation as investors reacted sharply and dumped shares, pushing down the scrip by 95 per cent. Regulatory action followed resulting into the arrest of Chairperson, Managing Director / Chief Executive Officer, Chief Financial Officer and key associates of the company including the partners of Audit Firm PWc.
In the capital market also the biggest scam was reported in the year 1992 known as Harshad Mehta Scam. It was reported that the Harshad Mehta scam featured an embezzlement of of Rs 1439 crores that led to a severe crunch and drastic loss of wealth in the life savings of many investors that amounted to Rs 3542 crores.
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