PRESENTED BY:

HARSH BHATIJA DEV KHANNA TEJAS LILANI VIKAS SHARMA WASIM SHEIKH NIEL POUDEL SIDDHANT SHAH 03 09 33 49 50 56 62

INTRODUCTION
You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time-Abraham Lincoln. Satyam chairman Ramalinga Raju managed to disprove the American president and has put some of the biggest fraudsters to shame by fooling the whole IT industry, stakeholders and employees. What unfolded has not only tarnished the squeaky clean image of the $60 billion Indian IT services industry but has thrown corporate governance and ethics literally out of the window, potentially impacting the whole industry, stakeholders, global customers and the careers of 53,000 employees of Satyam. What started as a failed acquisition bid of Raju family promoted two real estate companies Maytas Properties and Maytas Infra (Maytas is Satyam spelt backwards!) on December 16, took a new turn with Raju's admission of a Rs 7,000 crore fraud on 7 January and ended three days later, with Raju and his brother Rama surrendering to DGP Andhra Pradesh. While the court cases may implicate several accountants, auditors and members of the top management, it has already rocked the foundations of corporate governance laws in India as also shaken up India Inc.

THE RISE OF SATYAM

Satyam, which ironically means 'truth' in Sanskrit, was set up in 1987 with 20 employees as Raju spotted the opportunity in outsourced code-writing. Within no time, business was booming. Andhra Pradesh, of which Hyderabad is the capital, has one of the largest pools of skilled manpower in India. Satyam would prove a doughty competitor to its rivals, pricing its services so aggressively that some thought it was prepared to go with minimum profits in order to gain customers.

And it expanded aggressively overseas. When he opened his Sydney office a few years ago, he occupied premises vacated by a top global IT firm. In China, provincial leaders vied to invite Satyam to set up operations in their areas. But once Mr Raju sold shares to the Indian public in 1992 and later, went for a New York listing in 2001, pressure grew on him to improve the company's performance. Ever competitive, he was also in a rush to catch the market leaders, Tata Consultancy Services, Infosys Technologies and Wipro. 'Raju was obsessed with getting past the billion-dollar sales mark. When he got there, he wanted to post US$2 billion,' said an associate. Satyam posted US$2.1 billion (S$3.1 billion) sales in the year to March 31, 2008.With the ever-rising pressure to perform, Satyam began doctoring the books to show bigger profits, a process that began several years back, by Mr Raju's own admission. The value of the land bank available with Maytas, the real estate company owned by Mr Satyam's sons, is what he thought he could use to shore up Satyam's books when things began to go sour. aMaytas, which is Satyam spelt in reverse, has won the contract to build the metro rail in Hyderabad and is believed to have a sizeable land bank in the state. Satyam founder B. Ramalinga Raju, who shocked India by admitting massive fraud over several years, was the Ernst and Young Entrepreneur of the Year in 2007 and the company won the Golden Peacock Global Award for Excellence in Corporate Governance given by the World Council for Corporate Governance. Here is a brief history of the company, which was once a flag bearer of Hyderabad, as its headquarters and Andhra Pradesh were hailed in the early years of the IT boom in late 1990s. Established: June 24, 1987 Global Headquarters: Hyderabad Development Centres: Bangalore, Basingstoke, Beijing, Bhubaneswar, Budapest, California, Chennai, Chicago, Dalian, Georgia, Guangzhou, Gurgaon, Hartford, Hyderabad, Kuala

Lumpur, Melbourne, Mumbai, Munich, Mississauga, New Jersey, Ontario, Pune, Sao Paulo, Shanghai, Singapore, Sydney, Tokyo, Wiesbaden Employee strength: 52,865 (including employees in subsidiaries and joint ventures) as on Sep 30, 2008 1991: Debuts on Bombay Stock Exchange with an IPO oversubscribed 17 times 1999: Satyam Infoway (Sify) becomes the first Indian Internet company listed on Nasdaq; presence established in 30 countries 2001: Listed on the New York Stock Exchange with trading name SAY 2006: Revenue exceeds $1 billion; sets up the first 'Global Innovation Hub' in Singapore and operations in Guangzhou, China 2007: Becomes the official IT services provider for the FIFA World Cups, 2010 (South Africa) and 2014 (Brazil); Ramalinga Raju named the 'Ernst and Young Entrepreneur of the Year' 2008: Revenue crosses the $2-billion mark 2008 Dec 16: Announces plan to buy two Maytas firms; calls off the deal within hours in the face of shareholders' opposition; share price tumbles Satyam was one of the first outsourcing companies to move employees outside of Indian urban centers, and one of the first Indian companies to list on the Nasdaq and the New York Stock Exchange. It has been more aggressive than most about opening offices in Europe, and setting up training facilities in Western counties like Australia.

HOW DID THE SCAM START

Researchers from the Wharton School (among the worlds top business schools) have some interesting insights on this aspect of corporate frauds. They believe that while confidence underlies decisive, strong leadership, overconfidence leads managers to cross the line and commit fraud. Mr. Raju is a clear case in point. We know this from the following statement he made in his confession letter Every attempt to eliminate the (balance sheet) gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten. Satyam Computer Services, a leading Indian outsourcing company that serves more than a third of the Fortune 500 companies, significantly inflated its earnings and assets for years, the chairman and co-founder said, roiling Indian stock markets and throwing the industry into turmoil. The chairman, Ramalinga Raju, resigned after revealing that he had systematically falsified accounts as the company expanded from a handful of employees into a back-office giant with a work force of 53,000 and operations in 66 countries. Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world, handling everything from computer systems to customer service. Clients have included General Electric, General Motors, Nestl and the United States government. In some cases, Satyam is even responsible for clients finances and accounting.

In the four-and-a-half page letter distributed by the Bombay stock exchange, Mr. Raju described a small discrepancy that grew beyond his control. 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, he wrote. It was like riding a tiger, not knowing how to get off without being eaten. Mr. Raju said he had tried and failed to bridge the gap, including an effort in December to buy two construction firms in which the companys founders held stakes. Speaking of a deep regret and a tremendous burden, Mr. Raju said that neither he nor the co-founder and managing director, B. Rama Raju, had taken one rupee/dollar from the company. He said the board had no knowledge of the situation, nor did his or the managing directors families. The size and scope of the fraud raises questions about regulatory oversight in India and beyond. In addition to India, Satyam has been listed on the New York Stock Exchange since 2001, and on Euronext since January of 2008. The company has been audited by PricewaterhouseCoopers since its listing on the New York Stock exchange. The Serious Fraud Investigation Office will probe also Maytas infrastructure as part of the Satyam financial scam probe. Corporate affairs minister P C Gupta said on Monday evening that initial investigations suggest a clear nexus between Satyam, Maytas properties and Maytas infrastructure Earlier, the Andhra High Court dismissed Ramalinga Raju's revision petition against his police custody. But SEBI still did not get to question Raju on Monday as a court order on the body's petition to question him was postponed till January 22. Meanwhile the CID is questioning the Raju brothers and former Satyam CFO Vadlamani Srinivas. They are also looking into their e-mails and phone records over the last one month. Meanwhile, Andhra chief minister Y S R Reddy reiterated his government did not flout any rule in awarding the Hyderabad metro rail project to Maytas.

But how deep and how wide is the rot inside India's fourth largest software company? Sources tell CNN-IBN the company is facing serious money crunch, and needs Rs 1,110 crore to tide over the crisis and Rs 500 crore to pay the January salary to employees. Meanwhile a search is also on for a new CEO for the embattled IT firm. Network-18 learns that the board is looking at a 10-day time period to pick someone to head the company. Over 40 applications have come in so far. There is now also a question mark on the number of employees Satyam has. It is reported that Satyam has 53,000 employees. How they did it Investigators are now reportedly coming across evidence of insider trading by the promoters even before the scandal broke. The big take away from the Registrar of Companies report is that the top management of Satyam - the directors and senior officials - sold shares ahead of the Big Bang revelation by Raju. The reports say Satyam books have been overstated by Rs 5,000 to Rs 6,000 crore, leading to an inflated stock price that helped the top management make money. Who sold what? Raju has claimed that no one else in the company was privy to the fudging of accounts. But exclusive information with CNNIBN suggests insider trading. BSE figures show a number of senior people in the company, including Raju and CFO Vadlamani were reportedly selling Satyam's shares over the last 22 quarters. In June 2001, Raju had nearly 23 per cent shares. By December that year, his share was down to 22.4 per cent.In September 2002; it fell to 21.6 per cent which fell a year later to just over 19 per cent. In 2004, Raju's holding was 16 per cent which fell to 14 per cent in 2005, 11 per cent in 2006. In 2007 it was in single digit. By September 2008 Raju's share was just 8.27 per cent.BSE figure also show Vadlamani sold 92,538 shares while the then CEO Ram Mynampati sold 700,000 shares plus 2,50,000 ADRs. Apart from these, other senior officials also reportedly sold large number of shares. Sources say they include one Kiran Cavale who reportedly sold 400,000 shares and 10,000 ADRs

and one Rajan Nagarajan who reportedly sold 430,000 shares and 70,000 ADRs.

THE ILLUSIONISTS

Ramalinga Raju: B Rama Raju:

Satyam Former Chairman Brother of Ramalinga Raju Former Managing director. V Srinivas: Ex-chief financial officer S Gopalakrishnan: PriceWaterhouse Auditor Talluri Srinivas: PriceWaterhouse Auditor PRICE WATER HOUSE COOPERS PricewaterhouseCoopers (trading as PwC) is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm and the largest of the "Big Four" accountancy firms measured by 2011 revenues. PwC has offices in 771 cities across 158 countries and employs over 69,000 people. It had total revenues of $29.2 billion in FY 2011, of which $14.14 billion was generated by its Assurance practice, $7.63 billion by its Tax practice and $7.46 billion by its Advisory practice. The firm was formed in 1998 by a merger between Coopers & Lybrand and Price Waterhouse. The trading name was shortened to PwC in September 2010 as part of a major rebranding exercise. As of 2010 PwC was the seventhlargest privately owned organization in the United States. The role of the statutory auditors in Indias Enron comes under

the spotlight amid allegations that large Indian companies regularly use misleading accounting techniques and bully analysts, accountants and auditors into staying quiet.

PricewaterhouseCoopers has three main service lines: Assurance Services Tax Advisory, (international tax planning and compliance with local tax laws, customs, human resource consulting, and transfer pricing) Advisory mainly consulting an activity which covers Strategy, Performance Improvement, Transactions Services, Business Recovery Services, Corporate Finance, Business Valuation, Sustainability and Crisis Management in a range of specialist areas such as accountancy and actuarial advisory. PwC's service lines face the market in each country by broad industry specialisations such as: Consumer and Industrial Products and Service (CIPS) Financial Services (FS) Technology, Information, Communications and Entertainment (TICE) Infrastructure, Government and Utilities (IG&U) Private Company Services (PCS) These sub-divisions may vary slightly in some territories.

THE REASONS FOR THE SCAM

The Satyam scandal has shaken corporate India, and damaged its reputation with investors, domestic and foreign. It turns out that founder and CEO B. Ramalinga Raju invented $ 1 billion in cash, which never existed. How could the auditors miss this fraud? The discussion below will first show how problems started to appear and how the CEO eventually disclosed the fraud. The discussion will also identify the roles that various parties had in the fraud. First Cracks Appear As stock markets around the world collapsed during 2008, the Indian Stock Exchange, the Sensex, fell from a high of over 21,000 to below 8,000 between January 2008 and October 2008. The enormous losses caused investors to withdraw large amounts of cash from their investments. These cash withdrawals in turn triggered the discovery of several cases of financial fraud in America, as perpetrators could no longer hide the results. The discovery of high-profile financial scandals increased scrutiny on governance practices and companies' financial statements. To quote Warren Buffet, "It's only when the tide goes out that you realize who has been swimming naked." Satyam continued to report positive results during 2008 and claimed success in navigating the economic crisis. In October 2008, Satyam reported net income of $132.3 million, an increase of 28 percent from the same quarter the previous year. Saytam asserted that, despite the challenging environment, it continued to find opportunities for growth. The first crack in the company's reputation occurred during October, when the World Bank fired Satyam and issued an eight-year ban against the company. The World Bank accused Satyam of installing spy systems on its computers and stealing assets from the World Bank. In addition, during an October conference call reporting earnings, one stock analyst drew attention to large cash balances in non-interest bearing bank accounts. The analyst expressed concern about the large balances and expressed reservations about the accuracy of the numbers. Investors ignored the analyst's comment and the stock price rose with the reports of positive earnings and revenue growth. In December 2008, Satyam's Board of Directors unanimously approved the purchase of Maytas Properties and Maytas Infrastructure, two companies unrelated to the information

technology field. At the time, Mr. Raju stated that he and the Board anticipated that the market would "be delighted" by the two transactions as it would provide Satyam with greater diversification. However, investors were outraged over the transactions because Mr. Raju's family held a larger stake in Maytas Properties and Maytas Infrastructure than it did in Satyam. Shareholders viewed the transactions as an attempt to siphon money out of Satyam into the hands of the Raju family. Satyam quickly aborted the transactions, but the incident still caused significant damage to Satyam's reputation as a wellmanaged company. After the incident, chaos ensued. Analysts immediately soured on the company and put sell recommendations on its stock. Satyam's shares dropped nearly 10 percent and four of the five independent directors resigned. On December 30, analysts with Forrester Research advised clients to stop doing business with Satyam because of the fear of widespread fraud. Satyam hired Merrill Lynch to advise it on ways to increase shareholder value. By January 5, 2009, rumors circulated about several potential mergers between Satyam and competitors. On January 7, just hours before Mr. Raju disclosed the fraud, Merrill Lynch sent a letter to the stock exchange indicating that it was withdrawing from its engagement with Satyam because during the course of its representation it learned of material accounting irregularities. The Board called an emergency meeting for January 10 to address the company's rapidly deteriorating reputation. How the Fraud was Uncovered On January 7, 2009, Mr. Raju disclosed in a letter to Satyam's Board of Directors that he had been manipulating the company's accounting numbers for years. Mr. Raju said the manipulation started out small, and grew larger by the year. In the letter he stated, "It was like riding a tiger, not knowing how to get off without being eaten." Mr. Raju stated that eventually, the stress of hiding the fraud grew too much for him to bear.

RAMALINGA RAJU ACQUISITION

AND

THE

MAYTAS

The Satyam scandal is a classic case of negligence of fiduciary duties, total collapse of ethical standards, and a lack of corporate social responsibility. It is human greed and desire that led to fraud. This type of behaviour can be traced to: greed overshadowing the responsibility to meet fiduciary duties; fierce competition and the need to impress stakeholders especially investors, analysts, shareholders, and the stock market; low ethical and moral standards by top management; and, greater emphasis on shortterm performance. Greed for money, power, competition, success and prestige compelled Mr. Raju to ride the tiger, which led to violation of all duties imposed on them as fiduciaries the duty of care, the duty of negligence, the duty of loyalty, the duty of disclosure towards the stakeholders. According to CBI, the Indian crime investigation agency, the fraud activity dates back from April 1999, when the company embarked on a road to doubledigit annual growth. As of December 2008, Satyam had a total market capitalization of $3.2 billion dollars. Satyam planned to acquire a fiftyone percent stake in Maytas Infrastructure, a leading Infrastructure Development, Construction and Project Management Company, for $300 million. The Rajuss had a 37% stake. The total turnover was $350 million and a net profit of$20 million. Rajus also had a 35% share in Maytas Properties, another real estate

investment firm. Maytas infra and Maytas properties: firms owned by the sons of Raju. Planned to buy the Maytas to fill the gap in the balance sheet. Last attempt Raju made to fill the gap in the balance sheet. Major shareholder rebellion Acquisition was termed Poor corporate governance. Satyam revenues exceeded $1 billion in 2006. In April, 2008 Satyam became the first Indian company to publish IFRS audited financials. On December 16, 2008, the Satyam board, including its five independent directors had approved the founder's proposal to buy the stake in Maytas Infrastructure and all of Maytas Properties, which were owned by family members of Satyams Chairman, B Ramalinga Raju, as fully owned subsidiary for $1.6B. Without shareholder approval, the directors went ahead with the management's decision. The decision of acquisition was, however, reversed twelve hours after investors sold Satyam's stock and threatened action against the management. This was followed by the lawsuits filed in the US contesting Maytas deal. The World Bank banned Satyam from conducting business for 8 years due to inappropriate payments to staff and inability to provide information sought on invoices. Four independent directors quit the Satyam board and SEBI ordered promoters to disclose pledged shares to stock exchange. Investment bank DSP Merrill Lynch, which was appointed by Satyam to look for a partner or buyer for the company, ultimately blew the whistle and terminated its engagement with the company soon after it found financial irregularities. On 7 January 2009, Saytams previous Chairman, Ramalinga Raju, resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified. Raju confessed that Satyam's balance sheet of September 30, 2008, contained the following regularise: Inflated figures for cash and bank balances of US$1.04 billion vs.S$1.1 billion reflected in the books; An accrued interest of US$77.46 million which was non existent; An understated liability of US$253.38 million on account of funds was arranged by him;

 An overstated debtors' position of US$100.94 million vs. US$546.11 million in the books. Raju claimed in the same letter that neither he nor the managing director had benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of the situation in which the company was placed. The fraud took place to divert company funds into real estate investment, keep high earnings per share, raise executive compensation and make huge profits by selling stake at inflated price. The gap in the balance sheet had arisen purely on account of inflated profits over a period that lasted several years starting in April 1999. What accounted as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years, Ragu explained in his letter to the board and shareholders. He went on to explain, This gap reached unmanageable proportions as company operations grew significantly. Every attempt to eliminate the gap failed, and the aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. But the investors thought it was a brazen attempt to siphon cash out of Satyam, in which the Raju family held a small stake, into firms the family held tightly. The following chart depicts the Satyams fabricated income statement. It shows the difference between actual and reported finances: Fabricated Income Statements of Satyam8 the Satyam deal with Matyas was salvageable. It could have been saved only if the deal had been allowed to go through, as Satyam would have been able to use Maytas' assets to shore up its own books. Raju, who showed artificial cash on his books, had planned to use this non existent cash to acquire the two Maytas companies. Given the stake the Rajus held in Matyas, pursuing the deal would not have been terribly difficult from the perspective of the Raju family. The auditors, bankers, and SEBI, the market watchdog, were all blamed for their role in the accounting fraud. To what extent did the fraud take place and who else was involved? It is likely the fraud extended beyond Raju to other top managers. The fraud itself, however, was enough.

WHY DID RAJU CONFESS????

Raju was probably convinced that the gap in the balance sheet reached unmanageable proportions and could not be filled anyhow in future. A person who used a pseudonym, claimed himself to be a former senior executive in Satyam involved with its contract with the World Bank, acted as the whistleblower whose email to a Satyam board member triggered a chain of events that culminated in erstwhile chairman Mr Rajus decision to confess to the financial crime. Did Raju confess to a lesser crime?? With media reports speculating that Raju may have had benami accounts, land holdings and so on, senior government sources told Outlook Business that the suspicion from day one has been that Raju probably owned up to inflating accounts as the punishment for this

is significantly less than that for siphoning funds. "If Raju had been charged with more serious offences such as siphoning of funds or forging of valuable securities, then under Section 467 of the Indian Penal Code he would have faced life imprisonment. These offences are also cognisable and non-bail able," says Aman Sinha, Senior Counsel, and Supreme Court. On the other hand, if he is charged with cheating, say under Section 420, then the maximum punishment is seven years, with the likelihood of getting away with a shorter term. The provisions under the Income Tax (I-T) Act and the like also don't provide that extreme punishments either. For instance, under Section 277A, an offence for falsification of books or accounts, etc. carries a maximum punishment of rigorous imprisonment of three years and with a fine (though some other I-T offences could carry even a maximum of seven years). SATYAM UNDER RECONSTRUCTION Appointing new board. Board appointed by Govt: Former Nasscom Chief - Kiran Karnik, Chairman HDFC -Deepak Parikh Former SEBI member- C. Achuthan. Satyam shares gained over 44% day after appointment of the new board. New CEO: A S Murthy Tech Mahindra acquired Satyam on April 13, 2009

THE REVELATION OF FRAUD

Satyams fall from pioneering iconoclast to the largest corporate fraud in India has been rapid, unexpected and shocking. Now, some analysts and investors are wondering whether the same coolness under pressure and willingness to take risks that attracted supporters, employees and investors to Raju may have laid the groundwork for fraud. In a move that would have been unfathomable just a month ago, the Indian government ousted Satyam's board. Raju admitted to faking about $1 billion in cash on Satyam's books and vastly inflating the company's profit margins, after what he described as a small discrepancy bloomed out of control. The Rajus were arrested Friday, and Vadlamani on Sunday; all three are being investigated on suspicion of cheating, forgery, criminal breach of trust and falsifying documents. Ramalinga Rajus confession letter had this statement I have promoted and have been associated with Satyam (SAY) for well over twenty years now. I have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries. There isnt a speck of falsehood in this statement. Mr. Raju has promoted Satyam and has played an integral part in shaping up the company over the years. And under his chairmanship, Satyam has grown into a leading player in the Indian IT services space. Mr. Raju said that 50.4 billion rupees, or $1.04 billion, of the 53.6 billion rupees in cash and bank loans the company listed as assets for its second quarter, which ended in September, were nonexistent. Revenue for the quarter was 20 percent lower than the 27 billion rupees reported.

INVESTIGATION
CBI filed a charge sheet against nine on April 7, 2009. Apart from 5 illusionists, 4 others are: -Rajus second brother S. Raju -2 employees from finance wing -vice president (Finance) With the scam seemingly having multiple layers, the truth will be out only after investigations have been completed and appropriate charges filed. Meanwhile in New Delhi, within the corridors of government, hardly anyone is buying the theory that Raju, at present in judicial custody till January 23, only inflated accounts to show inflated profits for the past several years. Rather, with the sudden remembrance of the Income Tax Department having unearthed more than 50 bank accounts in the name of Raju's family members and others way back in 2002, the focus now is on whether the profits were actually siphoned away to group companies such as Maytas Infrastructure for investments in the latter's infrastructure projects. Or worse still, for underhand deals to grease the hands of politicians and bureaucrats. "Maytas in the last few years has bagged a number of high-profile infrastructure projects and it is a well known fact that the Rajus were politically well-connected. There is more than what meets the eye," says a government source. There is also widespread scepticism about Raju's claims that Satyam's profits margins could have been as low as 3%. "It is highly possible that just as businessmen 'rotate funds', Raju must have also done the same by siphoning funds from Satyam to Maytas, especially with the real estate market booming and with the latter grabbing many government projects including the Hyderabad Metro project," says a business analyst who didn't want to be named. 'Rotation of funds' refers to the practice of illegally moving funds from, say, Business A and investing it in Business B. Once the investment in Business B turns profitable, the original money is quietly put back in Business A.

With the IT sector being given tax waiver (recently extended till March 31, 2010); many IT companies have been flush with funds. "It is likely that Satyam siphoned away its monies to Maytas hoping to make a killing on the projects, assuming the boom in the economy continued. However, the US sub-prime crisis and the subsequent market meltdown burst the realty bubble, shattering Raju's original plans," suggests another business analyst. Disappointed by the failure of the auditors in either not spotting or allowing the scam to take place, home minister P Chidambaram, on January 12, is said to have summoned Ved Jain, President of The Institute of Chartered Accountants of India (ICAI), and told him in no uncertain terms that the chartered accountants regulator should take proper cognisance of the role of the auditors and take appropriate stringent actions thereafter. Soon after, ICAI initiated stringent proceedings against PricewaterhouseCoopers, Satyam's auditors. While sources would not confirm or deny whether PwC would be banned from conducting business in India if found guilty, they indicated that the government was in no mood to be lenient to anybody found guilty. "Many a time, finance ministry officials do point out to ICAI about auditors who cook books, but the apex body only looks the other way," alleges a government official. Though Chidambaram took over the reins of the Home Ministry after the Mumbai terror attack, for all practical purpose he continues to be the de jure finance minister. "The PM has had huge faith in the administrative capabilities of Mr Chidambaram," says a source the finance ministry portfolio now comes directly under the Prime Minister.

CONCLUSION
Lasting solutions can only be found by transforming human consciousness through an inner discipline and higher moral reasoning. A company can build sustainable competitive advantage through ethics, values, excellence, quality, social responsibility and human development. An integrated, value based vision of leadership and governance will go along in creating corporate governance. A transformed organizational culture which pays highest attention to ethical conduct and moral values will strengthen sustainable roots of the company. Transparency and effective auditing and regulatory checks through internal and external auditors and monitoring agencies will help establish long lasting credibility for any company. Companies should gather feedback, measure effectiveness, and continually improve their code of conduct. They always distinguish between opportunities and temptations. No matter what heights a person may reach, character must be maintained at any cost. Companies must

take a step back when presented with challenging decisions and individuals must listen to the little voice in their head in complying with law and to their heart in dealing with people. When making corporate decisions, it is important to not lose sight of the individuals ethical reasoning. Personal ethics, selfdiscipline, and high moral reasoning are critical to avoiding unethical behaviour. Some of the advantages of these elements include avoiding unethical behaviour, performing fiduciary duties, and resolving ethical dilemmas. But such personal ethics may put a person in direct conflict with existing corrupt bureaucratic systems, increased ethical dilemmas, and exposure to stress and intense emotional pressure. Transparency in financial reporting as a moral duty and ethical conduct is also very important for companies to adhere to in order to uphold ethical standards. Benefits from such engagement include higher trust and loyalty from stakeholders, increased goodwill, and higher investor confidence. Absolute transparency may lead to revelation of favourable and unfavourable performance which in turn may result in loss of investor confidence and inability to attract new capital. It is also important for companies to establish an organizational culture which supports ethical conduct through a code of conduct and properly laid out corporate governance policies and procedures. Advantages of this approach include fostering ethical behaviour from employees, increased inner discipline, and providing value based corporate vision. However, such a culture will add new conflicts of interest, strict compliance with rules and regulations and extra supervision.