ASSIGNMENT – 1

Q.1) Critically analyse Satyam fraud case in the context of violation

of Business Ethics and Corporate Governance.
1. About Satyam?
Ramalinga Raju, a management graduate from Ohio University, founded Satyam Computer Services
Ltd., a Hyderabad-based software Company in 1987. It catered to the IT needs of various sectors like
Healthcare, Bio-Tec., Telecommunication and Media, Automotive Banking & Finance, etc. Prior to the
year 2009, the Company was one of the few fastest growing companies in India, generating $ 2.1
billion revenue and having about 9% of the market share.

Genesis of the Satyam Scandal:

Ramalinga Raju, founder, and CEO of Satyam Computers announced on January 7, 2009, that his
company had been falsifying its accounts for years, overstating revenues and inflating profits. Prior to
that Raju made an attempt to have Satyam invest about Rs. 7000 Crore in Maytas Properties and
Maytas Infrastructure — two firms promoted and controlled by his family members. On December
16, 2008, Satyam’s Board cleared the investment, but investors opposed it. The Board of Satyam, later
on, was reconvened the same day and called off the proposed investment. Thereafter resignations
followed from Satyam’s non-executive Directors. Raju acknowledged that Satyam’s Balance Sheet
included Rs. 7,136 crore in non-existent cash and bank balances, accrued interest and misstatements.
It had also inflated its 2008 second quarter revenues by Rs. 588 crores to Rs. 2,700 crores and actual
operating margins were less than a tenth of the stated Rs. 649 crore. The company’s fixed deposits
documents were forged, diverting Rs 1,250 crore at the rate of Rs 20 crore per month over a period
of many years. It held more than 400 Benami land transactions of thousands of acres. The Company
claimed that the strength of the company was 53,000 against actual employee strength of only 40,000.

2. ETHICAL FRAMEWORK: Violation of Business Ethics and Corporate Governance:

2.1: Unethical Conduct – Ramalinga Raju: Satyam was clearly the situation of moral acts of neglect
of Ramalinga Raju, executive of the organization who conceded his own unfortunate activities. The
Serious Fraud Investigation Office (SFIO), researching arm of Ministry of Corporate Affairs in India
explored the case and presented its fundamental provide details regarding April 13, 200912. Per the
report, Satyam originators, ex-CFO Vadlamani Srinivas, and ex-VP (fund) G Ramakrishna, planned to
misleadingly expand the incomes and benefits in the books. The report features that the distortion
was finished by purposely leaving escape clauses in the Computerized Accounting System which
utilizes ERP modules. The abnormal state application scene of Satyam inner applications has
numerous connections between different frameworks where either there was no reconciliation or
there was powerless combination. These escape clauses were purposefully left to embed invented
solicitations and bank explanations to adjust them without being identified

2.2 Insider Trading

The promoters indulged in insider trading of the company’s shares to raise money. The funds collected
by the former chairman B. Ramalinga Raju, his brother Rama Raju and their relatives were used to
purchase lands in the names of 330 companies Promoters of Satyam and their family members during
April 2000 to January 7, 2009 sold almost 3.9 crore shares collecting in Rs 3029.67 crore16. The
promoters based on the inflated books thus projected a very good financial position of the company
and used the shareholders’ money deceitfully for their personal gains.

2.3 False Books & Accounting

According to the findings of SFIO, Satyam’s balance sheet as on September 7, 2008 carried an accrued
interest of Rs. 376 crore, which was non-existent. The company had created a false impression about
its fixed deposits summing to be about Rs 3318.37 crore while they held FDRs of just about Rs 9.96
crores17.

One of the biggest sources of forgery at Satyam was the inflation of the number of employees. While
founder chairman Raju claimed that the company had 53,000 employees on its payroll but in real
number was just over 40,000. The fictitious number could be fabricated only because payment to
the remaining 10,000 employees was faked year after year - an operation that evidently involved
the creation of bogus companies with a large number of employees18.

2.4 Negligent Board of Directors

The directors at the Satyam Board never questioned the actions of their Chairman. They did not raise
objections when the management decided to invest 1.6 billion dollars to acquire a 100 percent stake
in the two real estate firms promoted by Raju's sons19 which was in gross violation of the Companies
Act 1956, under which no company is allowed without shareholder’s approval to acquire directly or
indirectly any other corporate entity that is valued at over 60 percent of its paid-up capital.

2.5 Dubious role of Independent directors

Six of the nine directors on Satyam’s Board were independent directors including US academician
Mangalam Srinivasan (the independent director since 1991), Vinod K. Dham (famously known as
father of the Pentium and an ex Intel employee), M Ram Mohan Rao (Dean of Indian School of
Business), US Raju (former director of IIT Delhi), T.R. Prasad (former Cabinet Secretary) and Krishna
Palepu (professor at Harvard Business School)20. They all were men of good reputation. But the fact
that seven out of nine of these directors were present when Maytas deals were unanimously finalized,
raises questions about their integrity. It indicated that they were aware of the malpractices and kept
silent about them.

2.6 Dubious role of rating agencies

Credit rating agencies based their ratings of Satyam based on the falsified documents and never did
any due diligence in their coverage and assessment21. They seemed conveniently unaware of the
deteriorating financial condition of Satyam and therefore could not warn investors in advance.

2.7 Questionable role of Banks

Banks did not raise any doubt while sanctioning the short-term loans to Satyam which was supposedly
a cash rich company. The behavior of banks is unscrupulous in this regard22.

2.8 Unscrupulous role of Auditors

Price Waterhouse, was the auditor for Satyam and have been auditing their accounts since 2000-0123.
The auditors compromised on standards by not using the PwC standard testing tools rather they relied
on Satyam for that. Auditors, in connivance with perpetrators, did not report the possibility of fraud
and control deficiencies in Information Systems to shareholders. The Statutory auditors also failed in
discharging their duty when it came to independently verifying cash and bank balances, both current
account and fixed deposits. There needs to be a physical verification of assets owned by the company
rather than simply relying on the books prepared by the company.

2.9 Faulty Ownership model

Satyam ownership model was flawed from the perspective of good corporate governance24.

1. As a publicly owned company, it was under pressure to overstate profits to keep the company’s
bonds and equities in high esteem.

2. Mr. B. Ramalinga Raju, diluted his holding from 25.6 % in 2001 to 3.6 % in 2009. He could overstate
profits with the objective of influencing other shareholders. The overstatement never hurt him as his
own share was small.

3. Satyam would not have overstated its revenues and profits if it had to back both with real cash. A
big part of the blame for the colossal fraud thus belongs to India’s trade and fiscal policy makers.

3.Corporate Governance?
Corporate administration alludes to the arrangement of frameworks, standards, and
procedures by which an organization is represented. They give rules with respect to how
the organization can be coordinated or controlled to such an extent that it can satisfy its
objectives and targets in a way that adds to the estimation of the organization and is
additionally helpful for all partners in the long haul.
Stakeholders, for this situation, would incorporate everybody running from the Board of
Directors, the executives, investors to clients, representatives, and society. The
administration of the organization accept the job of a trustee for all the others. Great
corporate administration implies leading the business in a straightforward way with
uprightness and decency. It includes a pledge to direct business in a moral way by agreeing
to every one of the rules that everyone must follow and be responsible to every one of
the partners. Great corporate administration is one of the essential criteria for the
Investors including outside financial specialists for taking a speculation choice in the
organization. Organizations with a spotless picture can source capital at increasingly
sensible expenses. Great corporate administration ensures that all investors get a voice at
general gatherings and are permitted to take a functioning part. Indeed, even non-
investor partner's advantage should be taken consideration off. A set of principles with
respect to moral choices is set up for all the Board individuals. Business
straightforwardness ought to be the way to advancing investor trust.
Q.2) Explain the scope of Prohibition of Sexual Harassment
of Women at Workplace along with ethical practices and
case studies.

Scope of Prohibition of Sexual Harassment of Women at Workplace:

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
2013.:

An Act to provide protection against sexual harassment of women at workplace and for the
prevention and redressal of complaints of sexual harassment and matters connected therewith or
incidental thereto.

It extends to the whole of India.

The following circumstances, among other circumstances, if it occurs or is present or.in relation to or
connected with any act or behaviour of sexual harassment may amount to
sexual harassment:---
(i) implied or explicit promise of preferential treatment in her employment: or
(ii) implied or explicit it threat of detrimental treatment in her employment; or
(iii) implied or explicit threat about her present or future employment status: or
(iv) interference with her work or creating an intimidating or offensive or hostile
work environment for her; or
(v) humiliating treatment likely to affect her health or safety.

TVF's Case ….on Sexual Harassment of Women at Workplace:

In an unknown blog posted not long ago, Arunabh Kumar, CEO, The Viral Fever (TVF) had been asserted
of inappropriate behavior by a lady worker who worked at TVF from 2014 to 2016. This was trailed by
a progression of comparable charges of inappropriate behavior against Kumar by other ladies posting
secretly which turned into a web sensation all over internet based life.

On 29th March, a 27-year-old author executive had held up the main FIR with the MIDC police
headquarters charging that Kumar made improper motions and even contacted her while shooting a
web arrangement generation in 2016. At that point, on 30th March 2016, another unfortunate
casualty participate to enroll a lewd behavior argument against Kumar at the Versova police
headquarters.

Arun Chavan, Assistant Commissioner of Police (DN Nagar division) affirmed TOI about the FIR held up
by a lady who was in the past utilized with the TVF CEO. Chavan further included that "The unfortunate
casualty use to work with Kumar in 2014 and she asserts that it was then he gotten out of hand with
her. A body of evidence against Kumar has been recorded under IPC area 354 (A) with the Versova
police".
In her blog the injured individual expounds on the maltreatment and provocation she confronted,
expressing that Kumar inquired as to whether she'd be keen on pretend, a fast in and out or a
"business" exchange at various cases. When she said of illuminating the police of such comments and
conduct, he disclosed to her that the police are "in his pocket." Adding on the blog had referenced
subtleties of the responses she looked on talking about it to the individual TVF representatives.
Performing artist Naveen Kasturia, who has worked in a few recordings for TVF shared how she keeps
on getting break of agreement sees from the organization as she quit when she just couldn't bear any
longer. Complainant blogger likewise composed of needing to slaughter hers. In the interim, nine
other ladies like performer executive Reema Sengupta made comparable charges on a Facebook post
supporting the mysterious blog and said she Kumar made suggestions when she was coordinating a
web arrangement for TVF a year ago.

TVF representative Aditi Singh revealed to The Indian Express that they have no records of these
representatives regularly working at the organization. "There are a few different focuses in the blog
which appear to be truthfully mistaken. We are setting up a detailed reaction to the allegations made
in the blog," Singh said.

TVF's reaction, by saying completely, that, the charges referenced in the post were preposterous,
false, disparaging, outlandish and unsubstantiated. Additionally TVF incredibly included that it will
investigate every possibility in finding the writer of the article and get her to serious equity.

WIPRO's Case

The latest sex discrimination complaint against Wipro Ltd highlights an issue that has long
worried industry watchers and human resource (HR) consultants alike: fewer women in
senior leadership roles and its impact on workplace safety.

On Tuesday, Shreya Ukil, an India-born British citizen, accused Wipro of sex discrimination,
unequal pay, harassment and unfair dismissal, and sought compensation of up to £1
million, according to a claim at the central London employment tribunal.
Ukil, 39, said she was manipulated into an affair with married senior vice-president Manoj
Punja, the former head of Wipro BPO who resigned last year.
The company dismissed the allegations brought by the former employee and said it was
the duo’s failure to disclose the relationship that made the company sack both of them
last year.
“Wipro’s policy on conflict of interest requires employees to disclose to the organization
any personal relationship that could create conflict," said a spokesman for the company.
“Following an impartial inquiry, both Manoj Punja and Shreya Ukil were relieved from the
services of the company after it was established beyond reasonable doubt that they had
violated the stated policy."
The news comes less than a year after Wipro’s rival Infosys Ltd reprimanded a senior
executive for making “certain gender insensitive comments" to women employees, which
eventually led to him leaving the company at the start of this year. In May 2013, iGate
Corp. sacked then CEO Phaneesh Murthy over accusations of improper sexual conduct.
Awareness on what constitutes sexual harassment is on the rise in India after the
implementation of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act 2013, which requires companies to report the number of
sexual harassment cases they saw during the year.
Wipro had 140,000 employees of whom 30% were women as of 31 March.
Most sexual harassment complaints involve physical contact and advances and sexually
coloured remarks, says Arpinder Singh, partner, fraud investigation and dispute services,
EY India.
Once a case is reported, Singh says, companies have to gather evidence and take action
within three months. If the complainant is not satisfied, he or she can approach the court
or police. “Companies are now more focused on managing the sensitivities arising out of
such incidents and trying internally to address and resolve issues."
But the fact that Ukil decided to go to court shows that she did not have faith in the
internal systems at Wipro and that is worrisome, says a senior HR consultant who did not
want to be named.
Ukil, who joined Wipro in 2005 and was the head of sales of manufacturing and hi-tech
segments for Europe , alleged that she was treated like “dirty goods" after ending the
affair and filing complaints about how she was treated, according to a report dated 6
October in The Telegraph. Ukil further charged Wipro with discrimination, saying she was
paid far less than her male colleagues, earning up to £75,000 a year rather than the typical
£150,000 paid to male equivalents.