Satyam Computer Services has agreed to pay $10 million to settle US charges that former top managers inflated the Indian company's revenue, the US Securities and Exchange Commission said Tuesday. The SEC, in a complaint filed in US District Court here, alleged that former top officials at Hyderabad-based Satyam overstated the software company's revenue, income and cash balances by more than $1 billion over five years.
They used false invoices and forged bank statements to inflate Satyam's cash balances to make it appear more profitable to investors, the SEC said. Satyam was traded on Indian stock markets but American depository shares were traded on the New York Stock Exchange.
Satyam shocked India's corporate world in January 2009 when its former chairman and founder B. Ramalinga Raju admitted he had for years overstated profits and inflated the balance sheet. The fraud nearly pushed the group into bankruptcy.
Satyam, now known as Mahindra Satyam, was bought by the mid-sized outsourcer Tech Mahindra, a unit of the tractors-to-holidays conglomerate Mahindra and Mahindra, in April 2009 for $600 million. The SEC said Satyam's new leadership had co-operated with the SEC probe and had agreed to pay a $10 million penalty to settle the SEC's charges.
In addition, the company agreed to train officers and employees on securities laws and accounting principles, improve its internal audit functions, and hire an independent consultant to evaluate internal controls. The SEC also announced Tuesday that it was sanctioning five Indian-based affiliates of PricewaterhouseCoopers for deficient audits of Satyam's financial statements and enabling the accounting fraud to go undetected for years.
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