PowerPoint Presentation

Satyam Scam - Crisis Management Plan- Anurita Majumdar, Ruchi Surana & Teresa RodriguesAgendaIntroduction to SatyamSatyam ScamCrisis management plan for SatyamStakeholdersMediaSocial MediaConclusion- Monitoring and evaluating

Introduction to SatyamSatyam Computer Services Limited was an Indian IT services company based inHyderabad, IndiaThe company was listed on thePink Sheets, theNational Stock ExchangeandBombay Stock ExchangeIt offered a range of services, includingsoftware development,system maintenance, packaged software integration andengineering designservicesIt subsequently merged with Tech Mahindra on June 24, 2013The Satyam ScamA corporate money laundering scam that occurred in 2009On January 7, 2009, the chairman of Satyam Mr. Ramalinga Raju disclosed in a letter to Satyam Computers Board of Directors that he had been manipulating the companys accounting numbers for years

I did it!The Satyam ScamSatyam also underreported liabilities on its balance sheet and overstated income nearly every quarter over the course of several years in order to meet analyst expectationsMr. Raju also revealed that he created 6,000 fake salary accounts over the past few years and appropriated the money after the company deposited itA classic case of negligence of fiduciary duties, collapse of ethical standards and lack of corporate social responsibility

Red Flags Factors that indicated a crisisPayment of advance tax is an indicator of profitability and Satyams non-payment of advance tax could imply trouble had been brewing for a long timeWeak independent directors and Audit committeeIneffective whistle blower policyAftermath of the scamLost investors & employees confidenceCoveted awards won by Satyam were stripped from the companyShare prices dipped to an all time lowLost potential business venturesThe IT industry as a whole was hit by the scam.Company Image depreciatedThe top management had to be restructured

Crisis Management Plan Crisis Management Plan Holding Statement: We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation."

StakeholdersThe accounting crisis at Satyam adversely affected stakeholders like the employees, clients, shareholders and financial institutionsMajor focus on employees to handle the situationDisseminate information regularly to employees and adopt an open communication system for all employeesStakeholdersWork Ethics and morale workshops for all the members of the companyTeam building exercises with employees to prevent any brain drain from the companyEmployee feedback and suggestionsEnsure that salaries are paid on time and morale does not dip

MediaHolding Statement was released to mediaPress Conference to give all the facts and information to media as well as the measures taken by the organization such as replacement of the management, processes and services in place for client deliverables and no pay cut for the employees (January 8, 2009)Exclusive interview of Mr. Ram Mynampati, interim CEO of Satyam sharing insights about the way forward and the details of the current situation in The Economic Times

MediaPress Conference to announce the new management board and the new CEO of Satyam - Mr. A.S Murthy (February 5, 2009)Exclusive interview of Mr. A.S. Murthy on Satyams current stand on the situation and plans for future, on ET NOW

Social MediaHolding statement posted on FB page, twitter and the official websiteVideo of new leadership members about the current situation at hand, and requesting for support from associates, posted on social mediaEmployee Testimonials released on the siteConstantly monitoring the social media platforms to curtail any rumors arising due to the situation

Suggestions Stronger monitoring mechanism Stricter audit norms for internal as well as external auditEstablish a value system and code of conduct which should be deep-rooted in all the members of the company

Evaluation The crisis management plan worked for Satyam in the following ways:No brain-drain from Satyam as important employees were retainedShare prices were stabilized over time which is an indicator of revived investor confidenceThe speculations of Satyam being shut down were put to rest as the company was taken over by Tech Mahindra and remained fully operational

More stringent regulatory requirements and new corporate code of conduct for publicly listed Indian companies, by SEBI

Media Response

Indian Express

Reuters

IBN Live

Indian ExpressTHANK YOU!