Massive IT fraud rocks India

Agence France Presse
Mumbai, January 8:

India reeled today over a false accounting scandal at outsourcing giant Satyam, likened to that at US energy giant Enron, amid fears for jobs, foreign investment and the country’s economic credibility. The Satyam affair could not have come at a worse time, analysts said, with growth in India slowing and the government struggling to revive the flagging economy.
There were even fears the Hyderabad-based company - India’s fourth-largest IT exporter - could go to the wall, as existing clients run scared and potential bidders shy away from being associated with a tainted firm.
As news of the billion-dollar fraud broke, Satyam’s advisory consultants DSP Merrill Lynch, which had been scouting for merger bids, said it had ended its engagement with the firm, citing “material accounting irregularities”.
“Satyam is a dead company. Even if a white knight emerges, it will turn black,” Hitesh Agrawal, head of research with Angel Broking, said. Satyam Computer Services founder and chairman B Ramalinga Raju resigned on Wednesday, admitting in a letter to the industry regulator and stock exchange that company accounts and assets had been falsified and profits inflated.