Riding the Indian Tiger
January 7, 2009 7:57 AM Subscribe
Maximum Fraud: Ramalinga Raju, the Chairman of India's fourth largest exporter of IT services, Satyam Computer Services has admitted to falsifying records of at least five thousand crore rupees. Indian regulators are horrified, competitors shocked, chaos has ensued.
Satyam was audited by PriceWater Coopers. Since the company's stock is traded on NASDAQ and Euronext, there are judicial consequences in the US and Europe as well, in addition to a possible jail term in India. This admission comes in the wake of an aborted deal for two infrastructure-related companies owned by the chairman's family, a public censure from the World Bank (with possible corruption) and a $1.6 billion lawsuit.
Satyam was audited by PriceWater Coopers. Since the company's stock is traded on NASDAQ and Euronext, there are judicial consequences in the US and Europe as well, in addition to a possible jail term in India. This admission comes in the wake of an aborted deal for two infrastructure-related companies owned by the chairman's family, a public censure from the World Bank (with possible corruption) and a $1.6 billion lawsuit.
I love seeing outsourcers suffer. Fuck Thomas Friedman and his walrus moustache.
/schadenfreude
posted by Afroblanco at 8:17 AM on January 7, 2009
/schadenfreude
posted by Afroblanco at 8:17 AM on January 7, 2009
Wow, it's like even the fraud is being outsourced to India nowadays, isn't it?
posted by Dipsomaniac at 8:17 AM on January 7, 2009 [7 favorites]
posted by Dipsomaniac at 8:17 AM on January 7, 2009 [7 favorites]
At first I was like, "5000 rupees? Isn't that like a buck-eighty American?"
Then I learned that "crore" means 10 million, and that we're talking about 50 billion rupees here (equivalent to just over $5 billion USD).
Thanks for the clarification, DU.
posted by Rhaomi at 8:19 AM on January 7, 2009 [1 favorite]
Then I learned that "crore" means 10 million, and that we're talking about 50 billion rupees here (equivalent to just over $5 billion USD).
Thanks for the clarification, DU.
posted by Rhaomi at 8:19 AM on January 7, 2009 [1 favorite]
A Crore is ten million, so 5 thousand crore would be fifty billion rupees or about one billion dollars, right? Or did I miss a zero somewhere?
posted by delmoi at 8:20 AM on January 7, 2009
posted by delmoi at 8:20 AM on January 7, 2009
Then I learned that "crore" means 10 million, and that we're talking about 50 billion rupees here (equivalent to just over $5 billion USD).
According to this 50 rupees is worth about $1.02 USD.
posted by delmoi at 8:21 AM on January 7, 2009
According to this 50 rupees is worth about $1.02 USD.
posted by delmoi at 8:21 AM on January 7, 2009
we're talking about 50 billion rupees here (equivalent to just over $5 billion USD).
So, that's 0.1 Madoffs, then? Amateur!
posted by Skeptic at 8:21 AM on January 7, 2009 [4 favorites]
So, that's 0.1 Madoffs, then? Amateur!
posted by Skeptic at 8:21 AM on January 7, 2009 [4 favorites]
Maybe Mr. Raju wasn't too clear on the whole crore concept, either.
posted by Dumsnill at 8:23 AM on January 7, 2009 [2 favorites]
posted by Dumsnill at 8:23 AM on January 7, 2009 [2 favorites]
A Crore is ten million, so 5 thousand crore would be fifty billion rupees or about one billion dollars, right?
So, just 0.02 Madoffs, then. Bloody amateur!
posted by Skeptic at 8:24 AM on January 7, 2009
So, just 0.02 Madoffs, then. Bloody amateur!
posted by Skeptic at 8:24 AM on January 7, 2009
Henry Blodget wonders "why we should even BOTHER TO HAVE AUDITING FIRMS?"
posted by blue mustard at 8:24 AM on January 7, 2009
posted by blue mustard at 8:24 AM on January 7, 2009
BTW, am I wrong, or didn't PWC also "audit" Madoff? Are they doing an Arthur Andersen?
posted by Skeptic at 8:25 AM on January 7, 2009
posted by Skeptic at 8:25 AM on January 7, 2009
(Didn't mean to derail into terminology. "5000 crore" link in the post tells you exactly how much that is in USD.)
posted by DU at 8:34 AM on January 7, 2009
posted by DU at 8:34 AM on January 7, 2009
I kinda deliberately used the term 'crore' here just to explain all of those Indian news articles. If you click on the link, you'll see the number in billions and in USD. :-)
posted by the cydonian at 8:37 AM on January 7, 2009
posted by the cydonian at 8:37 AM on January 7, 2009
didn't PWC also "audit" Madoff?
PWC did not audit Madoff, although they did reportedly audit some of the feeder funds that invested in Madoff.
posted by blue mustard at 8:38 AM on January 7, 2009
PWC did not audit Madoff, although they did reportedly audit some of the feeder funds that invested in Madoff.
posted by blue mustard at 8:38 AM on January 7, 2009
Old-school IT outsourcing is quietly dying on the vine. Increasingly, companies now outsource departmental functions, like, say, running the CRM system, but the companies they outsource to are first world firms paying first world wages, using refined and proprietary processes and technology rather than cheap labor to improve productivity.
The "mythical man-month" means that tossing a ton of personnel at an IT problem won't improve the speed at which it's done, or the quality of the finished product. The Indian outsourcing firms have reduced costs, but have not improved productivity, and productivity is a bigger pay-off for IT investment.
I don't see this changing until India has a larger domestic market for IT services - and at that point, the largest customers for Indian outsourcing will be Indian, rather than American or European.
posted by Slap*Happy at 8:47 AM on January 7, 2009 [1 favorite]
The "mythical man-month" means that tossing a ton of personnel at an IT problem won't improve the speed at which it's done, or the quality of the finished product. The Indian outsourcing firms have reduced costs, but have not improved productivity, and productivity is a bigger pay-off for IT investment.
I don't see this changing until India has a larger domestic market for IT services - and at that point, the largest customers for Indian outsourcing will be Indian, rather than American or European.
posted by Slap*Happy at 8:47 AM on January 7, 2009 [1 favorite]
Sorry for the mix-up/derail. I tried to use Google's currency conversion by searching for "50000000000 rupees in usd" but got a standard SERP instead. Then I misread this page which seemed to answer my question and the rest is history.
posted by Rhaomi at 8:48 AM on January 7, 2009
posted by Rhaomi at 8:48 AM on January 7, 2009
Nitpickyfliter: PricewaterhouseCoopers.
posted by blue mustard at 9:30 AM on January 7, 2009
posted by blue mustard at 9:30 AM on January 7, 2009
Man, what can't we outsource these days?
posted by Pope Guilty at 9:39 AM on January 7, 2009 [2 favorites]
posted by Pope Guilty at 9:39 AM on January 7, 2009 [2 favorites]
And here I thought everyone was excited to be outsourcing the presidency to a Kenyan.
posted by kaibutsu at 11:50 AM on January 7, 2009 [1 favorite]
posted by kaibutsu at 11:50 AM on January 7, 2009 [1 favorite]
I couldn't contain my schadenfreudic glee when I read this today.
I love how bilious, semi-apologetic backpedalling doesn't sound any better when it pops out of an Indian CEOs mouth.
posted by Lipstick Thespian at 3:58 PM on January 7, 2009
I love how bilious, semi-apologetic backpedalling doesn't sound any better when it pops out of an Indian CEOs mouth.
posted by Lipstick Thespian at 3:58 PM on January 7, 2009
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posted by DU at 8:07 AM on January 7, 2009 [1 favorite]