Satyam Created Thousands Of Fake Invoices, Report Says
Investigators eye documents as part of probe into "India's Enron."
Scandal-scarred Satyam generated thousands of fake customer invoices as part of a scam to falsely inflate revenue and profits, according to a report Sunday.
India's Economic Times, citing sources close to India's Central Bureau of Investigation, said the agency has retrieved more than 7,000 fake invoices and numerous other spurious documents over the past several weeks.
The upshot: The total size of Satyam's deception is now approaching $2 billion, according to the paper. Investigators originally put the number significantly below that based on statements from Satyam officials.
On Jan. 7, Satyam chairman Ramalinga Raju admitted falsifying the company's cash position by as much as $1 billion while overstating quarterly earnings and revenue by up to 28%. Satyam may also have faked employee numbers and other data. Raju tendered his resignation and has since been arrested and jailed.
He's now in the custody of CBI, India's version of the U.S. Federal Bureau of Investigation.
Other Satyam officers, and two employees of PricewaterhouseCoopers India, also have been detained in connection with the case.
Increasingly nervous Satyam customers are looking for alternatives in case the outsourcer is unable to restore internal stability or find a buyer with pockets deep enough to see the Indian company through its current crisis.
The latest Satyam customer to consider alternatives is Selective Insurance Co., the 47th largest property and casualty insurance company in the United States. Selective has outsourced about a quarter of its IT staffing requirements to Satyam, but it may be looking for other arrangements in light of Satyam's woes.
"We believe we would be able to manage an efficient transition to a new vendor and not experience a significant negative impact to our operations in the event that we no longer retain Satyam in their current capacity due to the financial issues they are currently experiencing," Selective said in papers filed Feb. 27 with the Securities and Exchange Commission.
Selective Insurance is but the latest in a growing list of Satyam customers that may head for the exit.
Gadget maker SanDisk recently warned investors that Satyam's troubles have put its business operations at risk.
InformationWeek talked with Indian outsourcing company execs as they dealt with fallout from the Satyam financial fiasco. Download the report here (registration required).