Satyam chairman resigns amid $1bn fraud

The discovery that Satyam, India's fourth-largest IT outsourcer, cooked the books to the tune of $1billion threatens to send the country's reputation for corporate governance into freefall.

Already, many overseas businessmen are weary of doing business with a country renowned for endemic corruption. One American working in the shady property sector fed up of trying to cut deals in Mumbai told The Times last week that India actually stood for "I'll Never Do It Again".

But the flagship IT industry was supposed to be different. Its companies handle sensitive digital information – from credit card numbers to top-secret details of algorithmic stock trading programs – for Western clients. Rather like Caesar's wife, it has to be above suspicion.

Satyam failed miserably. In a resignation letter to the company's utterly discredited board this morning the group's founder and chairman Ramalinga Raju admitted, among other things, that:

* 50.4 billion rupees ($1 billion; £695 million) out of 53.6 billion rupees in cash assets on the company's books are "inflated or non-existent"

* In the three months to September, Satyam reported revenues of 27 billion rupees – but that the real figure was 21.12 billion rupees

* The actual real operating profits in the same quarter were 3 per cent of revenues – not 24 per cent as stated.

Such is the extent of the fraud, analysts in Mumbai said that nobody could be sure of any of the numbers disclosed by Satyam. Does it really, for instance, employ 50,000 staff?

India's financial community has been swift in slamming Mr Raju for raising a question mark over the country's entire corporate sector.

"Satyam is now India's Enron," Bhavtosh Vajpayee of CLSA India, the brokerage, said.

And if Caesar's wife got caught cooking the books, those who looked on while she stirred the pot appear – at the very least – careless.

"The independence of the board was already in question, now the auditors' (PwC) complicity in what seems to be a multi-year mis-statement of financials will also be explored," Mr Vajpayee added.

To top it all: late last year, The World Council for Corporate Governance, with Ola Ullsten, the former prime minister of Sweden as its lead judge, ranked Satyam as among the best run companies in the world.

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