CEO admits 94% of outsourcing vendor's cash 'fictitious'

[Pale Blue Dot]

(Reuters)—In a stunning development, the head of Indian outsourcing firm Satyam Computer Services resigned on Wednesday, disclosing that profits had been falsely inflated for years and sending its shares tumbling nearly 80%.

India’s biggest corporate scandal in memory threatens future foreign investment flows into Asia’s third-largest economy and casts a cloud over growth in its once-booming outsourcing sector.

The news sent Indian equity markets into a tailspin, with Bombay’s main benchmark index tumbling 7.3% in a firmer session for world markets and the Indian rupee fell.

Ramalinga Raju, founder and chairman of India’s fourth-largest software services exporter, said in a statement that Satyam’s profits had been massively inflated over recent years but no other board member was aware of the financial irregularities.

“If a company’s chairman himself says they built fictitious assets, who do you believe here? This has put a question mark on the entire corporate governance system in India,” said R.K. Gupta, managing director at Taurus Asset Management in New Delhi.

http://financialweek.com/apps/pbcs.dll/article?AID=/20090107/REG/901079993/1036

[Turbineguy]

1. Gee, there I was

investing against Americans and now I'm down 80%.

I need a bailout! The government owes me!:sarcasm:

[newscott]

2. Criminy. But hardly a surprise.