Problem: One of the more compelling financial fraud stories that unfolded in 2009 was Satyam Computers. Satyam plunged into crisis in January 2009 after its founder stated that the company's profits had been overstated by 97% and revenues by 76%. Satyam had about $672 million of fictitious and non-existent accounts including 13,000 ghost employees.
The $1 billion fraud unearthed at the leading Indian outsourcing firm has spawned fears it could tarnish the image of India overseas as an outsourcing powerhouse. The Indian IT sector generates more than half of its revenue from outsourced work from the United States. Satyam boasts of being the back office of more than 185 Fortune 500 companies, with a network spanning 66 countries. (FYI: Satyam had engaged PricewaterhouseCoopers as its auditors over the past 10 years.)
How did 13,000 ghost employees get by PricewaterhouseCoopers?