Philosophers Questioning The Scandal Combined With Ethical Principles In Business Accounting Essay



I chose this scandal because it was a recent and a very big one. It is also very international as it is an outsourcing firm, the consequences of the scandal affected many other nations. Many people lost their investments and India has lost the other nations' trust deeply. It is very suitable to explain with various ethical elements.

1.2 What is the Scandal about, who are the actors in it?

On 7 January 2009 by the confess of B. Ramalinga Raju, who is the founder and also the chairman of the Satyam Computer, the world has learnt and shocked about the fradulent financial activities that the Satyam interfered.

Ramalinga Raju founded Satyam in 1987 with only 20 employees which was India's fourth largest outsourcing company with $ 1 billion annual revenues Satyam Computer Services Ltd was incorporated in 1989 and it went public in 1992. With each passing year, Satyam strengthened its position and extended its operations to various locations. .

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However when it is discovered the cheatings of Satyam, questions arose about how Satyam came to this position. For answering these questions we must go back to the 1990s. The second half of the 1990s was the liberalization period in which the importance of the corporations increased highly in India. Increased competition forced corporations to seek unethical ways to drive their businesses. As coming into being later, Ramalinga Raju also engaged in such actions to show its company's performance better off.

In 2008, although the board of directors hesitated, Satyam acquired Maytas Infrastructure and Maytas Properties that were founded by the founder Ramalinga Raju's family for $1.6 billion. These both companies belonged to Raju's sons and in the end the government had to review the deal and the vice president of India criticized it.

When the government and the clients of the Satyam became suspicious about this behaviour of Satyam and the investors panically and suddenly sold a huge amount of the stocks, Satyam called of its decision.

Satyam investors lost 3,400 Indian Rupee in the related panic selling. The acquisition created a skepticism in New York Stock Exchange and the Satyam shares fell 55%. Because of that , the board of directors had to resign at the end of the year

Then on 29th December, 3 members of board of directors quit their jobs, it is the day when board of directors announced that they will buy back for gaining the trust of their investors again. However the things kept going worse off. On December 23, The World Bank announced that it banned the Satyam from doing business with it due to data theft and bribery. Market speculations about that the Satyam doing fraud forgery and breach of contract increased enormously. It is when the value of the promoter stake of Satyam decreased to 5%, which is an indicator that the Satyam was stranded, On 7 January 2009, company Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified (Arakali,2009).Raju confessed that Satyam's balance sheet of 30 September 2008 contained: inflated figures for cash and bank balances, an accrued interest of Rs. 376 crore which was non-existent, an understated liability of Rs. 1,230 crore and an overstated debtors' position of Rs. 490 crore (as against Rs. 2,651 crore in the books).After investigations are deepened, it was found that he had picked the lesser of two crimes when he decided to confess the crime and he siphoned off funds by inflating employee numbers, made many "benami" land deals, opened "benami" bank accounts, through relatives and friends and used them to trade in Satyam's shares (Aneja,2009).

Benami account means that when you purchase something in the name of someone else by applying your own funds, you use that person as a name-lender and this is called a ' benami transaction' and this is illegal, it can be made legal by transferring the land in your name but this will involve stamp duty and registration charges.

As a result, just a small manipulation in the company's balance sheet result in difference of INR 71,36 billions between the actual operating profit As Mr. Raju also stated in his letter,

this difference continued to grow in many years and there had been taken many actions to fill this gap and the attemp to buy Maytas was the last attemp to cover the fictitous assets with real ones.

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He also claimed that neither he nor the managing directors benefited financially from the inflated revenues and none of the board members had any knowledge of the situation in which the company was placed.

It is very difficult to convert everything back to an ethical and right way after a point and Satyam had already passed this point which means it was inevitable for Satyam to be disclosure. After the confession, the board of directors was banned from functioning and 10 nominal directors are appointed. Ramalinga Raju had arrested on charges of breach of trust, falsification of records, cheating, forgery and violating insider trading norm. A number of employees including a top executive and CFO who laid the groundwork for the fraud and involved in the falsifying the bank statements. The CFO of Satyam also arrested. PWC as being the audit firm of Satyam had lost confidence by its customers and 2 of its top officials were arrested.

This scandal called by the media as Indian's Enron and it has brought into question the levels of corporate governance in the country after this scandal. Satyam's shares decreased by %75 and it caused the Indian's stock market to fall by %7. [1] 

Rajiv Gupta, one of the investors of Satyam, told in an interview with BBC that he found the situations occurred after the scandal very worrying and the time is the worst possible time to happen while the markets were just started to look like they were recovering. [2] 

However, it is not the market only affected from this scandal; investors, employees, suppliers, customers all injured from the wrong doing. It is obvious that there are some people who violated some moral issues and behave unethically.

Now I will try to incorporate ethics into real life case and evaluate in the lights of different ethical principles to be able to make judgment whether it is in accordance with or in violation of moral standards.

1.3 Who has the moral responsibility? Who are to blame?

The term moral responsibility sometimes means to blame a person for something. A person is morally responsible for the injuries or a wrong if: caused or helped to cause it, or failed to prevent it when he could have and should have, did so knowing what he was doing did so of his own free will. In modern corporations responsibility is distributed among a number of cooperating parties. The parties produce the corporate act together. The system arises a question about who is responsible for jointly produced act. The traditional view is who is knowingly and freely contribute the corporate act is responsible for the wrong. In Satyam case fraud and deception at Satyam Computer Services in India consist of several immoral acts. Dual accounting books, thousands of forged invoices, thousands of unnecessary employees and dozens of fake bank statements, according to court records(Diaz,2009). So a number of fraud acts was seen. According to corporate responsibility theory who is responsible for? Whole company employees, employees, managers, board of directors, shareholders even auditors? In immoral acts an individual only be responsible for an fraud if the person is knowingly and freely make the wrongful act or not to participate the act but aware of it so not the make an action to

Under these conditions, we have to consider both Mr. Raju, the audit firm PricewaterhouseCoopers and board of directors and find out if they were morally responsible for the fraud or not.

Mr. Raju; we can obviously see that he caused the fraud, since he wrote a confession letter to the press and told all the fraud. Moreover we know that Mr. Raju acted of his own free will by acting deliberately and purposefully and his actions were not the result of some uncontrollable mental impulse or external force.

PwC; the audit firm claimed that they did not know about the fraud and the company gave them the wrong financial statements, so they did not recognize the fraud. Auditors are responsible to examine the financial statements of the company.

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Satyam committed an erroneous recording assets which did no exist. PwC is the audit company and should have recognized the fraud so PwC failed to prevent it when it could have prevented due to their profession (Pettet,2009). Through their profession, the audit firm is in a position to detect any inconsistency or fraud in the statements.

The firm could have raised questions about the huge non-existing money. They should have paid necessary professional attention to their work(Sekhar,2009)

This requirement is an obligation for the auditors. In Satyam the auditors who are S. Gopala Krishnan and Srinivas Talluri, who have been suspended from PricewaterhouseCoopers cases the auditors are also facing charges(Diaz,2009)

Board of Directors; when we think about the duties of the board such as governing the organization, approving annual budgets and oversee the activities of the company, it is clearly seen that the board did not do its duties. They probably did not examine the operations of the company carefully and did not know what was happening in the company. Therefore, we can say that the board failed to prevent it when it could have and should have prevented it.In Satyam cases according to Ram Mynampati he and other board of directos had no knowledge of the financial fraud. So they are not responsible for the immoral act because they have no knowledge so ignorance of the act(Vaswani,2009)

One can say that PwC and the Board are ignorant about the issue, however, they might be deliberately ignorant, and if they recognize that something was going wrong and did not say anything. For example Mr. Raju wanted to buy the Maytas Infrastructure Company's shares and the board knows that their business has no relationship with infrastructure but they did not search about the reasons why Mr.Raju wants to buy the shares.

The other exception of ignorance is being negligent. Both PwC and the Board failed to take necessary actions and they may neglect the observable clues of the fraud, it is not an excuse but it may reduce their responsibility.

Section 2 Philosophers questioning the Scandal combined with ethical principles in Business

2.1 Kohlberg's Moral Development

Ramalinga Raju can be the victim of his self interests. He may think that its consequences would be profitable and positive to his self interests. He may earn more money if he did not confess the fraud and resign.

Even if inflating figures and showing a non-existent accrued interest are not ethical, but these actions would result in profit to him, therefore, he sacrifice from being ethical. So, we can say that Mr. Raju is at the first level "preconventional stages" and at "Instrumental and Relative Orientation Stage". [3] 

2.2 Ethical Principles In Business

2.2.1 Utilitarianism:

According to Utilitarian approach, it is essential to consider both the immediate and foreseeable future costs and benefits that each alternative will produce for each and every individual. The costs of the scandal are severe. For example, 6 million innocent shareholders some of them have lost their entire life savings because Satyam lost its value by 78 % ( Vaswani, 2009). Employees suffered from the falsified accounts and lose their job in long term. He also diverted large sums of money belong to shareholders by pretending to make salary payments to non-existent employees mean that decrease the revenues of shareholders.

According to utilitarians, there is nothing unethical to falsify the datas in the records. Utilitarians think that the actions which produce the greatest benefit and the lowest cost for the society. Before the disclosure of the fraud, the investors were investing their money into Satyam and so the company could continue to operate.

If the company had showed the actual situation to the society, no investors would choose Satyam that the company would probably have had to be close down. In short all of its 53000 employees would become out of employ which is a big cost to the society. So there is a benefit of protecting to jobs of employees and moreover Mr. Raju and some other directors also might be benefited from the fraud and there were no one getting pain before the disclosure. So according to utilitarian approach, it is right to cheat on report in this situation. However there are problems with rights and justice, because this behaviour isn't a correct moral rule, it is not right to cheat on report.The legal system of India, petmits falsification of datas which means Mr. Raju and other people played role in fraud do not have a legal right to do that. However is it also wrong according to moral rights? Moral rights are correlated with duties. When a person have a moral right, the other have a duty not to interfere him or to provide him his right.

Here in the case, investors have right to know the actual position of the company which they are investing. However by cheating on records is violated their rights.

Satyam scandal has damaged the rest of the Indian tech services industry because foreign companies were discouraged for outsourcing owing to the scandal.

It is obvious that many U.S. and European clients including General Electric, General Motor, Nestle, and also United States Government will rethink their reliance on not only the company but also Indian outsourcing and the credibility in western clients will suffer in the long run (Görkey, 2009). As a consequence of the case, the entire corporate governance system in India has been unfaithful for most companies.

On the other hand, scandal created an opportunity for India's rivals in the outsourcing game and smaller IT companies in foreign countries can start business with Satyam's clients. However some clients are encouraged to keep jobs at home country in order to avoid any risks of fraud.

It can fresh home market of the clients who may prefer to do business in their own sector which will gain more profit itself. There are some Raju's contributions to society that can be calculated on benefits side like building an emergency healthcare provider called EMRI and setting up an emergency medical service (EMS).

At the end of cost-benefit analysis, net utility that produced by the scandal is negative meaning more costs over benefits so it is not a right action.

2.2.2 Kantian Rights

Ramalinga Raju in his letter noted that, Satyam had actually made 3% margin, however many economists and scholars find it ridiculously low in IT industry (Shirsat, 2009).This claim supports the claim that Raju pick the lesser of two crimes when he decided to confess the crime. Besides he inflated the headcount of employees to siphon off funds from company (Vaswani, 2009).Therefore we can conclude that more money was coming into company but it was being siphoned out. He used his elderly mother's name to make nearly 400 "benami" land deals, invest in other businesses such as real estate with the many.

First of all, he diverted large sums of money belong to shareholders by pretending to make salary payments to non-existent employees.

The situation cannot pass both the universalizability and reversibility criteria of Kantian rights. (Velasquez,2006) He also violated the second formulation of Kant because he used these non-existent employees and his elderly mother as a means for his own will and violated human dignity norm. Also violation of the property rights of shareholders by using property belongs to company without permission can be seen as an unethical practice.

Corporate law practitioners said Raju violated officers' right to know by abetting them to commit financial fraud. Another issue is Raju is known for his philanthropy and commitment to helping India's rural poor. He reportedly donated more than $50 million of his own money to create the program. With the wealth generated by money of others making such a commitment to society is unethical. This violates the shareholders' right to choose because they have a right to choose how to use their own money for helping poor or not.

Moreover according to Kant's first formulation, "the person's reasons for acting must be reasons that he or she would be willing to have all others use, even as a basis o how they treat him or her." Mr. Raju probably wouldn't want to invest in a company that looks being in a good situation but is actually in a bad situation. So also according to Kant's Categorical Imperative it is not right.

Satyam scandal involves questions of justice and fairness. From the "Distributive Justice" point of view which is the justice category based on the idea that benefits and burdens should be distributed equally, case involves many unjust practices.

Here Ramalinga Raju and his family diverted money from Satyam to their own will. Besides with the transfer of shares to the family members, they gave huge loss to the small investors. All benefits went to the Ramalinga Raju and his family. Employees, investors and creditors who had nothing to do with the fraud all suffer terrible consequences and bear all burdens. Also IT industry in India has spent 20 years building up credibility with Western clients, but this scandal is foreseen to make many U.S. and European clients rethink their reliance on Indian outsourcing. From the retributive justice perspective, Mr., Raju can be blamed and punished for doing wrong knowingly and in his own free will.

What is disturbing is that for over seven years the businessman who systematically committed fraud was supported by politicians in power in the Andhra Pradesh Government.

His association with the top leaders meant that Raju got huge chunks of prime land at throw-away prices for Technology Park and other purposes and many other facilities which enabled Satyam to expand and grow rapidly (Balachandran, 2009). Banks and financial institutions allowed Raju to open thousands of accounts without questioning. They provided statements about the company's finance as Raju requested. Raju was allowed inside knowledge of government policies, development plans and projects even before the blue-prints were prepared.

This enabled him and his consortium, Maytas Infra, to bid for projects on favorable terms. The whole government system was harnessed to sub serve Raju's interests. According to Rawls' fair equality of opportunity principle, everyone should be given an equal opportunity to qualify for the more privileged positions. It can be seen that Raju had greater opportunities than other people and got preferential treatment by banks, institutions and government. The scandal ends with heavy burden on society and causes inefficiency in the system so is deemed to violate the difference principle which is the claim that a productive society will incorporate inequalities. The difference principle implies that it is wrong to defraud shareholders and investors because action creates inefficiency.

2.2.3 Virtue Ethics:

Raju has an MBA Ohio University and is an alumnus of Harvard Business School, in other words he is a well-educated person. According to the Corruption Perception Index 2004 (CPI) which ranks the countries in their order of corruption, out of the 146 countries listed, India where he grew ranks a poor 91. In Satyam case, Raju's wrong act might be related to the following three situations: firstly, it might be related to his individual sense of values, so all he has done come from his personal moral values.

Secondly, it might come from is the value cherished by society where he grow. According to the idea, Raju might be affected by the Indian society and culture. Finally, the system of governance might have an influence on Raju's behaviors.

I would personally agree with this point, each culture and nation has different tolerances and different ways to accomplish business. In India it might have been easier to do it, than in any other country or the life conditions and society values may encourage him to do such a thing.

2.3 The Individuals in The Organization

2.3.1 Conflict of Interest

The policies and procedures under code of conflict of interest requires that the directors and associates of the company shall avoid any activity or association that creates or appears to create a conflict between the personal interests of the directors and associates and the company's business interests.

In the case of Satyam, the auditors of Satyam might have faced with conflicts of interest while certifying the financial record of Satyam. They have softened their standard while auditing the company financial statement. It is clear that the loyalty or obligation to the client, here it is Satyam, is divided or in conflict with self-interest of Auditors and the interest of Satyam's management. In addition, the company corporate governance does not show any conflict of interest between management and owners, the problem was caused by the conflict of interest between the dominant shareholders (promoters) and the minority shareholders.

The promoters that involve Mr. Raju, together with their friends and relatives were the dominant shareholders. The company proposed to invest $1.6 billion to buy real estate and infrastructure firms, Maytas Properties and Maytas Infrastructure, run by the sons of its founder-chairman Raju. Investors and analysts questioned the move by the Hyderabad-based software exporters to pay such a huge sum to acquire companies linked to Raju and raised concerns about corporate governance at Satyam and its credibility in the eyes of global clients and shareholders. Ramalinga Raju, however, justified the decision, saying it was part of a "good diversification strategy". Representatives of investors such as Templeton and Motilal Oswal complained that Satyam had no business buying real estate or infrastructure companies and that their investment in Satyam was because it was engaged in providing software services ( There is an actual conflict of interest under this investment decision and also supported the claim that "all money invested in Maytas belongs to Satyam". Then Raju stated that the aborted Maytas deal was actually last attempt to fill the fictitious assets with real ones. Though the financial institutions owned majority of stake, but historically they used to play a passive role in the company. This was allowing the promoters, Mr. Raju and his relatives to play the corruption game. The promoters were trying to re-structure the business and were also diverting assets between group companies. So, this shows the conflict of interest between these parties.

2.3.2 Insider Trading

Satyam promoters and top officials may have charged in insider trading. Investigators are coming across evidence of insider trading by the promoters even before the scandal broke. The investigation is also focusing on the allegations of insider trading in the period before the failed December 16. There are enough pointers to insider trading by the Satyam promoters and the companies floated by them and their relatives.

The insider trading in Satyam is formed by the top management of Satyam - the directors and senior officials - with selling shares ahead with that books have been overstated, leading to an inflated stock price that helped the top management make money.

The top management offloaded the company's 6.01 lakh shares this financial year just before the confessions of Raju. It reminded the possibility that there may be people who must be aware of things to come and might have offloaded their holding just before fiasco (Agarwal, 2009).

Srinivas Vadlamani, the chief financial officer of Satyam Computer Service, has been the most active in offloading the shares. Srinivas offloaded 92,358 shares in two instalments in September. Ram Mynampati, president of Satyam and a member of the board, also offloaded 80,000 shares in three installments in May and June. Interestingly, during the past nine months, none of the top management team of Satyam has purchased its shares. The heavy selling of shares by the Satyam big-wigs in September was initially attributed to the developing uncertainty in the economic scenario. However, put in the larger scheme of things, the sale could be a case of insider trading. The trend has asserted in December when 28,500 shares of the company were sold by its senior officials. The most recent sellout was done by AS Murthy, chief information officer, who sold 21,000 shares between December 12 and 15 (Agarwal, 2009).Mr. Raju inflated the account for increasing the price of shares so that he and his accomplices get maximum profits, in which he succeeded also. The day this news broke, the Satyam's share was soaring. Here, the SEBI and Ministry of Company Affairs too have failed in their assigned jobs. SEBI is the highest regulator and keeps eagle eye on the activities of the capital markets. When the profits of this company were registering abnormal growth, thereby the prices of the shares were soaring, they do not have any attempt, there has been a lot of hue and cry with respect to insider trading; a howl SEBI failed to listen to and it inflicted heavily on Satyam.

Although insider trading per se is not illegal but it is unethical, moreover when Company's high official who were on share selling spree must had the idea of what was going in the company.

Raju had also opened multiple benami (dummy) accounts through relatives and friends and used them to trade in Satyam's shares, violating the insider trading norm. He used the company's proprietary information to transfer securities to his brother Suryanarayana Raju and to his mother Appalanarsama Raju. Crime Investigation Department (CID) of the Andhra Pradesh police and Central agencies has confirmed that the promoters indulged in insider trading of the company's shares. (NDTV Correspondent,2009)

2.4 Rationalization

It may seem easy to rationalize this at first. Managers always trust in themselves and in their skills a lot, and believe that their company is fundamentally sound. They believe that they will make it up in the future without anybody noticing it when there is a problem and. They do everything to rationalize their moves, their decisions in order to look innocent. When the company faces the gap and unable to make it up, a larger distortion is needed to cover up,

as Raju added in his letter. He bet that neither him nor the managing director has benefitted in the financial terms on account of the inflated results, even 1 rupee/dollar. Put differently, he claims that he did falsify accounts in order to keep operating going at Satyam and to be able to provide prompt payments of salary.

He also gave an explanation to Maytas acquisition and rationalized it by claiming that he just tried to fill the fictitious assets of Satyam with real ones. What is more, he said 'Significant dividend payments, acquisitions and capital expenditures to provide for growth did not help matters.' He asserted these claims to find an excuse for his fraud.

2.5 Stakeholder Analysis

According to new stakeholder theory, management bears no additional fiduciary relationships to third parties but have morally significant nonfudiciary obligations to third parties. It means management may never have promised customers, employees a "return on investment" but obliged to take seriously its extra-legal obligations not to injure, lie to or cheat these stakeholders (Goodpaster, 1991).

Until the fraud, the secret of Raju's outstanding success is thought to lie in his simple, yet extensive management model that creates value, promotes entrepreneurship, focuses relentlessly on the customer and aims at constant pursuit of excellence for all stakeholders. The fraud showed that he is far away from this excellent picture. He failed to exercise his obligations which are not to injure, lie or cheat the stakeholders. All stakeholders are lied and cheated with the falsified numbers and reports for many years. In May, Satyam has just over 40,000 employees, almost each of them on the 'bench' are in danger of losing employment at Satyam.

As well as, customers of Satyam including Nestle, Nissan, in a big scrape because they don't want to work with Satyam anymore but transition is also difficult for them. Moreover IT industry participants, competitors and suppliers were lied, cheated and injured by Satyam

Section 3 The Ironies in the Scandal & The Awards of the Ceo

3.1 Ironies

This scandal includes many ironies in it, from the name of the company to awards the firm and the Ceo received:

Satyam means "truth" in Sanskrit,

Satyam earned a United Kingdom Trade and Investment India Business Award for Corporate Social Responsibility,

Satyam got Global Award for Excellence in Corporate Governance for 2008,

In 2007 Ramalinga Raju was chosen as the best entrepreneur of the year by Ernst&Young,

Satyam was selected for the formal IT sponsor of the World Cup 2010-2014 by FIFA.

3.2 Corporate Governance

Golden Peacock award was given to Satyam for its corporate governance standards. This is the irony of the situation that a company which was considered the best in IT industry has such low corporate governance standards. On top it the Board of Directors was not even apprised of even anything. Corporate Governance as defined is "Corporate governance refers to the legal and factual framework of the management and monitoring of companies. Corporate governance regulations are geared towards transparency and thus strengthen the trust in management and control focusing on value creation".

There are few importance elements of corporate governance namely Auditing, Independent Directors, Regulators and Finally the Board including CEO itself. If we examine these constituents one by one, it would be crystal clear that all the constituents either failed or did not act as was required. The role of Price Waterhouse Coopers, the Auditing firm of Satyam has been dealt.

So, the Satyam fraud is unfolding and so are the inherent weaknesses of Corporate Governance in India. The fraud has brought to light the fact that in India the distinction between owners and management is still not very clear. Where the owners are also the managers, such frauds are always a possibility.

Section 4 Conclusion and Suggestions

4.1 What should have been done, where did Raju do wrong?

Satyam Computer company is a world-wide company. The company has many clients all around the world and the foreign investors come to India to invest in the company. As being a big company, it requires a good corporate governance system and correlation among parties of company.

All of the parties should follow their duties according to the contract with the company. So that the company will survive, expand its market share and serve their clients in a confidential manner. The CEO of the Satyam Computers and other people involved in the process was blamed for the immoral acts which was inflating cash and bank balances, accruing interest that are non-existing, overstating debtors' position in the books, bribery, insider trading and etc. A company manager is responsible to carry the company in the pursuit of profit and while searching ways to increase profit the company should obey the legal issues and laws. Mr. Raju did not follow these principles that the company lost it's clients , reputation and damaged economically both in the home and foreign market. Mr. Raju used his authority and power in an inappropriate ways. In this report, Satyam scandal and related ethical dilemmas are evaluated in the lights of different ethical principles. The major aim was to incorporate ethics into this real life to be able to make judgment whether it is in accordance with or in violation of moral standards. Moral responsibility and blame analysis showed that Mr. Raju is morally responsible for the wrong with no mitigating factor even he tried to rationalize his wrong doing in his letter. PwC and board of directors stay negligent about the issue by failing to take necessary actions, their negligence may lessen their responsibility but cannot completely remove. At the end of cost-benefit analysis, net utility that produced by the scandal is found to be negative meaning more costs over benefits so it is not a right action. According to rights and justice.

Raju's actions are unjust and contradict to Rawl's principles and also violate Kant's first and second formulation and rights of others. As a chairman of the company, Raju failed to live up the duty to pursue the goals of the firm by acting on a "conflict of interest" and trading company's stock on the basis of "inside" information. Besides new stakeholder analysis proved that Satyam management failed to exercise their obligations toward the stakeholders which are not to injure, lie to or cheat the stakeholders. Raju's actions are immoral and he sacrificed being ethical purposefully for his self interest which lead us to put him into the "Instrumental egoism" stage of Kohlberg's moral development stages.

4.2 Introduction of a Company Ethics Program

Although Raju has an MBA Ohio University and is an alumnus of Harvard Business School, he made the fraud, it shows the importance of having common sense, the education does not matter all the time. "Company Ethics Program" should be formulated and each and every individual should commit this, Exercise of this program should be followed and monitored persistently and consistently.

People should be trained, retrained until the principles are internalized, It also showed us the importance of whistle blowing, The damage would be less if somebody blew the whistle earlier. Audit firms should be more careful while examining the financial statements of the companies. In the end they also have a big part in this game and they are to blame

Whistle blowing: Whistleblower is a person who raises a concern about wrongdoing occurring in an organization or body of people. Usually this person would be from that same organization. This misconduct can be classified in many ways such as a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption. Whistleblowers may make their allegations internally (for example, to other people within the accused organization) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues). [4]