Residents of the village of Bhimavaram, where he grew up and created jobs, have rallied behind him. And some have applauded the way he left the stage. "To me Raju was a hero, and will always be a hero," said Sharad Kumar, 38, a businessman. "You tell me: How many people dare to come out in open and confess to such a thing? . . . What Satyam did was basically to make middle-class Indians dare to dream."
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Satyam's $1-billion fraud shakes India
Out-sourcing giant Satyam's chief Ramalinga Raju admits to posting fake profits for years. It is unclear how the fraud went undetected, but analysts see don't see a larger industry-wide fallout.
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Analysts said the rising tide of hot money going into emerging markets in recent years and India's tech boom made it possible to keep the scam going for years.
"It was the best game in town," said Raamdeo Agrawal, managing director of Mumbai-based Motilal Oswal Securities. "The whole world loves you and you get hooked on it."
But in recent months, as the global economy soured and credit dried up, the walls started to close in. In desperation, Raju tried to engineer a "purchase" of two family firms last month, a deal that allegedly would have allowed him to post money transfers that didn't take place. But shareholders grew suspicious given the $1.6-billion price tag and Satyam's sudden desire to move into the completely unrelated infrastructure businesses.
A further blow came when the World Bank dropped its business with Satyam, citing "improper benefits" given to bank officials. And in what may have been the last straw, DSP Merrill Lynch was called in to broker a sale, only to resign as the company's advisor Tuesday. Raju released his letter the following morning.
"That may've been the trigger," said Manoj Vohra, director of India research with the Economist Intelligence Unit.
Analysts said that in the short term, this bombshell could dent the reputation of "India Inc." But barring another scandal, it would probably be recognized for what it is -- a case of irregularities by one company.
"I hope this is a wake-up call for everyone the world over," said Shaw, the biotech executive. "We've seen an economy of greed, fueled by scams and loose regulations leading to this recession. Good governance has never been held at a [proper] premium."
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mark.magnier@latimes.com
Special correspondent Rajiv Singh contributed to this report.
