Business Case Studies,Corporate Governance & Business Ethics Case Study, Flour Corp's Business Ethics Practices: Creating Six Sigma Standards in Staying Corruption-Free

Code : GOV0035

Year : 2009

Industry :Business Law, Governance and Ethics

Region : India

Teaching Note: Available

Structured Assignment : Available

Introduction:
Unanimous decision by the board of directors (board) at Satyam Computer Services Ltd. (Satyam) on December 16th 2008 to invest in two Hyderabad-based Maytas (SAT YAM spelt in reverse) twins in the realty business – Maytas Properties Ltd. and Maytas Infra Ltd. The decision intended mainly to “de-risk the core business”3 faced severe criticism from the shareholders and mass media. Ramalinga Raju, CEO of Satyam, announced that the firm would continue to stick to its core business of Information Technology (IT) and Business Process Outsourcing (BPO) services, while simultaneously taking up real-estate companies, in which the CEO’s family held majority stock. However, Ramalinga Raju could not foresee that the decision would trigger a crisis that would engulf Satyam and reverse its prospects (Annexure I).With a number of suspicions and uncertainties over the company and its transparency, the irked investors questioned the idea of investing in the family business of Satyam’s promoters from the accruals of Satyam, violating the promise they made in 1998. Facing the wrath of shareholder activism, Satyam management pulled back the acquisition deal within 9 hrs. of announcing the deal.