Satyam fraud methodology revealed
Indian investigators disclose how computer systems were subverted to generate false invoices
Ramalinga Raju, former head of Satyam
The Central Bureau of Investigation (CBI) of India has revealed details of
the fake invoicing system used by Satyam Computer Services Ltd as part of the
US$1 billion-plus fraud that has rocked the company.
Documents released to the general public in India showed how the company’s
standard billing systems were subverted to generate ‘false invoices to show
inflated sales,’ before its former boss Ramalinga Raju admitted his role in
India’s largest ever corporate scandal.
The CBI said it had used cyberforensics to uncover how in-house computer
systems were exploited to generate fake invoices.
Regular Satyam bills were created by a computer application called
‘Operational Real Time Management (OPTIMA)’, which creates and maintains
information on company projects.
The ‘Satyam Project Repository (SRP)’ system then generates project IDs; there
is also an ‘Ontime’ application for entering the hours worked by Satyam
employees; and a ‘Project Bill Management System (PBMS)’ for billing. An
‘Invoice Management System (IMS)’ generated the final invoices.
CBI officers have concluded that the scandal involved this system structure
being bypassed by the abuse of an emergency ‘Excel Porting’ system, which allows
‘invoices [to] be generated directly in IMS…by porting the data into the IMS.’
This system was subverted by the creation of a user ID called ‘Super User’ with
‘the power to hide/unhide the invoices generated in IMS’.
By ‘logging in a Super User, the accused were hiding some of the invoices
that were generated through Excel Porting. Once an invoice is hidden the same
will not be visible to the other divisions within the company but will only be
visible to the [company’s finance division sales team]’ concluded the CBI.
As a result, ‘concerned business circles’ would not be aware of the invoices,
which were ‘also not dispatched to the customers’. The note added:
‘Investigation revealed that all the invoices that were hidden using the Super
User ID in the IMS server were found to be false and fabricated.’ The value of
these fake invoices ‘were shown as receivables in the books of accounts of
[Satyam] thereby dishonestly inflating the revenues of the company.’
And there were a lot of these bills. The CBI said their inquiries revealed
there are 7,561 invoices found hidden in the invoice management system, worth
INDRupees 51 billion (US$1.01 billion). ‘As a result of this analysis, the
individuals who have generated and hidden these false and fabricated invoices
have been identified,’ said the law enforcement agency.