Top 5 Scandalous Cases of Fraud In Accounting

By Rajeev Bagri

 


Top 5 Scandalous Cases of Fraud in Accounting

Malfeasance and corporate greed have seemingly increased in the last few decades. Billions of dollars lost, careers and companies destroyed; all because of the excessive greed exhibited by individuals. During our school days, we learned that every action has a consequence. However, as adults, we seem to forget that our actions could potentially ruin someone's life. In this article, we take a look at the top scandalous cases of fraud in accounting.

1. Satyam Computer Scam:

This fraudulent activity took place in the years 2006 to 2008. B Rama Raju, Vadlamani Srinivas, Subramani Gopalkrishnan, and T Srinivas were involved in this illegal activity. They all held high positions in the organization; B Rama Raju was the chairman while Vadlamani Srinivas was the Chief Financial officer.

The scam broke out in the year 2009 and the chairman of the company confessed that the accounts had been tampered with. He also confessed to cash inflation, within the company, to Sebi and stock exchange. Raju was guilty of manipulating the books by excluding receipts and payments that resulted in a misstatement of around 12,318 crore rupees. He was also convicted on 9th April 2015, along with ten other members. To name a few-

●       Former chief financial officer – Vadlamani Srinivas

●       Former PwC auditors Subramani Gopalakrishnan and T Srinivas

●       Brother- B Suryanarayana

●       Former employees of the company – G Ramakrishna, D Venkatpathi Raju, Ch Srisailam

●       Former internal chief auditor- V S Prabhakar Gupta

When the scandal became people's knowledge, the government passed the order to put the sale of the company up for auction. It was then taken over by Tech Mahindra and renamed immediately after Mahindra Satyam. 

2. Ketan Parekh and the Stock Market of 2001

The case broke out in the year 2009. Parekh was a chartered accountant and was managing his family’s brokerage business. He has become close friends with international personalities like Kerry Packer. Together with Kerry, they started a venture capital with the intention of funding start-ups in India.

3. Harshad Mehta’s Stock Market Scam

A stock broker from Gujarat, he facilitated the transaction of ready forward deals during the 1990s. He acted as an intermediary and raised funds from the banks. In this process, he used the money to illegally invest in the Bombay Stock Exchange. He raised the stock prices in an artificial manner. He continuously pumped up money and promised banks high interest rates if they transferred money, under the pretense of purchasing securities, to his personal account. When the State Bank of India reported issues with government securities, the scam became public knowledge. Harshad Mehta was guilty of manipulating large amounts of money, estimated to be around 3,500 crores.

4. Nirav Modi

Nirav Modi was brought up in Antwerp, Belgium, and is a third generation diamantaire. He reportedly dropped out of the University of Pennsylvania’s Wharton School and decided to participate in the family business led by his maternal uncle. Mehul Choski was Modi’s uncle and business partner. Together they duped Punjab National Bank of 12,000 crores, around 1.77 billion us dollars. The scam came to light in January 2018 and shocked the public. The central Bureau of Crime investigation sized around 34k jewelry pieces that were around 85 crore Indian Rupees.

5. Saradha Scam

This scandal took place between 2003 and 2011 and was one of the biggest financial scams of the early 2000s. Saradha Group was set up by Sudipto Sen (he was into the real estate business in the 1980s), he was one of the key people involved in the case. This case was quite similar to the Ponzi scheme as he promised high commission to those who brought in the money. Sen managed to raise around 2,500 crore rupees and built its image by investing in films and clubs. He even sponsored cultural events and expanded the scheme to several states like Tripura, Assam, and Odisha.

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