An analysis of the report by the Serious Fraud Investigation Office (SFIO) on the swindle at Satyam Computer Services Ltd shows manipulation of software, and lack of audit controls and systemic review.

The fraud can be divided into three phases. For nearly three years since 1999, the firm rode on the Y2K phenomenon, which saw Indias software industry get huge orders and earn good profits.

The second phase began in 2001. According to the SFIO report, the falsification of accounts started then to keep Satyams share price high. The company had gone public in 1992.

Riding on the high price, Satyam promoters offloaded their shareholding in the market and used the proceeds to buy land. In fact, founder B. Ramalinga Raju had set up as many as 374 infrastructure firms and eight investment companies to help him become a land baron, the report has found. This phase continued till 2004, which was when things started going wrong.

The third and final phase started sometime in mid-2007 and continued till Rajus confession on 7 January this year. During this period, the company showed huge cash balances and fixed deposits in several banks of international repute. It was, however, actually starved of funds and the promoters were desperate to raise money to keep the company afloat.

On 18 December last year, two days after the Satyam board met and decided to acquire two group firmsMaytas Infra Ltd and Maytas Properties Ltdindependent director Krishna Palepu received an anonymous email.

The writer went by an alias, Joseph Abraham, and has been declared the whistle blower in the case. This email laid bare the fraud.

Palepu forwarded the email to another independent director, M. Rammohan Rao, who chaired the Satyam audit committee. Rao forwarded this email to S. Gopalakrishnan, partner at Price Waterhouse, the companys auditors.

Gopalakrishnan told Rao over phone that there was no truth to the allegations and assured him of a detailed reply in a proposed presentation before the audit committee on 29 December.

That meeting never took place. A new date10 Januarywas fixed.

Raju knew the clock was ticking for that audit meeting could have seen the committee members pose tough questions. Raju had not taken Raos calls seeking an answer to the allegations in the whistle blowers email.

Three days before the meeting, Raju confessed to Indias biggest corporate fraud.