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The Satyam Saga: The unanswered questionsBY: Jyoti | Category: Business and Finance | Post Date: 2009-03-13
The very definition of corporate governance in India points towards fairness, transparency and accountability. The Satyam saga pertains to blatant abuse of all these terms. Having done that, India's fourth largest software company Satyam Computers can lay claim to be involved in one of the biggest frauds in the recent history of Indian corporate world. It all began when 54 year old Byrraju Ramalinga Raju's greed and appetite for money overpowered his moral and social values. The founder of Satyam computers, on 7 January 2009, notified the board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified. Immediately thereafter, he resigned from the chairmanship of the company that had reached dizzy heights under his aegis. In the words of Raju, "What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualized revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap.- The fraud came to light after a botched acquisition attempt involving Maytas (a company owned by his own family) in December 2008 led to a sharp decline in the share price of Satyam. Raju admitted, -The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.- Riding the tiger indeed proved to be his waterloo. Raju and his brother, B Rama Raju, were arrested by Andhra Pradesh police on charges of criminal breach of trust, criminal conspiracy, cheating, falsification of records and forgery. Allegations against Raju also state that he has siphoned off the investors money for personal gratification. While Raju's battery of lawyers fight tooth and nail to ward off any extension of the swindler's CBI custody and the government appointed board of Satyam uses all its prudence to put the beleaguered company back on track, many questions remain unanswered. If big frauds like those of Enron Corporation and World Com were uncovered a decade back, why are the checks and balances not put in place to avoid such recurrences? Why is it left to the likes of the Satyams to tarnish India's image. The Indian software industry, akin to majority of the industries worldwide, is reeling under tremendous pressure owing to worldwide slump. Can we afford episodes like Satyam and run the risk of being cold shouldered by the rest of the world? After all, Satyam is believed to have brought outsourcing to India. If the worst of our nightmares were to come true, Satyam would be the one to take outsourcing out of India. Article Source: http://www.saching.com About Author / Additional Info: Additional Articles: * Suggestions for Cross Cultural Communication * Indian Premier League and controversies of IPL * Computer Support Keeps OS from Pesky Programs * Love.. Make it survive... * Insurance for Pregnancy Costs and Benefits Does this article violate or infringe on your copyright ? It is a violation of our terms for authors to submit content which they did not write and claim it as their own. If this article infringes on your copyrights, then use our Contact us form with the detailed proof of infringement along with the offending article's title, URL and writer name. If you do not hear back from us then contact us again in another 10 days. Thank you. Comments on this article: (0 comments so far) * Additional comments are now closed for this article *
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