Satyam untruths

The macabre humour of a firm called Satyam perpetrating the biggest corporate fraud in India will not be lost on the impartial observer. But, for a Government which had made globalisation and free trade central tenets of economic policy, the debacle can hardly be a laughing matter. Nor can the thousands of employees and stakeholders of this once reputed firm, which had boasted among its clients 185 members of the Fortune 500 club, be expected to be amused, since they are at risk of losing their livelihood or investments. By his own admission the Chairman of Satyam Computer Services, B. Ramalinga Raju, has been doctoring the company’s accounts to inflate profits and assets by a non-existent Rs.7,136 crore, his ostensible reason for doing so being to make Satyam stocks attractive by showing growth in profits, and get foreign institutional investors to pick them up. His accounts could pass audit scans during the heady days of the so called economic boom, but the global meltdown and recessionary tendencies ensured that the subterfuge could no longer be kept up. However, unlike other mammoth corporate scams of the past such as the one involving Enron, when the dirt had to be unearthed by others and punitive measures imposed upon the fraudsters, Raju has voluntarily owned responsibility in order to save the company he had started from being absolutely destroyed.

Axiomatically, it is only in winters of discontent does the seamier side of the corporate sector reveal itself, and the Satyam episode might well be merely the tip of an iceberg. Unless the Government and monitoring institutions such as the RBI and SEBI take a realistic stock of the after-shocks, the fallouts from Raju’s revelations might create a domino effect and lead to an irreversible situation. The Sensex having registered a huge fall, the fiasco has further dented investor confidence in the share market, which had even previously been showing a dismal downturn. With the resignation of its Chairman, the Satyam management is looking at various options to save the company and the jobs of thousands, which at the moment appears to be an almost impossible feat. However, it is not merely the fate of a single company that is at stake. The Indian software industry, a keystone in India’s economic development, has been jeopardised as a whole, since the shadow of the Satyam fraud has darkened the entire system as far as perception of foreign outsourcing agencies are concerned. Other prospective sharers in the outsourcing pie like China and South East Asian countries might benefit at the cost of India. It is imperative that authorities undertake measures to restore global confidence in the nation’s financial and corporate systems to neutralise the negative impact of the Satyam fiasco. source: assam tribune