Questions

Satyam was a fiasco, big time, no doubt about it, a corporate f**k up, a failure of the system and a nauseating pimple on the face of squeaky clean ‘Corporate India’. These descriptions sum up the sentiments of the hordes of ‘critics’ dissecting the biggest sensation since Rakhi Sawant’s fake mammary glands.

What nags me the most is the question ‘why did he do it?’. Ramalinga Raju, a poster child of the Indian IT industry, was not doing badly when the scam started. Satyam was globally recognised, projects were numerous, his construction company, Maytas, had its order books full. Now why did he have to go ahead and screw it all up?

I think it is all about ‘Maximizing the shareholders wealth’. The constant need to satisfy the incessant greed of investors just gets to you. To add insult to injury, quarter reporting just aggravates the problem, every quarter the pressure just builds up. In my list of villains I also add the media for lionising of such personalities, Raju is the recipient of many awards, he was often hailed as an underdog superhero. To keep up with the expectations the poor man was pushed to show better profits every quarter and needed to show how his company excelled in everything. Sure, there might have been a lot of ego feeding involved which leads me to the next topic in this discussion.

I read an article contrasting the role of the promoter in companies in the US and in India. In the US, the promoter is quite encumbered by the company’s proceedings; it would be run by professionals who in turn would keep its policies intact. India, on the other hand, is in favour of promoters meddling in the company’s affairs. The author concluded that we should follow the Americans and let the professionals handle it. Quite a good idea, but it made me wonder; what is the incentive for a promoter to start something new. More than the money, it’s the ego trip that the promoters crave for and if that is not satisfied what’s in it for them?

Is it really justified to keep the shareholders wealth to be the utmost concern? They are just in it for a quick buck or two. Where is the loyalty? Investors, in the traditional sense are a dying breed. So is it time for to shift focus from shareholder’s benefit to company’s benefit? Treating the company as an entity and taking decisions that would help it grow and become a better service to society (Forgive me for that tinge of socialism).

Don’t even get me started on the role of auditors. If they don’t assume responsibility of the work they do, then why is it mandatory. If the ‘Big Four’ guys don’t check at least the bank accounts, then why in God’s name is it called an audit. I looked it up, Webster’s define Audit as “The review of a body's activities and operations to ensure that these are being performed or are functioning in accordance with objectives, budgets, rules and standards. The aim of this review is to identify, at regular intervals, deviations which might require corrective action”. I don’t think this was what PWC did at Satyam. Arrrrgghhh...

I don’t want to draw any conclusions; I’ll leave that to you. I believe there’s more to unfold and many lessons to be gleaned from this.