Wednesday, December 24, 2008

Nightmare at Satyam

The latest news has amplified the focus on the question: will the chairman of the board, B. Ramalinga Raju, resign along with other key staffpersons? This question will have a significant impact upon the conduct of managers of Indian firms in the future. This question will clearly turn on how the owners of Satyam think. Of these, the institutional investors (particularly foreigners) matter the most. The extent to which the Indian legal environment gives them voice is also an important question. As I wrote in my blog post Crisis in Satyam on Sunday:

What would you do with a manager who lost Rs.9,560 crore? I suspect that in most well governed countries, the manager would get sacked. It would be interesting to see (a) What the institutional investors of Satyam think, and (b) How the Indian legal environment deals with this.

1. Thanks Ajay,

Very good link on reportings on Satyam in connection with world bank.

In specific, with respect to the findings at the World Bank by Government Accountability Project (GAP). The matters came to light only after this agency (is it Non Governmental?) verified the activities of World Bank and presented the frauds committed by Satyam.

I really wonder why we can not have an institution with similar purpose, which is purely involved in verifying the end use/appropriateness of all the huge public money spent on various welfare schemes primarily focussed on Accountability aspect. OF course we have C&AG, but for reasons I do not understand, there was never such revelations or ACCOUNTABILITY on the part of any participating firms/officers/others. Accountability was clearly lacking in public services as brought in the recent Mumbai blasts.

In a scenario where we are worried about our internal security and gone ahead with National Security measures, considering that poverty alleviation is a key element in uplifting our economy to achieve growth and considering the substantial monies that have been spent over several plan periods (with no discernible improvement on the target segment living standards), will an institution of ACCOUNTABILITY, promoted to act independently, will be a good support for achieving our goals.

I invite learned members to respond.

2. Ak, Ajay,

Indians back home are going to be truly shocked when they learn about the "improper benefits" provided to the World Bank CIO by Mr. Ram Mynampati (Board member) and his key executives like Mr. Raj Asava, K. Sriram, Virender Agarwal etc.

The benefits provided were extremely immoral, unethical and disgusting. But as these corrupt executives will say, they were not illegal.

Please note: LaTeX mathematics works. This means that if you want to say $10 you have to say \$10.