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INDIAN IT DOT CON
After 26/11,
India
suffers corporate terrorism as Satyam fraud sinks IT dream
Mansukh Kaur / WSN Bureau
 NEW
DELHI: In countless Bollywood movies, the hero is often named Raju.
An underdog, Raju has beaten many odds in many a movies and always
walked away with the girl in the masala cinema simply because of the
one thing he never shunned -- truthfulness.
The past week
saw India's IT major Satyam, meaning The Truthful, being exposed as
totally devoid of any such connotation as its head honcho chairman,
B. Ramalinga Raju, detailed the falsehoods he had pedalled as
account books, revealing a Rs 7,800 crore fraud. His modus operandi?
Simple: He just cooked up the books, adding thousands of crores of
non-existent cash to a few hundred crore that he had.
An empire spread
over many countries and employing 55,000 young and brilliant staff
came dangerously close to crumbling.
India's IT
sector reputation got a worst reputation jolt.
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RAJU BAN GAYA CONMAN |
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Now,
Indian Government is seriously thinking of a Rs 2,000 crore mega
cash injection in the form of a liquidity package. The corporate
rescue plan will be a special short-term loan from a clutch of
public-sector banks.
Satyam’s annual
wage bill for the current year is estimated to be about Rs 6,000
crore, while about Rs 1,500 crore is required to pay next three
months’ salaries to its 53,000 employees.
Indian political
and business spectrum is now rushing to salvage not just Satyam but
the country's reputation for good business practices. Satyam slipped
through all regulatory mechanisms, and the sheer scale of the
robbery has shocked the nation.
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India Inc was already reeling under the globally originated
credit tsunami and a locally created economic slowdown. Now,
Raju’s Satyam trick has come as a nightmare, a sort of corporate
terrorism much bigger in scale that the Mumbai 26/11 since it
has put more lives and jobs at risk. And the men who perpetrated
it have been feted all along by the Government and society.
26/11 placed the government and politicians under a scanner.
Satyam fraud has forced the politicians to bring on a magnifying
lens. Look, who all is crawling from underneath? Wipro was
forced to disclose that it was banned by the World Bank for
unsavoury unethical deals with Bank employees.
But what is the real worry of India Inc and the IT sector is
that Satyam may soon start looking much smaller as it could be
the tip of an iceberg. Indian liberalisation is based on the
singular notion of profit building since
New Delhi
never had the time or the inclination to put in place regulatory
measures when it was opening the country to be ruled by the
profit mania.
It is common knowledge now that a large number of companies
have packaged themselves to tap the vast amounts of global
liquidity and capital sloshing around the world, searching for
returns, and doing so through IPOs and other market transactions
— with active participation and help from investment bankers and
other market intermediaries and, now it seems, even auditors.
Anyone who understands money can’t help but be amazed and
wide eyed at the ease with which a large number of companies
seem to register significant growth, quarter on quarter. Now,
many of the growth stories will be viewed with suspicion, and in
any business, suspicion could be the death knell.
India will
have to do something exemplary and big to prove that the guilty
join the rogues’ gallery. Kenneth Lay and Jeffrey Skilling of
Enron, Bernie Ebbers from WorldCom, Dennis Kozlowski of Tyco and
Sanjay Kumar from Computer Associates — they are all in jail
serving sentences, and Indian crooks need to go there too. |
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Now, details are
emerging that there were many slip ups and Satyam could not have
done the fraudster trick without
a lot of
cooperation. So may be there are bandits among the regulators, some
suspect.
On Tuesday, PM
Manmohan Singh was closetted with External affairs minister Pranab
Mukherjee, home minister P. Chidambaram, commerce and industry
minister Kamal Nath, corporate affairs minister P.C. Gupta and
Planning Commission deputy chairman Montek Singh Ahluwalia.
The old board
has been sacked, a one is in place comprising HDFC chairman Deepak
Parekh, IT veteran Kiran Karnik and legal expert C. Achuthan. It
seems clear now that the government will have a bail out package
even as investigations into the fraud were handed over to the
Serious Fraud Investigation Office (SFIO), a multidisciplinary
agency empowered to investigate major economic offences that have
substantial regulatory and public interest.
But the real
loss has already happened.
India's claims
of being an IT dream country have turned out to be so much of
marketing hype and rhetoric. Anyone who ever claimed that the
private sector was the real hub for merit and meritocracy now eats
his words for breakfast and humble pie for rest of the day.
Talk of
liberalisation producing a new
India that
worked on good corporate governance and honesty as the norm only
showed how gullible Indian people and media were. Wealth creation
has clearly led to unprecedented greed, a side of the economic
liberalisation that people often miss when they adopt finacial
status as a measure of the man.
In a recent
television programme about the Satyam fraud, the leading TV anchor
said that the media in India have largely been focused on exposing
political leaders and their scams and not as much on the corporate
sector. The fact is that political scams are not possible without
willing corporate scamsters. That there are many is obvious. So far
they have only enriched themselves at the expense of the taxpayer.
Satyam and its promoters have only expanded the scope of what our
corporate scamsters are now seen as capable of doing.
14 January 2009
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