The Satyam episode from different angles


On 18th Jan 2008, I had the opportunity and privilege to be part of a panel under the auspices of Rajaji Centre for Public Affairs, Chennai to speak on “The Satyam Debacle”. The distinguished members of the panel were Shri G V Ramakrishna (GVR) (Former Chairman SEBI), Shri B S Raghavan (BSR) (IAS Retd & a noted writer on public issues) and Shri G Narayanaswamy (GN) (Auditor and Trustee of several institutions).

Shri GN opened the proceedings with a lucid presentation of the function of the Board of Directors, the Audit Committee, the Internal Audit function and the role of the external auditors.  He also touched upon the relevant portions of the balance sheet of Satyam computers.

Shri GVR spoke about the various entities involved in the fraud such as the management, independent directors, auditors, regulator, banks et al.  He also opined that there is an attempt to cover up the entire fraud by having multiple agencies involved in the investigation without any coordinating agency and likened it to a big jigsaw puzzle where the pieces are shared by many kids each unwilling to share their pieces with the others.

I opened with a huge disclaimer that in the absence of facts, all I had was theories and speculations. I had raised some questions about the veracity of Raju’s ‘confessional letter’ and cast my doubts about it being a single handed job.  I had briefly traced the fraud to the transaction level and wondered how it would be impossible to carry it out without the actual support of several people at different levels.  While I expressed my concern at the plight of the employees, I also expressed some doubts about the number of employees as it is being made out and felt that it would be much lower.

Shri BSR started his speech by sharing parts of his earlier speeches and  articles as early as 2002 and 2004 where he had envisaged corporate frauds with the active connivance of the various bodies.  He was especially critical of the Satyam Auditors Price Waterhouse Coopers (PWC) who had paid fines of $800 Million to the SEC for falsifying records amongst other misdeeds.  He also felt that Satyam had delivered quality work to its clients and hence cannot be allowed to fall.

Members of the audience then shared their views. Mr.Uppili, an equity research analyst, wondered about the fate of the Satyam employees.  Mr.Ramesh suggested that the culprits be severely punished as in the older times.

In the second round, Shri BSR and myself responded to some of the queries and comments from the audience and the session came to an end.

A disclaimer:  I did not make any notes of the speeches made by the other panel members and have relied upon my recollection of the same.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: