Big Indian story this year was Satyam investing in Maytas. What binds these two stories together? Corporate Governance. Oh yeah. Stock prices showed how 'One man can make a difference', though that one man was not Michael Knight of the Knight Rider.
On the issue of corporate governance, one event that kind tainted India's image in the world in terms of governance is the Satyam debacle. Why? Again, one man. One man decided to use funds of a listed public company to invest in his son's real estate enterprise or it was only virtual fund which was reflected in balance sheet of the company. In other words, he wanted to run a family business using shareholders' money. The effect - snowballing scrutiny into corporate governance, and a 'Yikes, Indians can do this too????' question from foreign investors who look upon India as a key player in IT services. In a way the hullabaloo that followed the crappy decision of Mr Raju of Satyam bodes well for India, since it shows that the shareholder is still king, and that the company owner is in every way answerable to the millions of investors. Perhaps the democratic government can learn a thing or two about accountability from this model followed by corporate.
In this Wednesday morning a letter from Satyam's chief to SEBI and board admitting of Fraud. It was horrified and unfortunate for SEBI and Corporate India to witness this kind of scam. Even the greatest man of India Inc cant resist himself without commenting on the issue, Narayanamurthy described developments at Satyam as shocking, painful and a good warning for other companies in the sector.
Some of the highlights of the scam are
- Satyam carries inflated cash balance of Rs.5040 cr
- Satyam crashes 77%
- Satyam chairman Ramalinga Raju resigns from board
- Auditors accountable for financial situation: SEBI
- Need for investors to know the truth: SEBI
- Violations across several laws: SEBI
- Satyam issue has serious implications: SEBI
- Wrong doings at Satyam should be probed in detail
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