Mysorean

I am sure by now you are innundated with mails and news reports about how and what Ramalinga Raju did to Satyam. Of course he built it up from 0 to 50,000 employees but he also has put all of their careers into serious uncertainty. Do you appreciate this man for having built an organization so far or just plainly accuse him of fraud for his confession as the standard reaction has been? As far as I am concerned, I am still reeling under shock.

Satyam was one of those entities that subconsciously connected to India’s growing status as an economy. Ramalinga Raju was one of the doyens of the industry till 12.30PM yesterday. Now suddenly when I see his pictures on the TV Channels I don’t know how to react. I am so shocked because it is my belief system that has been affected. I had believed him blindly. Not that I would ever want to work with him or any such personal benefit, but I always thought he and others like him – NRN, Premji, Ramadorai, etc. were the ones who were driving the Mercedes Benz of Indian industry on the global map.

Of course, Ramalinga Raju has let me down. Has let us down. But is he the lone perpetrator of this fraud of unimaginable scale? I don’t think so. There must be more people and organizations whose names will now come out in the open as investigations unfold with their results. I am just shattered at the thought of the possible names that might come under the scanner.

Imagine dragging PriceWaterhouse Coopers (PwC) to court. In India, there are atleast 100 publicly listed companies that use them as their auditor and several (possibly more than 100) other unlisted ones. I just hope they come clean through this though I have kind of assumed that they are guilty until proven otherwise. I mean you can’t be an auditor to a firm that’s been fudging numbers for seven years and yet not know what’s going on. And it was not a few bucks here and there, it was a massive Rs. 7,000 crores! I just want to study the composition of the team that was handling the Satyam account from PwC since the time they took it on. If it was the same team, then you don’t need me to tell you what was going on. If it was changing constantly, then we need to really talk to those guys who moved on to see the truth.

Then comes the board of directors. What on earth were they doing there? You had the biggest names on that board. Such a disgrace to them. I understand that they cannot get into the minute details of the financial statements, that too with Mr. Raju whose aura precedes him. I mean even if it was not for the aura, very rarely do you get into such details as you are also thinking about not irking your CEO by micro-managing or asking for too much detail or questioning his authority or any such thing. Now you add the aura of Mr. Raju and you see the position of the board. But still, I guess they have swerved away from their line of duty somewhere and they owe a moral obligation to move on from here and make way for new board members.

Come to think of it, it’s happened in the IT industry. The most watched. The most admired. Satyam had 185 of the Forbes 500 as their customers. PwC as their auditors. In hindsight, it all seems to be such a farce because the one who mattered resorted to unethical ways of managing stakeholder expectation. The good part of it is that this serves as a wake-up call to every company to get their stuff right. Also, I guess more and more companies will come clean at the earliest and revise their guidances to the market in an effort to manage stakeholder expectations better rather winding up operations or getting into such murky conditions.

Also, somewhere deep down I feel this is a representation of our Indian system. We have this fiery need to be recognized as good by the society. And this goodness is related directly to how well we manage our external image. Internally what you think or what you do be damned. But externally if you have put up your best face, then you are good. And I think this is the trap into which Mr. Raju got caught too. Just that the circle of influence of his actions was larger and it has opened our eyes to the real world.

The only thing I think I still appreciate about Mr. Raju is that he confessed to having done it all at a time when nobody actually expected it to happen. People are saying that he had no option and he was pushed into a corner and all that. Give me one instance where this has happened. He has just stood up unable to withstand his conscience and announced to the World whatever he has done. If PwC did not know, the board did not know, the finance department did not know, the shareholders did now know, the stock exchanges did not know and SEBI had no clue. Merril Lynch and Maytas were the only ones I suspect who knew. And in blowing the whistle they would have also been staring down the barrel. It was only sensible they did it this way, and even now, do we really know?

Trackback this Post | Feed on comments to this Post