jan 7th, 2009
a letter was sent to the SEBI by satyam chairman ramalinga raju accepting that there was massive fraud and misstatement of accounts within the company. i believe this letter is genuine, as it was passed on to me by someone from an investment bank.
i am posting the letter at http://rajeev.posterous.com/satyam-letter-accepting-fraud
this is a serious matter, and i imagine satyam will now be sold for a song to somebody.
i did defend satyam, and i continue to defend the company per se. it is an important firm, and destroying it would be neither useful nor sensible. also, i have no sympathy for the likes of the world bank -- after all, it had to fire its CIO on accusations that he had taken money from various IT companies to award them contracts. and it is true that they use double standards.
but i now have to admit that, in light of the admitted fraud, i have to reconsider my support for the individuals concerned. they should not have allowed such a massive fraud to happen. i am appalled. this casts a shadow on the entire IT services sector.
in light of clause 49 and sarbanes-oxley provisions (satyam is listed on NASDAQ), the consequences may be quite serious for the CEO, CFO, and the auditors.
8 comments:
The Atlanticists at NYT are of course quick to highlight what's happened at Satyam, even trying to extrapolate it across Indian industry in general:
http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html
This will be a massive setback for Indian entrepreneurs trying to rais emoney in US. It's not that Us have not seen such cases(Enron was a mai-bap) but desi management will come under intense scrutiny.
I am not only sad at my personal financial loss but more worried about the fallout on Indian companies in general. Moreover it has been a success story of middle class dream...
PwC will be questioned and also will be those who rated Satyam with 'golden peacock'.
CEO, CFO and board will have to face music.
Ramalinga Raju better not go to the US.
10 years of jail is certain (In India)...
Yes, foreign news sites and our own foreign worshippers are going ga-ga and wondering loud whether the whole industry is like that...
Another news of Pakistan admitting that the captured terrorist is indeed a Paki.
as if to take the mickey out of you Rajeev - I think Rediff highlighted your defending Satyam column on it's business page just now.
Yeah - I hope that the auditor's (I think it is PricewaterhouseCoopers) get more than questioned. They should be hit with law suits. They were on the wrong end of the Global Trust Bank fiasco as well (another Hyderabad based company - so its the same Pwc office). S Gurumurthy has been saying for some time that foreign audit firms are monopolising the market (disclosure - I am not a chartered accountant but Gurumurthy is)
There will be a lot of egg on a lot of faces - not the least on these guys who gave Satyam a Corporate Governance award
http://www.rediff.com/money/2009/jan/07satyam-to-be-stripped-of-corp-governance-award.htm
well, i am in good company in misjudging the raju brothers -- the sebi, the nifty, the institutional investors, the retail investors, none of them had a clue what was going on.
it is pretty sad, though.
Well, after Mumbai made us look like a hollow power in front of the world, this Satyam scandal likewise makes us look like a paper tiger -- it's like the dropping of the other shoe. We need to respond with tighter rules that will restore more credibility, confidence and respect.
in India(or anywhere) more rules and regulations will never solve any problem..I am sure we have tomes and tomes of accounting rules and laws and bylaws out there..
Stripped of all the media hyperbole this is a case of fraud. Prosecution of this case by the authorities and taking PWC to task along with Satyam is all we need ...
More government is bad period.. More so with India..
what if the govt bought satyam and turned it into a psu as a sort of strategic initiative in i.t?
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