The conviction of founder Ramalinga Raju and nine others in the infamous Rs.7,123-crore Satyam fraud case that shook the Indian corporate world in 2009 has set off a debate of a different kind. Is the quantum of punishment adequate given the nature of the crime and the method of its execution in a collusive manner? This fresh debate, however, has conveniently cast aside the larger malice afflicting not just the Indian enterprise but the society as a whole. Ironically, in this instance, a fraud of a gigantic proportion happened in a company which went by the name ‘Satyam!’ Can the end justify the mean? Can’t businesses be run in a fair manner? Is ethical business impossible? Can’t professionals be objective? Can enterprise make profit without cutting corners? And, more importantly, can stakeholders perform dispassionately in an environment where relationships encounter differing goals?
An objective reflection will reveal how enlightened self-interest without any modicum of concern for larger public good often collectively leads up to a public bad of gargantuan proportion. Satyam eminently fit into this category. First an icon, then a conman, and now a convict, Ramalinga Raju has indeed traversed quite a bit. A series of ‘covering acts’ — of suppressing truth — had finally done him in. If only the other ‘crucial elements’ in Satyam — such as co-promoters, fellow directors, learned auditors and trusted managers — had exercised their duty with a sense of professional pride, the story would have been vastly different. It is like asking: would Mahabharata have happened if Bhishma had not renounced the throne? Well, we don’t have the benefit of hindsight to correct the course of history.
For ordinary eyes and minds, truth is very difficult to decipher. They place their trust and money in established brands backed by credible names. The Satyam episode, however, makes one wonder if name, fame and size matter at all. If the Satyam imbroglio exposed the diabolical nexus between promoters and the so-called independent professionals, whose job was to secure the larger interest of the enterprise, it also has set off a sense of distrust across. Often times, enterprises rope in big names on their boards to spruce up their image. More often than not, these big names play just an ornamental role sans responsibility. At the same time, they enjoy the perks that go with such a board position. It required a Satyam to fall for the market regulator to re-define the role of independent directors and vest them with actionable responsibility. Much water had flowed since the startling admission of fraud by Ramalinga Raju on January 7, 2009. The regulator has since tightened disclosure norms and beefed up governance procedures. All these have made communication transparent and its flow regular to avoid any Satyam-like untoward happenings. The question, however, is: do we need to be constantly regulated, nay educated, on what is fair and just in anything we do? Is it something special to be fair and just? Are we not to be so all the time? To make a virtue of what is routinely expected of us — it tells a tale of its own i.e. of the degeneration in the value system. The modern business environment has seen sprouting up of multiple intermediaries in the chain, each seeking to have a piece of the action and also reward in the money multiplier game. And, there is a paradigm shift in the approach — from selling to marketing. This new focus permeates across the canvas, and, often times, permits collusion of new kinds.
With the verdict out, the villains of the Satyam scam have been brought to book. That must be pleasing to many who, not many summers ago, had looked upon Satyam with awe and admiration. Satyam, the company itself, survived thanks to the rescue act by the Mahindras. And, the controversial Ramalinga Raju-promoted infrastructure firms outlived the scam, thanks to another Good Samaritan.
Though they suffered initial pains when the scam broke out, the employees too got a better employer. Of course, the class action suit ensured that the overseas investors got their due. In the end, it is the Indian investors who have been left in the lurch. And, who cares for the retail investors who are always told to read the prospectus carefully!
When: The timeline:
- Ramalinga Raju dropped a letter-bomb on unsuspecting investors, employees and the government confessing to a Rs.7,136-crore fraud committed by him and his close circle of relatives and employees at the company. Ramalinga Raju resigns. >read more
- Citibank freezes Satyam's 30 accounts.
- Ramalinga Raju and his younger brother B. Rama Raju arrested. Central govt disbands Satyam’s board, to appoint its own 10 directors. >read more
- Satyam removed from Sensex, Nifty >read more
- Satyam’s former CFO Srinivas Vadlamani arrested. >read more
- Government appoints Deepak Parekh, Kiran Karnik and C. Achuthan to Satyam board. >read more
- CBI takes over investigation, goes on to file three chargesheets >read more
- Gets SEBI nod for bidding process to select investor >read more
- Tech Mahindra makes open offer to Satyam shareholders at Rs. 58/share, offer to close June 9 >read more
- Mahindra unveils new brand identity for Satyam, Mahindra Satyam. >read more
- Raju says charges levelled by CBI are false >read more
- Supreme Court grants bail to Raju since CBI failed to file chargesheet on time. >read more
- Enforcement Directorate files a criminal complaint against 47 persons and 166 corporate entities headed by Ramalinga Raju. >read more
- Ramalinga Raju and three others given six months jail term by SFIO >read more
- Judge postpones verdict citing voluminous documents >read more
- Special court defers verdict till April 9 >read more
- All 10 accused found guilty >read more
In his resignation letter to the board of directors of the company, Mr. Raju rued: “I am now prepared to subject myself to the laws of land and face consequences thereof.”
Why did the then fourth largest IT company choose to take the criminal route of falsifying accounts and indulging in fraud?
The arrest might be the start of an effective legal process to bring to justice the self-confessed perpetrator of the biggest corporate fraud in Indian history.
The sheer audacity of what they did is evident from investigations done by Sebi which stumbled upon fake invoices and bank statements dating back by many years.
The IT company had generated false invoices to show inflated sales.
Sebi also asks them to return Rs.1,849 crore worth of unlawful gains with interest.