While the court has sentenced the perpetrators of India’s worst corporate fraud to prison terms, corporate governance experts believe investors of the erstwhile Satyam Computer Services remain aggrieved.
“The quantum and term of the punishment is in no way a benchmark if you compare with similar cases in the US,” said Shriram Subramanian, managing director of corporate governance advisory firm InGovern. “Indian investors are also not compensated in this case, when compared to the US investors, given the stock lost Rs 20,000 crore in market value.”
On the day Raju admitted to his wrongdoing, the stock had plunged a massive 78 per cent. Satyam was eventually bought over by Tech Mahindra.
Amit Tandon, co-founder at proxy advisory firm Institutional Investor Advisory Services, agreed with Subramanian. He said, “Although late, there is a verdict and should help bring closure. Separately, in Satyam the US investors were compensated but Indian investors were not.”
In 2011, Satyam agreed for a $125 million settlement with US investors. Tandon said, “This may a trigger to Indian government to speed up the process of notifying the section on filing class action suits under the new companies Act.”
Under a class action lawsuit, a number of people who have a common interest in an issue can sue or be sued as a group.
Ramesh Vaidyanathan, Managing Partner, Advaya Legal, however, said that a criminal court has restrictions in terms of award of punishment and fines. He said, “The award of damages is matter to be dealt with civil courts and Indian investors could have approached these forum for relief.”
There has been regulatory tightening after the scam. Regulator Securities and Exchange Board of India now requires companies to disclose more information regarding appointment of independent directors, quantum of pledged shares as also fixed deposits.
CII president reaction
CII President Sumit Mazumder said the verdict would surely act as a deterrent to such malafide intentions and scams in the future. The verdict would also help establish trust of stakeholders on the non-tolerance against frauds and the overall Indian judicial framework, not only in India but across the globe, he added.
“As for cases of financial malfeasance like that in Satyam are concerned, it is our view that the certainty of the punishment is as important as the swiftness of justice and from that point of view we appreciate the verdict. This would act as an example and also therefore, a deterrent for misdirected persons in the corporate sector,” Mr. Mazumder said.
Member of Parliament Rajeev Chandrasekhar said the Satyam conviction represented India’s corporate crimes being brought to book. “Bernie Madoff scam in New York was same time as Satyam scam in 2009 but was convicted in less than 6 months and been in jail since. White collar and corporate crime in India often unpunished. Satyam verdict is step forward to justice for these crime,” he said.
Raju starting-up again
Even as he was awaiting the court verdict, B. Ramalinga Raju was doing the groundwork for his next business venture. Called ‘Call Health,’ the venture was being designed to offer healthcare to people in small towns and villages, linking them to specialists via video conferencing.
The work on Call Health happened silently, as nothing was officially shared with media. Still, word got out that the idea is to bring healthcare to people’s doorsteps, either digitally or physically, even if on a motorcycle.