Satyam Computers happened to India and this is the mother of all technology industry scams in the history of the country.
A lot has already been exposed and I may be late on the reporting scene but nevertheless, I shall have my say ! The CEO of the company B R Raju confessed to swindling the company and that he has been doing this for many years now. Some observations and opinions.....
- Raju gypped the company of about Rs.7000 crores (about $ 1.2 b) not bad in a company which has processes certified to CMM-5, ISO 27K1 etc and was awarded an award named "Golden Peacock" for best Corporate Governance
so the joke is on whom ? is it only the company that has been swindled ?
- Raju has been mis-reporting accounts for he past 7 years.
And he says that no one knows and that he is the only person responsible ! I mean are we wet-behind-the-ears kids ? What about the auditors, the CFO, the directors the accounts people, the senior managers !!!
- He was riding Tiger and could not get off !
Oh my dear shareholders please forgive my trespasses. I was trying to retain control of the company and to keep the corrupt people around me happy. I fudged accounts so I could keep corporate raiders away from hostile takeover. I created a tiger and rode it to scare everyone and fed him "fudged figures" and he wanted more and more and I had to keep buying land to keep this on.
But I did not do any wrong. I only fudged some figures to make my balance sheet look good.
- Raju's auditors cannot speak due to client confidentiality and they did their job according to international auditing standards.
Big 4 company digs deep hole for itself and then says that client gave them statements. Hah - so what does the word "auditor" mean ? What does an auditor do ? Seems that they are so big they have forgotten the basics of the profession.
Just because you are Big-4 does not mean you are God's gift to auditkind. We know what happened to A_Andersen.
What a gigantic fraud carried out by an insider and the insider is the big boss himself. Governance and ethics begin at the top and this is a case where the top boss (management) is just giving lip service to these principles while engaged in fraud.
While this incident is bringing up calls for more stringent laws / regulations for governance and oversight, the age of ethical business is still far off in our dear land. Family owned and promoted entities hold their employees to ransom in collusion with political leaders and government officials. Unions are usually promoted by political parties and seem to operate for power and money without a thought for the worker.
If we factor 7000 cr for the past 7 years it may mean that 1000cr was siphoned off every year. That means higher reporting for each geography. It means higher (fudged) figures for bank deposits, employees et al. No one caught on to the scam ... not a single analyst, investor, banker, auditor, regulator, shareholder, C-level executive, employee, accountant, VP (Marketing, HR, Admin)
The investigations are bound to prove the complicity of many others in the top hierarchy and Directors and Auditors cannot claim immunity under the guise of statements like "I signed what was given to me and did not check the documents" or "I believed what was given to me in good faith".
The world is witness to the "good faith" displayed when Raju walked out of the board-room to leave the directors to discuss and approve the Maytas acquisition. He did it in the interest of good governance as required in view of his 'conflict of interest' .... now we know that Raju went to the washroom and was ROTFL> And his band of directors blindly said a "Yay" without any thought about doing any due diligence .... did they discuss their paycheck or next vacation too < ? >
Lets hope the world is a cleaner place once the dust settles. As of now, corporate India and the auditors are all walking on hot coals. The Big audit firms are already taking a second look at their work .
Oh so much is happening in my world ... ever since I returned to my dear motherland.
Labels: bad audit, bad governance, fraud, governance, india, indicent, maytas, satyam