Posted by Admin on 9:45 AM
Satyam shows system stinks
The scale of the
Satyam scandal
is stupefying.
It had a supervisory board
where the promoter- family were a minority;
they had a tiny share of all equity.
The independent directors
were all highly regarded personalities.
Its accounts were certified by the Indian arm
of a globally top name in audit.
It was subject to all sorts of independent regulators.
Its senior executives were top-notch.
Yet,
its founder-head admits Satyam's accounts
have been falsified on an increasingly massive scale for years,
showing thousands of crores
of non-existent revenues and profits.
That comes right after
the World Bank blacklisted Satyam
for data theft and bribery of the former's staffers.
Exactly
what is the regulatory structure
we have and what is it worth?
Infosys'
Nandan Nilekani's shocked observation
was that it is clearly not enough to have rules.
But
we were supposed to have all sorts
of independent and high-minded people
enforcing the rules here.
Was it all as much of
a sham as Satyam's accounts?
The auditors,
for instance,
don't seem to have even once physically
checked the firm's cash balance in seven years.
An audit committee of three independent directors
is supposed to meet at least four times a year
and monitor procedures here.
Where do the lies end?
All sorts of probes have been promised now;
they need to be both comprehensive and brisk,
while being convincing.
The questions are many,
starting with what audit and regulation
are supposed to be about and
why we had such a mockery of both.
Some developed countries
insist on joint annual inspections of companies
by at least two separate audit firms and
a change of auditors every three years.
There is the related question
of whether professional bodies can ever satisfactorily
regulate their members without
outside scrutiny and involvement,
as with the Institute of Chartered Accountants now;
what sort of
"due diligence"
was on all these years by
the various investors and partners in Satyam,
let alone those who were to oversee stock listing norms?
It is only three weeks
since Satyam's blue-chip
ones went along with a deal to use
Rs 7,000 crore
of shareholder money
to buy shares of the promoter family in non-IT businesses,
junked after an unprecedented retail revolt.
We need clear measures to address
each of these and other issues thrown up in the scandal,
to ensure a system which works and honestly.
 Sriram Savarkar © Hinduism is more a way of life than a method of worship. Dharmo Rakshati Rakshithaha If you protect Dharma, Dharma will in turn protect you. Hindus, If people slap you once, slap them twice!
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