A'Satyam' ... asundaram

70000000000 is a huge number, a seven followed by ten sifars. And when it gets translated into money by prefixing a 'Rs.' tag to it, it becomes even bigger.
Corporate Governance gone haywire

When i switched on my television set this morning, I was welcomed with a piece of breaking news- "Satyam chairman Raju resigns". It was expected sooner or later, so there was nothing breaking about it. So, i just changed the channel and started surfing through. What I missed then was that this resignation did not come in the wake of Maytas acquisition controversy but a bigger and more sinister controversy that had been brewing all this time.
So when i again visited the news channel after having waded through the movies, animation, music channels et al, I came to know about the real news. B. Ramalinga Raju, the charismatic founder and Chairman of Satyam Computer Services Ltd, in a letter to the (still remaining) Board of Directors of his company, "with deep regret and tremendous burden that I am carrying on my conscience", admitted to a fraud to the tune of Rs 7,000 crore.
Fortunes of the India's fourth largest IT company started to take a U-turn when last month, following the strong resistance by its investors, the company had to backtrack on its decision to acquire two infrastructure firms Maytas Properties and Maytas Infrastructure promoted by the founder's family. Following this, a number of independent directors stepped down owning moral responsibility for not opposing the failed acquisition.
This news was followed by another revelation within a weeks time that the company has been barred from all business at the World Bank for eight years. The reason provided was that Satyam had been found providing 'improper benefits' or in simple terms, bribing the bank staff to acquire contracts. There have also been allegations against Satyam of causing security breaches at the bank.
As if all this was not enough to bring disrepute to this reputable Indian firm, now comes the biggest news of all. Mr. Raju has admitted that he had falsified the accounts and assets of his company and inflated its profits, hence taking the shareholders on a ride. However, Mr. Raju was also on a dangerous ride himself as he puts it in his letter to the BoD. He writes, "It was like riding a tiger, not knowing how to get off without being eaten."
This is undoubtedly, one of the most controversial cases of corporate governance gone haywire in the recent history of Corporate India. We have had Harshad Mehtas and Ketan Parekhs but this is a case apart as here at the centre of the big fraud is not just any stock broker but the founder and chairman of one of India's pioneering company. In all the economic mess we have been seeing of late, as skeletons kept tumbling out of the Corporate West's cupboard , we in India atleast felt proud of our corporate sector for not having indulged in any wrongdoing. But now the myth has been broken.
Mr. Raju further reveals that Satyam had planned to complete the Maytas acquisition deal "as the last attempt to fill fictitious assets with real ones." Hence, the Maytas fraud was just a last ditched attempt to keep a much bigger fraud from being exposed. Chester Barnard, the first to carry out a comprehensive analysis of the decision making process had clearly classified the decisions into the organizational ones and the private ones. However, when a corporate executive tends to merge the two, problems are bound to arise. One wonders how many more such frauds, the companies in India must be committing to keep their bigger frauds under the veil.
I am not a shareholder of any company and don't even plan to be in near future, but still i feel cheated by this revelation. I feel cheated as i do when I hear about M.P.'s taking bribe for casting their votes in the parliament. I feel cheated as i do when I hear about a public bridge collapsing due to substandard cement used by the contractor. I feel cheated as i do when I hear about a policeman beating an innocent to death for not admitting a false accusation. I feel cheated as i do when I hear about a government in charge inciting communal violence to earn votes in upcoming elections.
Most of us have a tendency to ask for transparency and accountability in the government affairs, hence seeking what is better know as good governance. However, it is the time we realise that good corporate governance is as important as good governance.
Corporate Governance includes the policies and procedures adopted by a company in achieving its objectives in relation to its shareholders, customers and suppliers, regulatory authorities and the community at large.
The provisions like the induction of specified number of independent directors in a listed company has been made to realise good corporate governance. However, the Maytas acquisition controversy makes it clear, that much more needs to be done to fill any gaps left. Moreover, today's revelation asks for stringent regulatory as well as auditory provisions for private enterprises of all hues and colours. Stricter legal provisions and punishments for the defaulters will also act as a deterrent.
Although Mr. Raju claims in his letter that he made no monetary gains out of this fraud, which itself is a hard fact to digest, this does not diminish the gravity of his misdemeanor. Moreover, he will have to face legal action not only in India but also U.S. as his company is listed there too. Mr. Raju ends his letter claiming, "I am now prepared to subject myself to the laws of the land and face the consequences thereof." Government of India should act swiftly to make a strong case against Mr. Raju to send out a tough message to others in the same league and safeguard the global reputation of Corporate India.
As the trading day came to an end, the shares of Satyam Computers had plunged by nearly 80% post-fraud revelation. At the time when the investor confidence is already very low, such incidences can make the job even more difficult for the government and the corporate sector as a whole. One hopes there aren't any more skeletons waiting to tumble out of the Corporate India's cupboard.

Image Courtesy
http://www.adasoftware.com (edited)

Power swings 2008

Politics, economics and Cricket

As the year 2008 comes to a close, it is interesting to look back at some of the developments that challenged the existing order and made one ponder if these are indications to an eventful 2009.
The U.S.-Russia tussle saw two major geographical manipulations in the Russian vicinity. The first was triggered by U.S. support for declaration of independence by the Serbian province of Kosovo in February, the latest thread in the Balkanisation process. However, the month of August gave Russians a chance to return the favor, thanks to Georgian belligerence in its northern province of South Ossetia. Russians routed the Georgian army and recognized South Ossetia's right to secede along with another Georgian province of Abkhazia. U.S. might have triggered this event too but the Russians had the last laugh while U.S. was left fuming at the sight of its beleaguered ally.
There was more to come at the strategic level. U.S. in its move to bring the NATO forces and artillery closer to the Russian borders; supported the inclusion of Georgia and Ukraine in the cross-Atlantic body, and made known its intentions of installing air defense systems in Poland and Czech Republic, under the garb of Iranian threat. As the year came to an end, Russian fleet too set its sails towards the American seas to hold joint war games with Venezuela. Moreover, Russia too plans to strengthen its defenses (and offenses) in Kaliningrad Oblast bordering U.S. allies, Poland and Lithuania.
On the energy front too, Russia has successfully brought together the Gas exporting countries under an OPEC-like institutional framework which has further added to its clout, much to the dismay of U.S. It will be interesting to see what course this age-old rivalry takes in the coming year.
While the above developments hurt U.S.A.'s international standing badly, its homegrown sub prime and mortgage crisis triggered such events that now threaten its economic hegemony too. World saw the Gulf sovereign funds coming to the rescue of American banks, an unprecedented development indeed. Though the decoupling theory proved wrong, but still India and China seemed better prepared for the crisis than ever before. A couple of weeks back, China, Japan and South Korea summit saw new economic partnerships being forged to work out a coordinated strategy against the global financial meltdown, an indication of countries looking beyond U.S.
Earlier in July this year, Doha rounds, the free-trade negotiations of W.T.O. collapsed in Geneva, as the developing countries led by India and China refused to yield to U.S. terms and conditions. Moreover, the recent revelation of Maddoff Ponzi scheme brought further disrepute to the Wall Street and the U.S. nation as a whole.
Away from all this politics and economics, another superpower is being threatened and the year 2008 has been very tough for it. Australian Cricket can never be the same again. They started the year defeating India in the controversial Sydney Test thanks to the magical over bowled by Michael Clark. However that was the end for them and a beginning for the bruised Indian team. India won the next test and though lost the test series, came back with vengeance in the One-dayers. In the three final matches tri-series, India under Dhoni never needed the third final.
There was more to come in October-November when Australians came to India for the next edition of Border-Gavaskar Trophy. They did come with the trophy but could not take it back, being defeated 2-nil by the resurgent Indians. In between India tied a test series with South Africa at home and lost to Sri Lanka at their home but returned the favour in the one-dayers.
Indians brought the year to an end with an inspiring test victory at home against England. In the first test, the Sehwag blitzkrieg left the Englishmen clueless and the cricket lovers bedazzled. However the year ending has proved dismal for the Aussies. Proteas' heroics in the first test at Perth saw South Africa scaling a target of 414 with great agility and confidence. With the Boxing Day Test, the final and the most crucial test match of the year having started just half an hour back (and Hayden continuing with his poor form, already back to the pavilion), one wonders how the Kangaroos will fair this time. Australia might have amassed a lot of points on the test ranking table, thanks to the likes of McGrath, Warne and company but with these stalwarts retiring from the international scene, the going is getting tougher for the Ponting men or rather boys. India and even more strongly, South Africa have started fancying their chances to bring an end to the Australian hegemony in cricket.
In the corporate sphere of cricket, BCCI continues to extend its hegemony. With the successful conduct of PCL, Lalit Modi has become one of the most powerful sports executive in the world. Hence, the year 2009 holds a lot of promises for India in the cricketing arena. One hopes the good performances of 2008, seen in the other sports like shooting and boxing continue the next year too, to give a better platform for the Indian contingent at Commonwealth Games to be held in the National Capital in 2010.
Coming back to politics, U.S. saw a major domestic power swing as Democrats under Obama came back to power. Republicans had their eight years under Bush and they ended up doing all that should not have been done. Bush revealing earlier this month that his biggest regret was the U.S. intelligence failure on Iraq sums it up.
However, back home, power politics kept swinging all through the year. NDA's Karnataka victory earlier this year, saw them gaining a lot of mileage for the coming general elections but the results of recent assembly elections in Chhatisgarh, Madhya Pradesh, Rajasthan and Delhi humbled the saffron brigade to some extent and filled a new zeal and confidence in the Grand Old Party of India, which was fearing for worse.
"We have taken a risk", is what Chief Election Commissioner had to say on announcing the schedule for elections to the Jammu and Kashmir State Assembly, back in October. Earlier in the year, the way events had unfolded around the Amarnath shrine board issue, it seemed the separatists will have a field day if and when elections are conducted. Air in the Valley seemed rife with secessionist emotions and no one predicted that democracy could have the last laugh.
However, with all the seven phases of election over in the state, one is amazed at the voter turnout figures, much above than the previous occasions. Hence, the year ending saw the power swinging back in the favour of the democratic process in the northern-most state of India. In another couple of days, we will come to know, who will wear the crown and hopefully, strengthen this process further in 2009.
On the corporate front, Indian companies continued their foreign acquisitions, though at a lesser pace than in 2007, led by Tata's takeover of Land Rover and Jaguar brands from Ford. However, the Japanese firm's takeover of Indian pharmaceutical giant Ranbaxy spoilt the party to some extent.
India's successful moon mission, Chandrayaan was another step in the Indian as well as Asian elevation in space technology. With Indian-built European satellite W2M being launched last Sunday from French Guiana, it adds further to ISRO's clout and coffers.
Further on technology and more importantly strategic front, India signed the Nuclear Cooperation Deal with U.S.A. , Russia and France after getting unprecedented go-ahead from NSG and IAEA. By successfully carving out a special place for itself in nuclear arena, India has successfully de-hyphenated itself from Pakistan.
Recent developments post-Mumbai terror attacks are seeing Pakistan being further marginalized. Even its strong ally China has not come out with open support as on previous occasions. Year 2009 is going to be very crucial for India-Pakistan relations and may see major power swings in South Asia with U.S. committed to escalate its war against terror in Afghanistan under Obama.

Image Courtesy
http://www.mcs.alma.edu (original)

'Good for everyone'

Economic perspectives and the Indian ELians

In terms of the economic disputations, I see an ELian as a pacifier in the perennial 'Development vs Displacement' debate. The findings of a recent survey claimed that majority of the Indians are 'for' free trade in order to have higher growth rates. With respect to another question, it also claimed that majority feel government should take the responsibility for the upliftment of the economically backward classes and hence were 'for' inclusive growth. That is the essence of EL.
'The greatest good for the greatest number' as claimed by the utilitarianism is not what we want. We want 'Good for everyone' and for realizing this the 'haves' will have to make some sacrifices to take the 'have-nots' along the growth trajectory.
However, do these majority of Indians as elaborated in the survey see the two given questions together or as compartmentalized. The need is to see them together as only the holistic approach can provide the feasible solution.
With these economic disputations get intertwined many socio-political disputations too, giving rise to questions like affirmative action, SEZ's, disinvestment, etc. However, in order to find an answer to these, the primary question remains, 'to what extent do we accommodate?'

Image Courtesy
http://thumbs.dreamstime.com (original)