Satyam saga has shaken corporate India, but hope is still alive

January 16th, 2009 - 5:50 pm ICT by ANI  

Ramalinga Raju

New Delhi, Jan 16 (ANI): The fraud involving India’’s fourth-largest software services exporter, Satyam Computer Services has put corporate governance in India back in focus.
Analysts say the saga exposes serious shortfalls in corporate India that must be addressed to ensure credibility in an increasingly globalized and competitive world.
Some analysts say that market watchdog, the Securities and Exchange Board of India (SEBI), lacks teeth to prevent Satyam-like fallouts, while others say the rules don”t go far enough.
Satyam has contended it adhered to corporate governance rules, appointing the requisite number of independent directors with excellent credentials, including the dean of a top business school in its hometown of Hyderabad and a professor at Harvard Business School.
But experts say there are concerns that some directors might have been too close to Satyam chairman B. Ramalinga Raju to be considered truly independent, as all of them failed to ask tough questions about controversial infrastructure deals.
Several observers say the issue could be the opening of a Pandora’’s Box, especially with several top Indian firms being run as closely knit family businesses.
Indian economists said that India should not fear accusations from the western countries over Satyam as they too are having a fair share of corporate scandals.
“Indian corporate governance has been a can of worms, but I wouldn”t really like to hear that from the west given that what has happened recently in western corporate governance,” said Partha Sen, Economics Professor, Delhi School of Economics.
The incidents across the globe highlight loose market regulations, especially in developing countries that could prompt investors to be more cautious on stock picks even as they battle with the fallout from the worst financial crisis in a generation.
Talking about India, Sen said that it is time to put a proper system of checks in place and that the Satyam episode may be a trigger for better governance.
“Just because their chartered accountant is Price Waterhouse Coopers, it doesn”t mean that they don”t be looked at carefully. So there is a lot of stuff, which is done on faith or in India some players are too big to be even scrutinized, that has to go,” he said.
About half the companies in India’’s benchmark 30-share Bombay Stock Exchange (BSE) are family-controlled. (ANI

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