The Satyam Scandal: India's Reaction
The Jan. 7 news that Ramalingam Raju, chairman of Indian IT outsourcing company Satyam Computer Services (SAY), has admitted to a huge accounting fraud rocked the Indian business community. Following is a sampling of reaction to the fraud from a variety of publications.
• Mohammed Hadi, in The Wall Street Journal, writes: "The whole affair—already being dubbed India's Enron—throws India's corporate governance into sharp relief. That Mr. Raju thought it appropriate to spend $1.6 billion on two firms so unrelated to Satyam's business and in which he had a financial interest, without seeking shareholder approval, speaks volumes about his sense of what his shareholders would tolerate."
• Shailesh Haribhakti, executive chairman at BDO Haribhakti, a Mumbai management services firm, told Reuters that there was little risk of similar problems at other companies in India. "There is no need to extrapolate Satyam to any other enterprise in the country—it's just not possible that this level of misstatement will be there in a widespread manner."
• In a similar vein, LiveMint.com said that corporate leaders were confident that the scandal wouldn't damage India's business image or the IT sector. "These kind of things do not do any good, but I don't think this will affect the image of India Inc. totally," said Maruti Suzuki India (MRTI.BO) Chairman R.C. Bhargava. "A fraud could happen in any sector."
• The Economic Times questioned the role of the company's auditors in the fraud. "The image of Satyam's statutory auditors, PricewaterhouseCoopers, has been tarnished as voices are being raised at the possibility that the auditors were hand-in-glove with the conspirators in the…scam."
• The Business Standard reported on the scene outside Satyam's headquarters, saying: "The otherwise lively campus wore a grim and somber look with high security all around," with employees reluctant to talk. "'We are tense after hearing about the developments in the company,'" said one employee. "'Though the company has taken up an image-building exercise for the past few days, the reality today is quite a contrast. The chairman has been sending personal mails to all of us assuring things would be on track shortly. But what we see is quite different.'"