Satyam Computers - The Corporate Governance Mishap !!

In an event that is likely to leave a deep and a long lasting scar on corporate management practices in India, Ramalinga Raju, the controversial Chairman of Satyam, one of India’s largest IT services dropped the biggest of the bombs so far when he resigned today, owning responsibility of a fraud running into billions of rupees. The company’s balance sheet, it is believed, has in reality just 6% of the total Rs 54 bn that it is reported to have. In other words, funds totaling Rs 50 bn are non-existent. In a confession letter sent to the stock exchanges, Mr. Raju wrote, "Every attempt to eliminate the (balance sheet) gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten." While managements at other companies may not be riding the so-called tiger, confidence is likely to take such a beating, that the mauling will come at their doorsteps as well, resulting into market value erosion for no direct fault of theirs. Not a good position to be in, especially when the economy is already in the doldrums.

What does the auditors PWC have to say.....what audit have they done...audit trails..the very profession of auditing goes for a hit. The fate of 50,000 employees of satyam is pathetic. Pray god that they are in safe hands in the ensuing future.....Bad days ahead for the Indian companies....

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