Jan 7, 2009

Saytam Scandal: A lesson in doing one's role

I was on the road today meeting probable clients and talking on the phone with colleagues and friends, when I was browsing the net on my mobile.

Was stunned to read that Satyam Chairman Ramalinga Raju had resigned following his admission of massive accounting fraud over the years.

Satyam was the place I joined after my MBA from 1999 to 2002 , and I have really fond memories of the people I worked along with in their training group. However over the last fortnight the organization has been going through a massive crisis of investor confidence and the confessions of the ex-CEO has effective pulled the curtains on the organization's status as one of India's top 5 IT outsourcing firms.

As people are discovering - it is not merely the fact that firms have directors (who are seen as independent) and external auditors (in this case, PricewaterhouseCoopers) but that they really live up to their roles.

I am no expert in corporate governance, but honestly how can you brush such a massive corporate fraud under the carpet and have supposedly "independent" parties assess and advise you?

And how come there were no whistleblowers from within Satyam's Internal Audit and Finance team? A conspiracy of silence?

Something stinks - and Satyam (which means truth) has been lying about it a long time now.

News: $1 billion of our cash doesn't exist
Huge Blow to Indian Tech
Satyam fraud may catch Maytas cos. in its vortex

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  1. You have been in Satyam. You are a HR guru. With existing customers likely to be lost, new ones hard to come, and employees not sure about the job, growth, salary - what would you do to increase the employee morale, retain the talented employees? I'd like to know your thoughts. Let us not talk ill about the company that taught us the basics and made what we are now.! It was a top management mess up, and not the junior employees fault. BTW, I hated when MD Pai went ahead and mentioned that he'd not recruit anyone from Satyam. I thought that was poor business ethics!

  2. Satyam was a real shocker.
    To think that Raju would turn out to be nothing more than a financial crook, the mind boggles. And I was reading somewhere that Satyam got an award for the best Internal Audit department or something to that effect!
    My gut feeling is that this stuff happens in company's with very hierarchical or charismatic leadership, most people are either too scared or too enamored to ask questions.
    Secondly the small group of people in the know are being taken care of through additional rewards, both monetary and non-monetary.

  3. I guess HR may need to check why people exit such good companies, despite being high performers and getting rated poorly for " not being a team man" or similar appraisal pointers by the superior

    An analysis of this nature by HR may reveal issues on the type of corporate governance existent within the company… any sort of financial nexus of this nature present.

    Internal Audits, both financial and HR have failed in this situation.